Exhibit 10.4


 


	
   

  	
   

  	
  CONTINUING SECURITY AGREEMENT

  
	
  WELLS FARGO

  	
   

  	
  RIGHTS TO PAYMENT AND INVENTORY

  



 


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 accounts, deposit
accounts, chattel paper (whether electronic or tangible), instruments,
promissory notes, documents, general intangibles, payment intangibles,
software, letter of credit rights, health-care insurance receivables and other
rights to payment (collectively called “Rights to Payments”), now existing or
at any time hereafter, and prior to the termination hereof, arising (whether
they arise from the sale, lease or other disposition of inventory or from
performance of contracts for service, manufacture. construction, repair or
otherwise or from any other source whatsoever), including all securities,
guaranties, warranties, indemnity agreements, insurance policies, supporting
obligations and other agreements pertaining to the same or the property
described therein, and in all goods returned by or repossessed from Debtor’s
customers, together with a security interest in all inventory, goods held for
sale or lease or to be furnished under contracts for service, goods so leased
or furnished, raw materials, component parts and embedded software, work in
process or materials used or consumed in Debtor’s business and all warehouse
receipts, bills of lading and other documents evidencing goods owned or
acquired by Debtor, and all goods covered thereby, now or at any time
hereafter, and prior to the termination hereof, owned or acquired by Debtor,
wherever located, and all products thereof (collectively called “Inventory”),
whether in the possession of Debtor, warehousemen, bailees or any other person,
or in process of delivery and whether located at Debtor’s places of business or
elsewhere (with all Rights to Payment and Inventory referred to herein
collectively as the “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, all rights to payment,
including returned premiums, with respect to any insurance relating to any of
the foregoing, and 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


 


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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 and, where applicable, in the Collateral 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; (g) all persons appearing to be
obligated on Rights to Payment and Proceeds have authority and capacity to
contract and are bound as they appear to be; (h) all property subject to
chattel paper has been properly registered and filed in compliance with law and
to perfect the interest of Debtor in such property; and (i) all Rights to
Payment and Proceeds comply with all applicable laws concerning form, content
and manner of preparation and execution, including where applicable Federal
Reserve Regulation Z and any State consumer credit laws.


 


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 Inventory and, where applicable, Rights to Payment
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) not to use any Inventory for any unlawful
purpose or in any way that would void any insurance required to be carried in
connection therewith; (d) not to remove Inventory from Debtor’s premises
except in the ordinary course of Debtor’s business; (e) not to permit any
security interest in or lien on the Collateral or Proceeds, including without
limitation, liens arising from the storage of Inventory, except in favor of
Bank; (f) 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, except sales of Inventory to buyers in the ordinary course of
Debtor’s business; (g) to furnish reports to Bank of all acquisitions,
returns, sales and other dispositions of the Inventory in such form and
detail and at such times as Bank may require; (h) to permit Bank to
inspect the Collateral at any time; (i) 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; (j) if requested by Bank, to
receive and use reasonable diligence to collect Rights to Payment and Proceeds,
in trust and as the property of Bank, and to immediately endorse as appropriate
and deliver such Rights to Payment and Proceeds to Bank daily in the exact form in
which they are received together with a collection report in form satisfactory
to Bank; (k) not to commingle Rights to Payment, Proceeds or collections
thereunder with other property; (l) to give only normal allowances and credits
and to advise Bank thereof immediately in writing if they affect any Rights to
Payment or Proceeds in any material respect; (m) on demand, to deliver to Bank
returned property resulting from, or payment equal to, such allowances or
credits on any Rights to Payment or Proceeds or to execute such documents and
do such other things as Bank may reasonably request for the purpose of
perfecting, preserving and enforcing its security interest in such returned
property; (n) from time to time, when requested by Bank, to prepare and deliver
a schedule of all Collateral and Proceeds subject to this Agreement and to
assign in writing and deliver to Bank all accounts, contracts, leases and other
chattel paper, instruments, documents and other evidences thereof; (o) in the
event Bank elects to receive payments of Rights to Payment or 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 (p) 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 all Collateral in good and saleable condition in
accordance with the standards and practices adhered to generally by users and
manufacturers of like property, and to keep all Collateral and Proceeds free
and clear of all defenses, rights of offset and counterclaims.


 


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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 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; (n) to make withdrawals from and to
close deposit accounts or other accounts with any financial institution,
wherever located, into which Proceeds may have been deposited, and to
apply funds so withdrawn to payment of the Indebtedness; (o) to preserve or
release the interest evidenced by chattel paper to which Bank is entitled
hereunder and to endorse and deliver any evidence of title incidental thereto;
and (p) 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


 


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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. With respect to any sale by
Bank of any Collateral subject to this Agreement, Debtor hereby expressly
grants to Bank the right to sell such Collateral using any or all of Debtor’s
trademarks, trade names, trade name rights and/or proprietary labels or marks.
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 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.


 


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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.


 


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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