Exhibit 10.3


 


	
   

  	
  SECURITY AGREEMENT

  
	
  WELLS FARGO

  	
  EQUIPMENT

  



 


1.                               GRANT
OF SECURITY INTEREST. For valuable consideration, the undersigned Willdan Group, Inc.,
or any of them (“Debtor”), hereby grants and transfers to WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Bank”) a security interest in all goods, tools,
machinery, furnishings, furniture and other equipment, now or at any time
hereafter, and prior to the termination hereof, owned or acquired by Debtor,
wherever located, whether in the possession of Debtor or any other person and
whether located on Debtor’s property or elsewhere, and all improvements,
replacements, accessions and additions thereto and embedded software included
therein (collectively called “Collateral”), together with whatever is
receivable or received when any of the Collateral or proceeds thereof are sold,
leased, collected, exchanged or otherwise disposed of, whether such disposition
is  voluntary
or involuntary, including without limitation, (a) all accounts, contract
rights, chattel paper (whether electronic or tangible), instruments, promissory
notes, documents, general intangibles, payment intangibles and other rights to
payment of every kind now or at any time hereafter arising from any such sale,
lease, collection, exchange or other disposition of any of the foregoing, (b) all
rights to payment, including returned premiums, with respect to any insurance
relating to any of the foregoing, and (c) all rights to payment with
respect to any claim or cause of action affecting or relating to any of the
foregoing (hereinafter called “Proceeds”).


 


2.                               OBLIGATIONS
SECURED. The obligations secured hereby are the payment and performance of: (a) all
present and future Indebtedness of Debtor to Bank; (b) all obligations of
Debtor and rights of Bank under this Agreement; and (c) all present and
future obligations of Debtor to Bank of other kinds. The word “Indebtedness” is
used herein in its most comprehensive sense and includes any and all advances,
debts, obligations and liabilities of Debtor, or any of them, heretofore, now
or hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including under any swap, derivative,
foreign exchange, hedge, deposit, treasury management or other similar
transaction or arrangement, and whether Debtor may be liable individually
or jointly, or whether recovery upon such Indebtedness may be or hereafter
becomes unenforceable.


 


3.                               TERMINATION.
This Agreement will terminate upon the performance of all obligations of Debtor
to Bank, including without limitation, the payment of all Indebtedness of
Debtor to Bank, and the termination of all commitments of Bank to extend credit
to Debtor, existing at the time Bank receives written notice from Debtor of the
termination of this Agreement.


 


4.                               OBLIGATIONS
OF BANK. Bank has no obligation to make any loans hereunder. Any money received
by Bank in respect of the Collateral may be deposited, at Bank’s option,
into a non-interest bearing account over which Debtor shall have no control,
and the same shall, for all purposes, be deemed Collateral hereunder.


 


5.                               REPRESENTATIONS
AND WARRANTIES. Debtor represents and warrants to Bank that: (a) Debtor’s
legal name is exactly as set forth on the first page of this Agreement,
and all of Debtor’s organizational documents or agreements delivered to Bank
are complete and accurate in every respect; (b) Debtor is the owner and
has possession or control of the Collateral and Proceeds; (c) Debtor has
the exclusive right to grant a security interest in the Collateral and
Proceeds; (d) all Collateral and Proceeds are genuine, free from liens,
adverse claims, setoffs, default, prepayment, defenses and conditions precedent
of any kind or character, except the lien created hereby or as otherwise agreed
to by Bank, or heretofore disclosed by Debtor to Bank, in writing; (e) all
statements contained herein are true and complete in all material respects; (f) no
financing statement covering any of the Collateral or Proceeds, and naming any
secured party other than Bank, is on file in any public office; and (g) Debtor
is not in the business of selling goods of the kind included within the
Collateral subject to this Agreement, and Debtor acknowledges that no sale or
other disposition of any Collateral, including without limitation, any
Collateral which Debtor may deem to be surplus, has been or shall be
consented to or acquiesced in by Bank, except as specifically set forth in
writing by Bank.


 


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6.                               COVENANTS
OF DEBTOR.


 


6.1                      Debtor
Agrees in general: (a) to pay Indebtedness secured hereby when due; (b) to
indemnify Bank against all losses, claims, demands, liabilities and expenses of
every kind caused by property subject hereto; (c) to permit Bank to
exercise its powers; (d) to execute and deliver such documents as Bank
deems necessary to create, perfect and continue the security interests
contemplated hereby; (e) not to change its name, and as applicable, its
chief executive office, its principal residence or the jurisdiction in which it
is organized and/or registered without giving Bank prior written notice
thereof; (f) not to change the places where Debtor keeps any Collateral or
Debtor’s records concerning the Collateral and Proceeds without giving Bank
prior written notice of the address to which Debtor is moving same; and (g) to
cooperate with Bank in perfecting all security interests granted herein and in
obtaining such agreements from third parties as Bank deems necessary, proper or
convenient in connection with the preservation, perfection or enforcement of
any of its rights hereunder.


 


6.2                      Debtor
agrees with regard to the Collateral and Proceeds, unless Bank agrees otherwise
in writing: (a) that Bank is authorized to file financing statements in
the name of Debtor to perfect Bank’s security interest in Collateral and
Proceeds; (b) to insure the Collateral with Bank named as loss payee, in
form, substance and amounts, under agreements, against risks and liabilities,
and with insurance companies satisfactory to Bank; (c) to operate the
Collateral in accordance with all applicable statutes, rules and
regulations relating to the use and control thereof, and not to use the
Collateral for any unlawful purpose or in any way that would void any insurance
required to be carried in connection therewith; (d) not to permit any
security interest in or lien on the Collateral or Proceeds, including without
limitation, liens arising from repairs to or storage of the Collateral, except
in favor of Bank; (e) to pay when due all license fees, registration fees
and other charges in connection with any Collateral; (f) not to remove the
Collateral from Debtor’s premises except in the ordinary course of Debtor’s business;
(g) not to sell, hypothecate or otherwise dispose of, nor permit the
transfer by operation of law of, any of the Collateral or Proceeds or any
interest therein; (h) not to rent, lease or charter the Collateral; (i) to
permit Bank to inspect the Collateral at any time; (j) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Collateral and Proceeds, and to permit Bank to inspect
the same and make copies thereof at any reasonable time; (k) if requested
by Bank, to receive and use reasonable diligence to collect Proceeds, in trust
and as the property of Bank, and to immediately endorse as appropriate and
deliver such Proceeds to Bank daily in the exact form in which they are
received together with a collection report in form satisfactory to Bank; (l) not
to commingle Proceeds or collections thereunder with other property; (m) to
give only normal allowances and credits and to advise Bank thereof immediately
in writing if they affect any Collateral or Proceeds in any material respect; (n) in
the event Bank elects to receive payments of Proceeds hereunder, to pay all
expenses incurred by Bank in connection therewith, including expenses of
accounting, correspondence, collection efforts, reporting to account or
contract debtors, filing, recording, record keeping and expenses incidental
thereto; and (o) to provide any service and do any other acts which may be
necessary to maintain, preserve and protect all Collateral and, as appropriate
and applicable, to keep the Collateral in good and saleable condition and
repair, to deal with the Collateral in accordance with the standards and
practices adhered to generally by owners of like property, and to keep all
Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims.


 


7.                               POWERS
OF BANK. Debtor appoints Bank its true attorney-in-fact to perform any of
the following powers, which are coupled with an interest, are irrevocable until
termination of this Agreement and may be exercised from time to time by
Bank’s officers and employees, or any of them, whether or not Debtor is in
default: (a) to perform any obligation of Debtor hereunder in Debtor’s
name or otherwise; (b) to give notice to account debtors or others of Bank’s
rights in the Collateral and Proceeds, to enforce or forebear from enforcing
the same and make extension or modification agreements with respect thereto; (c) to
release persons liable on Proceeds and to give receipts and acquittances and
compromise disputes in connection therewith; (d) to release or substitute
security; (e) to resort to security in any order; (f) to prepare,
execute, file, record or deliver notes, assignments, schedules, designation
statements, financing statements, continuation statements, termination
statements, statements of assignment, applications for registration or like
papers to perfect, preserve or release Bank’s interest in the Collateral and
Proceeds; (g) to receive, open and read mail addressed to Debtor; (h) to
take cash, instruments for the payment of money and other property to which
Bank is entitled; (i) to verify facts concerning the Collateral and
Proceeds by inquiry of obligors thereon, or otherwise, in its own name or a
fictitious name; (j) to endorse, collect, deliver and receive payment
under instruments for the payment of money constituting or relating to Proceeds;
(k) to prepare, adjust, execute, deliver and receive payment under
insurance claims, and to collect and receive payment of and endorse any
instrument in payment of loss or returned premiums or any other


 


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insurance refund or
return, and to apply such amounts received by Bank, at Bank’s sole option,
toward repayment of the Indebtedness or replacement of the Collateral; (l) to
exercise all rights, powers and remedies which Debtor would have, but for this
Agreement, with respect to all Collateral and Proceeds subject hereto; (m) to
enter onto Debtor’s premises in inspecting the Collateral; and (n) to do
all acts and things and execute all documents in the name of Debtor or
otherwise, deemed by Bank as necessary, proper and convenient in connection
with the preservation, perfection or enforcement of its rights hereunder.


 


8.                               PAYMENT
OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to pay, prior
to delinquency, all insurance premiums, taxes, charges, liens and assessments
against the Collateral and Proceeds, and upon the failure of Debtor to do so,
Bank at its option may pay any of them and shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand, together with interest at a rate determined in
accordance with the provisions of this Agreement, and shall be secured by the
Collateral and Proceeds, subject to all terms and conditions of this Agreement.


 


9.                               EVENTS
OF DEFAULT. The occurrence of any of the following shall constitute an “Event
of Default” under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness, or (ii) any other
agreement between Debtor and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Debtor herein shall prove to be incorrect,
false or misleading in any material respect when made; (c) Debtor shall
fail to observe or perform any obligation or agreement contained herein; (d) any
impairment of the rights of Bank in any Collateral or Proceeds or any
attachment or like levy on any property of Debtor; and (e) Bank, in good
faith, believes any or all of the Collateral and/or Proceeds to be in danger of
misuse, dissipation, commingling, loss, theft, damage or destruction, or
otherwise in jeopardy or unsatisfactory in character or value.


 


10.                         REMEDIES.
Upon the occurrence of any Event of Default, Bank shall have the right to
declare immediately due and payable all or any Indebtedness secured hereby and
to terminate any commitments to make loans or otherwise extend credit to
Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the California Uniform Commerical
Code or otherwise provided by law, including without limitation, the right (a) to
contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose of any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any
right, power, privilege or remedy hereunder shall affect or operate as a waiver
of such right, power, privilege or remedy; nor shall any single or partial
exercise of any such right, power, privilege or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power, privilege or remedy. Any waiver, permit, consent or
approval of any kind by Bank of any default hereunder, or any such waiver of
any provisions or conditions hereof, must be in writing and shall be effective
only to the extent set forth in writing. It is agreed that public or private
sales or other dispositions, for cash or on credit, to a wholesaler or retailer
or investor, or user of property of the types subject to this Agreement, or
public auctions, are all commercially reasonable since differences in the
prices generally realized in the different kinds of dispositions are ordinarily
offset by the differences in the costs and credit risks of such dispositions.


 


While an Event of Default
exists: (a) Debtor will deliver to Bank from time to time, as requested by
Bank, current lists of all Collateral and Proceeds; (b) Debtor will not
dispose of any Collateral or Proceeds except on terms approved by Bank; (c) at
Bank’s request, Debtor will assemble and deliver all Collateral and Proceeds,
and books and records pertaining thereto, to Bank at a reasonably convenient
place designated by Bank; and (d) Bank may, without notice to Debtor,
enter onto Debtor’s premises and take possession of the Collateral. Debtor
further agrees that Bank shall have no obligation to process or prepare any
Collateral for sale or other disposition.


 


11.                         DISPOSITION
OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In disposing of Collateral
hereunder, Bank may disclaim all warranties of title, possession, quiet
enjoyment and the like. Any proceeds of any disposition of any Collateral or
Proceeds, or any part thereof, may be applied by Bank to the


 


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payment of expenses
incurred by Bank in connection with the foregoing, including reasonable
attorneys’ fees, and the balance of such proceeds may be applied by Bank
toward the payment of the Indebtedness in such order of application as Bank may from
time to time elect. Upon the transfer of all or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or
Proceeds and shall be fully discharged thereafter from all liability and
responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Bank hereunder with
respect to any of the foregoing so transferred; but with respect to any
Collateral or Proceeds not so transferred Bank shall retain all rights, powers,
privileges and remedies herein given.


 


12.                         STATUTE
OF LIMITATIONS. Until all Indebtedness shall have been paid in full and all
commitments by Bank to extend credit to Debtor have been terminated, the power
of sale or other disposition and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be
exercised by Bank at any time and from time to time irrespective of the fact
that the Indebtedness or any part thereof may have become barred by
any statute of limitations, or that the personal liability of Debtor may have
ceased, unless such liability shall have ceased due to the payment in full of
all Indebtedness secured hereunder.


 


13.                         MISCELLANEOUS.
When there is more than one Debtor named herein: (a) the word “Debtor”
shall mean all or any one or more of them as the context requires; (b) the
obligations of each Debtor hereunder are joint and several; and (c) until
all Indebtedness shall have been paid in full, no Debtor shall have any right
of subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank. Debtor hereby waives any right to require Bank
to (i) proceed against Debtor or any other person, (ii) marshal
assets or proceed against or exhaust any security from Debtor or any other
person, (iii) perform any obligation of Debtor with respect to any
Collateral or Proceeds, and (d) make any presentment or demand, or give
any notice of nonpayment or nonperformance, protest, notice of protest or
notice of dishonor hereunder or in connection with any Collateral or Proceeds.
Debtor further waives any right to direct the application of payments or
security for any Indebtedness of Debtor or indebtedness of customers of Debtor.


 


14.                         NOTICES. All
notices, requests and demands required under this Agreement must be in writing,
addressed to Bank at the address specified in any other loan documents entered
into between Debtor and Bank and to Debtor at the address of its chief
executive office (or principal residence, if applicable) specified below or to
such other address as any party may designate by written notice to each
other party, and shall be deemed to have been given or made as follows: (a) if
personally delivered, upon delivery; (b) if sent by mail, upon the earlier
of the date of receipt or 3 days after deposit in the U. S. mail, first class and
postage prepaid; and (c) if sent by telecopy, upon receipt.


 


15.                         COSTS,
EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Bank immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of Bank’s in-house counsel), expended or incurred by Bank in
connection with (a) the perfection and preservation of the Collateral or
Bank’s interest therein, and (b) the realization, enforcement and exercise
of any right, power, privilege or remedy conferred by this Agreement, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Debtor or in any way affecting any of the Collateral or Bank’s ability to
exercise any of its rights or remedies with respect thereto. All of the
foregoing shall be paid by Owner with interest from the date of demand until
paid in full at a rate per annum equal to the greater of ten percent (10%) or
Bank’s Prime Rate in effect from time to time.


 


16.                         SUCCESSORS;
ASSIGNS; AMENDMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties, and may be amended or modified only
in writing signed by Bank and Debtor.


 


17.                         OBLIGATIONS
OF MARRIED PERSONS. Any married person who signs this Agreement as Debtor
hereby expressly agrees that recourse may be had against his or her
separate property for all his or her Indebtedness to Bank secured by the
Collateral and Proceeds under this Agreement.


 


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18.                         SEVERABILITY OF PROVISIONS. If any provision
of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of
this Agreement.


 


19.                         GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.


 


Debtor
warrants that Debtor is an organization registered under the laws of Delaware.


 


Debtor
warrants that its chief executive office (or principal residence, if
applicable) is located at the following address:  2711 Centerville Road, Suite 400, Wilmington, DE
19808


 


Debtor
warrants that the Collateral (except goods in transit) is located or domiciled
at the following additional addresses:  2401 East Katella Avenue, Suite 300, Anaheim, CA 92806


 


IN WITNESS WHEREOF, this Agreement has been duly executed as of December 28, 2007.


 


 


	
  Willdan
  Group, Inc.

  
	
   

  
	
  By:

  	
   /s/
  Kimberly D. Gant

  	
   

  
	
   

  	
  Kimberly
  D. Gant

  
	
  Title:

  	
  Chief
  Financial Officer

  	
   

  
				



 


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