Document:

Exhibit 10.3

	
  

  	
  Orange County

  BUSINESS BANK

  

 

COMMERCIAL
SECURITY AGREEMENT

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call/Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $8,000,000.00

  	
   

  	
  01-31-2007

  	
   

  	
  07-31-2007

  	
   

  	
  10176244

  	
   

  	
  4A/430

  	
   

  	
   

  	
   

  	
  NG1

  	
   

  	
  /s/ NJG

  

 

References in the shaded
area are for Lender’s use only and do not limit the applicability of this
document to any particular loan or item.

Any
item above containing “***” has been omitted due to text length limitations.

	
  Grantor:

  	
  Willdan Group, Inc.

  	
  Lender:

  	
  Orange County Business Bank

  
	
   

  	
  2401 East Katella Avenue, Suite 300

  	
   

  	
  Main Office

  
	
   

  	
  Anaheim, CA 92806

  	
   

  	
  4675 MacArthur Court

  
	
   

  	
   

  	
   

  	
  Suite 100

  Newport Beach, CA 92660

  

 

THIS COMMERCIAL
SECURITY AGREEMENT dated January 31, 2007, is made and executed between Willdan
Group, Inc. (“Grantor”) and Orange County Business Bank (“Lender”).

GRANT OF
SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a
security interest in the Collateral to secure the Indebtedness
and agrees that Lender shall have the rights stated in this Agreement with
respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL
DESCRIPTION. The word “Collateral” as used in this Agreement means
the following described property, whether now owned or hereafter acquired, whether now
existing or hereafter arising, and wherever located, in which Grantor is giving
to Lender a security interest for the payment of the Indebtedness and performance of all other
obligations under the Note and this Agreement:

All inventory, equipment, accounts
(including but not limited to all health-care-insurance receivables), chattel
paper, instruments (including but not limited to all promissory notes),
letter-of-credit rights, letters of credit, documents, deposit accounts,
investment property, money, other rights to payment and performance, and
general intangibles (including but not limited to all software and all payment
intangibles); all insurance refunds relating to the
foregoing property; all good will relating to the foregoing property; all
records and data and embedded software relating to the foregoing property, and
all equipment, inventory and software to utilize, create, maintain and process
any such records and data on electronic media; and all
supporting obligations relating to the foregoing property; all whether now
existing or hereafter arising, whether now owned or hereafter
acquired or whether now or hereafter subject to any rights in the foregoing
property; and all products and proceeds (including but
not limited to all insurance payments) of or relating to the foregoing
property.

In addition, the word “Collateral”
also includes all the following, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located:

(A)  All accessions,
attachments, accessories, tools, parts, supplies, replacements of and additions
to any of the collateral described herein, whether added now or later.

(B)   All products and produce of any of the property
described in this Collateral section.

(C)   All accounts, general
intangibles, instruments, rents, monies, payments, and all other rights,
arising out of a sale, lease, consignment or other disposition of any of the property described
in this Collateral section.

(D)  All proceeds (including
insurance proceeds) from the sale, destruction, loss, or other disposition of
any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed
the Collateral or from that party’s insurer, whether due to judgment,
settlement or other process.

(E)   All records and data relating to any of the
property described in this Collateral section, whether in the form of a
writing, photograph, microfilm, microfiche,
or electronic media, together with all of Grantor’s right, title, and interest
in and to all computer software required to utilize, create, maintain, and
process any such records or data on electronic media.

GRANTOR’S
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the
Collateral, Grantor represents and
promises to Lender that:

Perfection of Security Interest. Grantor agrees to take
whatever actions are requested by Lender to perfect and continue Lender’s security
interest in the Collateral. Upon request of Lender, Grantor will deliver to
Lender any and all of the documents evidencing or constituting the Collateral,
and Grantor will note Lender’s interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and
will continue in effect even though all or any part of the Indebtedness is paid
in full and even though for a period of time Grantor may not be
indebted to Lender. Collateral does not include leased or rented property.

Notices to Lender. Grantor will promptly notify Lender in writing
at Lender’s address shown above (or such other addresses as Lender may designate from time to time) prior to any (1)
change in Grantor’s name; (2) change in Grantor’s assumed business name(s); (3)
material change in the management of the Corporation Grantor; (4) change in the
authorized signer(s); (5) change in Grantor’s principal office address; (6)
change in

Grantor’s state of organization;
(7) conversion of Grantor to a new or different type of business entity; or (8)
change in any other aspect of Grantor that directly or indirectly relates to any
agreements between Grantor and Lender. No change in Grantor’s name or state of
organization will take effect until
after Lender has received notice.

No Violation.
The
execution and delivery of this Agreement will not violate any law or agreement
governing Grantor or to which Grantor is a party, and its certificate or
articles of incorporation and bylaws do not prohibit any term or condition of
this Agreement.

Enforceability
of Collateral. To the extent the Collateral consists of accounts,
chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the
Collateral is enforceable in accordance with its terms, is genuine, and fully
complies with all applicable laws and regulations concerning form, content and
manner of preparation and execution, and all persons appearing to be obligated
on the Collateral have authority and capacity to contract and are in fact obligated as
they appear to be on the Collateral. At the time any account becomes subject to
a security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
previously shipped or delivered pursuant to a contract of sale, or for services
previously performed by Grantor with or for the account debtor. So long as this Agreement
remains in effect, Grantor shall not, without Lender’s prior written consent,
compromise, settle, adjust, or extend payment under or with regard to any such
Accounts. There shall be no setoffs or counterclaims against any of the
Collateral, and no agreement shall have been made under which any deductions or
discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

Location of
the Collateral. Except in the ordinary course of Grantor’s business,
Grantor agrees to keep the Collateral (or to the extent the Collateral consists
of intangible property such as accounts or general intangibles, the records
concerning the Collateral) at Grantor’s address shown above or at such other locations as
are acceptable to Lender. Upon Lender’s request, Grantor will deliver to Lender
in form satisfactory to Lender a schedule of real properties and Collateral
locations relating to Grantor’s operations, including without limitation the
following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3)
all storage facilities Grantor owns, rents, leases, or uses; and (4) all other
properties where Collateral is or may be located.

Transactions
Involving Collateral. Except for inventory sold or accounts collected in the
ordinary course of Grantor’s business, or as otherwise provided for in this
Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or
dispose of the Collateral. While Grantor is not in default under this Agreement,
Grantor may sell inventory, but only in the ordinary course of its business and
only to buyers who qualify as a buyer in the ordinary course of business. A
sale in the ordinary course of Grantor’s business does not include a transfer
in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent of
Lender. This includes security
interests even if junior in right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any disposition of
the Collateral (for whatever reason) shall be held in trust for Lender and
shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any
sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender. Grantor may sell old
office equipment, furniture and furnishings in accordance with normal
replacement policies and practices.

Title. Grantor represents and
warrants to Lender that Grantor holds good and marketable title to the Collateral,
free and clear of all liens and encumbrances except for the lien of this
Agreement. No financing statement covering any of the Collateral is on file in
any public office other than those which reflect the security interest created by this
Agreement or to which Lender has specifically consented. Grantor shall defend
Lender’s rights in the Collateral
against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep
and maintain, and to cause others to keep and maintain, the Collateral in good
order, repair and condition at all times while this Agreement remains in effect. Grantor
further agrees to pay when due all claims for work done on, or services
rendered or material furnished in connection with the Collateral so that no
lien or encumbrance may ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender’s
designated representatives and agents shall have the right at all reasonable
times to examine and inspect the
Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due
all taxes, assessments and liens upon the Collateral, its use or operation,
upon this Agreement,
upon any promissory note or notes evidencing the Indebtedness, or upon any of
the other Related Documents. Grantor may withhold any such payment or may elect
to contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender’s
interest in the Collateral is not jeopardized in Lender’s sole opinion. If the
Collateral is subjected to a lien which is not discharged within fifteen (15)
days, Grantor shall deposit with Lender cash, a sufficient corporate surety
bond or other security satisfactory to Lender in an amount adequate to provide for
the discharge of the lien plus any interest, costs, reasonable attorneys’ fees
or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against
the Collateral. Grantor shall name Lender as an additional obligee under any
surety bond furnished in the contest proceedings. Grantor further agrees to
furnish Lender with evidence that such taxes, assessments, and governmental and
other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect
to contest any lien if Grantor is in good faith conducting an appropriate proceeding
to contest the obligation to pay and so long as Lender’s interest in the
Collateral is not jeopardized.

Compliance with Governmental
Requirements. Grantor shall comply promptly with all laws, ordinances,
rules and regulations of all governmental authorities, now or hereafter in
effect, applicable to the ownership, production, disposition, or use of the
Collateral, including all laws or regulations relating to the undue erosion of highly-erodible
land or relating to the conversion of wetlands for the production of an
agricultural product or commodity. Grantor
may contest in good faith any such law, ordinance or regulation and withhold
compliance during any proceeding, including appropriate appeals, so long as
Lender’s interest in the Collateral, in Lender’s opinion, is not jeopardized.

Hazardous Substances. Grantor represents and
warrants that the Collateral never has been, and never will be so long as this
Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or
for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous
Substance. The representations and warranties contained herein are based on
Grantor’s due diligence in investigating
the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives
any future claims against Lender for indemnity
or contribution in the event Grantor becomes liable for cleanup or other costs
under any Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and
all claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify and defend shall survive the
payment of the Indebtedness and the satisfaction of this Agreement.

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Maintenance of Casualty Insurance. Grantor shall procure
and maintain all risks insurance, including without limitation fire, theft and
liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and
issued by a company or companies reasonably acceptable to Lender. Grantor, upon
request of Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender. Grantor stipulates that coverages
will not be cancelled or diminished without at least thirty (30) days’ prior
written notice to Lender and not including any disclaimer of the insurer’s
liability for failure to give such a notice. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Grantor or any other person. In
connection with all policies covering assets in which Lender holds or is
offered a security interest, Grantor will provide Lender with such loss payable
or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any
insurance as required under this Agreement, Lender may (but shall not be
obligated to) obtain such insurance as Lender deems appropriate, including
if Lender so chooses “single interest insurance,” which will cover only Lender’s
interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly
notify Lender of any material loss or damage to the Collateral, whether or not
such casualty
or loss is covered by insurance. Lender may make proof of loss if Grantor fails
to do so within fifteen (15) days of the casualty. All proceeds of any
insurance on the Collateral, including accrued proceeds thereon, shall be held
by Lender as part of the Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not
been disbursed within six (6) months after their receipt and which Grantor has not
committed to the repair or restoration of the Collateral shall be used to
prepay the Indebtedness.

Insurance Reports. Grantor, upon request of
Lender, shall furnish to Lender reports on each existing policy of insurance
showing such information as Lender
may reasonably request including the following: (1) the name of the insurer;
(2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on
the basis of which insurance has been obtained and the manner of determining
that value; and (6) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable,
the cash value or replacement cost of the Collateral.

Financing Statements. Grantor authorizes Lender
to file a UCC financing statement, or alternatively, a copy of this Agreement
to perfect Lender’s security interest. At Lender’s request, Grantor
additionally agrees to sign all other documents that are necessary to perfect,
protect, and continue Lender’s security interest in the Property. Grantor will
pay all filing fees, title transfer fees, and other fees and costs involved
unless prohibited by law or unless Lender is required by law to pay such fees and
costs. Grantor irrevocably appoints Lender to execute documents necessary to
transfer title if there is a default. Lender may file a copy of this Agreement as a
financing statement. If Grantor changes Grantor’s name or address, or the name
or address
of any person granting a security interest under this Agreement changes,
Grantor will promptly notify the Lender of such change.

GRANTOR’S
RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this Agreement or
the Related Documents, provided that Grantor’s right to possession and
beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender’s security interest
in such Collateral. Until otherwise notified by Lender, Grantor may collect any
of the Collateral consisting of accounts. If Lender at any time has possession
of any Collateral, whether before or after an Event of Default, Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral if Lender takes such action for that purpose as Grantor shall
request or as Lender, in Lender’s sole discretion, shall deem appropriate under
the circumstances, but failure to honor any request by Grantor shall not of itself be
deemed to be a failure to exercise
reasonable care. Lender shall not be required to take any steps necessary to
preserve any rights in the Collateral against prior parties, nor to protect,
preserve or maintain any security interest given to secure the Indebtedness.

LENDER’S EXPENDITURES. If any action or
proceeding is commenced that would materially affect Lender’s interest in the
Collateral or if Grantor fails to comply with any provision of this Agreement or any Related
Documents, including but not limited to Grantor’s failure to discharge or pay
when due any amounts Grantor is required to discharge or pay under this
Agreement or any Related Documents, Lender on Grantor’s behalf may (but shall
not be obligated to) take any
action that Lender deems appropriate, including but not limited to discharging
or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the
Collateral and paying all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses will become a part of the Indebtedness and, at Lender’s option, will
(A) be payable on demand; (B) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (1) the term of any applicable insurance policy; or (2)
the remaining term of the Note; or (C) be treated as a balloon payment which
will be due and payable at the Note’s
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender
may be entitled upon Default.

DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Payment Default. Grantor fails to make any payment when due under
the Indebtedness within ten (10) days of due date.

Other Defaults. Grantor fails to comply
with or to perform any other material term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents or to comply
with or to perform any term, obligation, covenant or condition contained in any
other agreement between Lender
and Grantor within twenty (20) days of notice from Lender.

False Statements. Any warranty,
representation or statement made or furnished to Lender by Grantor or on
Grantor’s behalf under this Agreement or the Related Documents is false or misleading in any material respect,
either now or at the time made.

Defective Collateralization. This Agreement or any of
the Related Documents ceases to be in full force and effect (including failure
of any collateral document to create a valid and perfected security Interest or
lien) at any time and for any reason. If such event occurs, Borrower and Lender
will in a timely manner cure such
defect.

Insolvency. The dissolution or
termination of Grantor’s existence as a going business, the insolvency of
Grantor, the appointment of a receiver for any part of Grantor’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.

 3
 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any
governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Grantor’s
accounts, including deposit accounts, with Lender. However, this Event of
Default shall not apply if there is a
good faith dispute by Grantor as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding,
in an amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding
events occurs with respect to any Guarantor of any of the Indebtedness or
Guarantor dies or becomes incompetent or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.

Adverse Change. A material adverse change
occurs in Grantor’s financial condition, which causes Lender to believe the prospect
of payment or performance of the
Indebtedness is impaired.

Cure Provisions. If any default, other than a default in payment is curable and if
Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding
twelve (12) months, it may be cured if Grantor, after receiving written notice
from Lender demanding cure of such
default: (1) cures the default within twenty (20) days; or (2) if the cure
requires more than twenty (20) days, immediately initiates steps which
Lender deems in Lender’s sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.

RIGHTS AND
REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at
any time thereafter, Lender shall have all the rights of a secured party under the
Delaware Uniform Commercial Code. In addition and without limitation, Lender
may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness. Lender may declare the
entire Indebtedness, including any prepayment penalty which Grantor would be
required to pay, immediately due
and payable, without notice of any kind to Grantor.

Assemble Collateral. Lender may require
Grantor to deliver to Lender all or any portion of the Collateral and any and
all certificates of title and other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full
power to enter upon the property of Grantor to take possession of and remove
the Collateral. If the Collateral
contains other goods not covered by this Agreement at the time of repossession,
Grantor agrees Lender may take such other goods, provided that Lender
makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full
power to sell, lease, transfer, or otherwise deal with the Collateral or
proceeds thereof in Lender’s own name or that of Grantor. Lender may sell the Collateral
at public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Lender will give
Grantor, and other persons as required by law, reasonable notice of the time
and place of
any public sale, or the time after which any private sale or any other
disposition of the Collateral is to be made. However, no notice need be provided to any person
who, after Event of Default occurs, enters into and authenticates an agreement
waiving that person’s right to notification of sale. The requirements of
reasonable notice shall be met if such notice is given at least ten (10) days
before the time of the sale or disposition. All expenses relating to the
disposition of the Collateral, including without limitation the expenses of
retaking, holding, insuring, preparing for sale and selling the Collateral,
shall become a part of the Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint Receiver. Lender shall have the
right to have a receiver appointed to take possession of all or any part of the
Collateral, with the power to protect and preserve the Collateral, to operate
the Collateral preceding foreclosure or sale, and to collect the Rents from the
Collateral and apply the proceeds, over and above the cost of the receivership,
against the Indebtedness. The receiver may serve without bond if permitted by
law. Lender’s right
to the appointment of a receiver shall exist whether or not the apparent value
of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a
person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or
through a receiver, may collect the payments, rents, income, and revenues from
the Collateral. Lender may at any time in Lender’s discretion transfer any
Collateral into Lender’s own name or that of Lender’s nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as security
for the Indebtedness or apply it to payment of the Indebtedness in such order of preference
as Lender may determine. Insofar as the Collateral consists of accounts,
general intangibles, insurance policies, instruments, chattel paper, choses in
action, or similar property, Lender may demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender
may determine, whether or not Indebtedness or Collateral is then due. For these
purposes, Lender may, on behalf of and in the name of Grantor, receive, open
and dispose of mail addressed to Grantor; change any address to which mail and
payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell
any or all of the Collateral, Lender may obtain a judgment against Grantor for
any deficiency remaining on the Indebtedness due to Lender after application of
all amounts received from the exercise of the rights provided in this
Agreement. Grantor shall be liable for a deficiency even if the transaction
described in this subsection is a  sale of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all
the rights and remedies of a secured creditor under the provisions of the
Uniform Commercial Code, as may
be amended from time to time. In addition, Lender shall have and may exercise
any or all other rights and remedies it may have available at law, in equity,
or otherwise.

Election of Remedies. Except as may be
prohibited by applicable law, all of Lender’s rights and remedies, whether
evidenced by this Agreement, the Related Documents, or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s
failure to perform, shall not affect Lender’s right to declare a default and
exercise its remedies.

MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are a part of this Agreement:

Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the matters set forth in this
Agreement. No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 4
 

Attorneys’ Fees; Expenses. Grantor agrees to pay
upon demand all of Lender’s costs and expenses, including Lender’s reasonable
attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and
Grantor shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender’s reasonable attorneys’ fees and legal expenses whether
or not there is a lawsuit, including reasonable attorneys’ fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-Judgment collection services. Lender
may also recover from Grantor all court, alternative dispute resolution or other
collection costs (including, without limitation, fees and charges of collection
agencies) actually incurred by
Lender.

Caption Headings. Caption headings in this
Agreement are for convenience purposes only and are not to be used to interpret
or define the provisions of this
Agreement.

Governing Law. With respect to
procedural matters related to the perfection and enforcement of Lender’s rights
against the Collateral, this Agreement will be governed by
federal law applicable to Lender and to the extent not preempted by federal
law, the laws of the State of Delaware. In all other respects, this Agreement
will be governed by federal law applicable to Lender and, to the extent not
preempted by federal law, the laws of the State of California without regard to
its conflicts of law provisions. However, if there ever is a question about
whether any provision of this Agreement is valid or enforceable, the provision
that is questioned will be governed by whichever state or federal
law would find the provision to be valid and enforceable. The loan transaction
that is evidenced by the Note and this Agreement has been applied for, considered,
approved and made, and all necessary loan documents have been accepted by
Lender in the State of California.

Choice of Venue. If there is a lawsuit,
Grantor agrees upon Lender’s request to submit to the jurisdiction of the
courts of Orange County, State of California.

No Waiver by Lender. Lender shall not be
deemed to have waived any rights under this Agreement unless such waiver is
given in writing and signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any other
right. A waiver by Lender of a provision of this Agreement shall not prejudice
or constitute a waiver of Lender’s right otherwise to demand strict compliance
with that provision or any other provision of this Agreement. No prior waiver
by Lender, nor any course of dealing between Lender and Grantor, shall
constitute a waiver of any of Lender’s rights or of any of Grantor’s
obligations as to any future transactions. Whenever the consent of Lender is
required under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent to subsequent instances where
such consent is required and in
all cases such consent may be granted or withheld in the sole discretion of
Lender.

Notices. Any notice required to
be given under this Agreement shall be given in writing, and shall be effective
when actually delivered, when actually received by telefacsimile (unless otherwise
required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses shown
near the beginning of this Agreement. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying that
the purpose
of the notice is to change the party’s address. For notice purposes, Grantor
agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise provided or
required by law, if there is more than one Grantor, any notice given by Lender
to any Grantor is deemed to be notice given to all Grantors.

Power of Attorney. Grantor hereby appoints
Lender as Grantor’s irrevocable attorney-in-fact for the purpose of executing
any documents necessary to perfect, amend, or to continue the security interest
granted in this Agreement or to demand termination of filings of other secured
parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction
of any financing statement or of this Agreement for use as a financing
statement Grantor will reimburse Lender for all expenses for the perfection and
the continuation of the perfection of Lender’s security interest in the Collateral.

Severability. If a court of competent
jurisdiction finds any provision of this Agreement to be illegal, invalid, or
unenforceable as to any circumstance, that finding shall not make the offending
provision illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it
becomes legal, valid and enforceable. If the offending provision cannot be so
modified, it shall be considered deleted from this Agreement. Unless otherwise required
by law, the illegality, invalidity, or unenforceability of any provision of
this Agreement shall not affect
the legality, validity or enforceability of any other provision of this
Agreement.

Successors and Assigns. Subject to any
limitations stated in this Agreement on transfer of Grantor’s interest, this
Agreement shall be binding upon and inure to the benefit of the parties, their
successors and assigns. If ownership of the Collateral becomes vested in a
person other than Grantor, Lender, without notice to Grantor, may deal with Grantor’s
successors with reference to this Agreement and the Indebtedness by way of
forbearance or extension without
releasing Grantor from the obligations of this Agreement or liability under the
Indebtedness.

Survival of Representations and
Warranties. All representations, warranties, and agreements made by Grantor in this
Agreement shall survive the execution
and delivery of this Agreement, shall be continuing in nature, and shall remain
in full force and effect until such time as Grantor’s Indebtedness shall be
paid in full.

Time is of the Essence. Time is of the essence in
the performance of this Agreement.

DEFINITIONS. The following
capitalized words and terms shall have the following meanings when used in this
Agreement. Unless specifically stated to the contrary, all references to dollar
amounts shall mean amounts in lawful money of the United States of America.
Words and terms used in the singular shall include the plural, and the plural
shall include the singular, as the context may require. Words and terms not
otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement. The word “Agreement” means this Commercial
Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Commercial Security Agreement from time
to time.

Borrower. The word “Borrower” means
Willdan Group, Inc. and includes all co-signers and co-makers signing the Note
and all their successors and assigns.

Collateral. The word “Collateral”
means all of Grantor’s right, title and interest in and to all the Collateral
as described in the Collateral Description section of this Agreement.

Default. The word “Default” means
the Default set forth in this Agreement in the section titled “Default”.

 5
 

Environmental Laws. The words “Environmental Laws” mean any and all
state, federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended,
42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of
Division 20 of the California Health and Safety Code, Section 25100, et seq.,
or other applicable state or
federal laws, rules, or regulations adopted pursuant thereto.

Event of Default. The words “Event of Default” mean any of the
events of default set forth in this Agreement in the default section of this
Agreement.

Grantor. The word “Grantor” means Willdan Group, Inc..

Guarantor. The word “Guarantor” means any guarantor, surety,
or accommodation party of any or all of the Indebtedness.

Guaranty. The word “Guaranty” means the guaranty from
Guarantor to Lender, including without limitation a guaranty of all or part of
the Note.

Hazardous Substances. The words “Hazardous
Substances” mean materials that, because of their quantity, concentration or
physical, chemical or infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed
of, generated, manufactured, transported or otherwise handled. The words “Hazardous
Substances” are used in their very broadest sense and include without
limitation any and all hazardous or toxic substances, materials or waste as
defined by or listed under the Environmental Laws. The term “Hazardous
Substances” also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.

Indebtedness. The word “Indebtedness”
means the indebtedness evidenced by the Note or Related Documents, including
all principal and interest together with all other indebtedness and costs and
expenses for which Grantor is responsible under this Agreement or under any of
the Related Documents.

Lender. The word “Lender” means Orange County Business
Bank, its successors and assigns.

Note. The word “Note” means the
Note executed by Willdan Group, Inc. in the principal amount of $8,000,000.00
dated January 31, 2007, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the note or credit
agreement.

Property. The word “Property”
means all of Grantor’s right, title and interest in and to all the Property as
described in the “Collateral Description” section of this Agreement.

Related Documents. The words “Related
Documents” mean all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS
DATED JANUARY 31, 2007.

THIS AGREEMENT IS GIVEN UNDER SEAL
AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE
EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

	
  GRANTOR:

  
	
   

  
	
   

  
	
  WILLDAN GROUP, INC.

  
	
  By :

  	
  /s/ Win S. Westfall

  	
  (Seal)

  
	
   

  	
  Win S. Westfall, President/CEO of Willdan

  
	
   

  	
  Group, Inc.

  
				

 

 6Exhibit
10.10

WILLDAN GROUP, INC.

AMENDED AND RESTATED

2006 EMPLOYEE STOCK PURCHASE PLAN

1.                                      PURPOSE.  The purpose of this Willdan Group, Inc.
Amended and Restated 2006 Employee Stock Purchase Plan (the “Plan”) is to
encourage stock ownership by eligible employees of Willdan Group, Inc. (the “Company”)
and its Subsidiaries, excluding Public Agency Resource (PARs), and to provide
them with an incentive to contribute to the profitability and success of the
Company.  The Plan is intended to qualify
as an “employee stock purchase plan” under Section 423 of the Code and will be
maintained for the exclusive benefit of eligible employees of the Company and
its Subsidiaries.

2.                                      DEFINITIONS.  For purposes of the Plan, in addition to the
terms defined in Section 1, the following terms are defined:

(a)                      “Board” means the Board of Directors of the
Company.

(b)                      “Book Account” means the book entry account
maintained on behalf of  each Participant
by the Company for the purpose of accounting for the cash contributions withheld
from payroll pending an investment in Stock.

(c)                      “Code” means the Internal Revenue Code of
1986, as amended.

(d)                      “Earnings”
means a Participant’s salary or wages, including overtime (but excluding
bonuses) for services performed for the Company and its Subsidiaries and
received by a Participant for services rendered during an Offering Period.

(e)                      “Fair Market Value”
means the closing price of the Stock on the relevant date as reported on the
Nasdaq Global Market (or any national securities exchange or quotation system
on which the Stock is then listed), or if there were no sales on that date the
closing price on the next preceding date for which a closing price was
reported.

(f)                        “Offering Period”
means the six-month period beginning on each January 1 and ending each
June 30 and the six-month period beginning on each July 1 and ending on each
December 31; provided, however, that the initial offering period shall commence on February 10, 2007 and end on June
30, 2007.

(g)                     “Parent” means
any parent corporation as defined in Code Section 424(e).

(h)                     “Participant”
means an employee of the Company or a qualifying Subsidiary who is
participating in the Plan.

(i)                        “Purchase Right”
means a Participant’s option to purchase Stock that is deemed to be outstanding
during a Offering Period.  A Purchase
Right represents an “option” under Section 423 of the Code.

(j)                        “Stock”
means the common stock of the Company.

(k)                    “Subsidiary”
means any subsidiary corporation as defined in Code Section 424(f).

3.                                      ADMINISTRATION.

(a)                      BOARD ADMINISTRATION.  The Plan
will be administered by the Board.  The
Board may delegate its administrative duties and authority (other than its
authority to amend or terminate the Plan) to any Board committee or to any
officers or employees or committee thereof as the Board may designate (in which
case references to the Board will be deemed to refer to the administrator to
which such duties and authority have been delegated).  The Board will have full authority to adopt,
amend, suspend, waive, and rescind rules and regulations and appoint agents as
it deems necessary or advisable to administer the Plan, to correct any defect
or supply any omission or reconcile any inconsistency in the Plan and to
construe and interpret the Plan and rules and regulations thereunder, and to
make all other decisions and determinations under the Plan (including
determinations relating to eligibility). 
No person acting in connection with the administration of the Plan will,
in that capacity, participate in deciding any matter relating to his or her
participation in the Plan.

(b)                      WAIVERS.  The Board may waive or modify any requirement
that a notice or election be made or filed under the Plan a specified period in
advance on an individual case or by adopting a rule or regulation under the
Plan, without amending the Plan.

(c)                      OTHER ADMINISTRATIVE PROVISIONS.  The Company
will furnish information from its records as directed by the Board, and such
records, including a Participant’s Earnings, will be conclusive on all persons
unless determined by the Board to be incorrect. 
Each Participant and other person claiming benefits under the Plan must
furnish to the Company in writing a current mailing address and any other
information as the Board may reasonably request.  Any communication, statement, or notice
mailed with postage prepaid to any such Participant or other person at the last
mailing address filed with the Company will be deemed sufficiently given when
mailed and will be binding upon the named recipient.  The Plan will be administered on a reasonable
and nondiscriminatory basis and uniform rules will apply to all persons
similarly situated.  All Participants
will have equal rights and privileges (subject to the terms of the Plan) with
respect to Purchase Right outstanding during any given Offering Period in
accordance with Code Section 423(b)(5) .

4.                                      STOCK SUBJECT TO PLAN.  Subject to
adjustment as provided in Section 8(a), the total number of shares of Stock
reserved and available for issuance or which may be otherwise acquired upon
exercise of Purchase Rights under the Plan will be 300,000; provided, however,
that not more than 100,000 shares of Stock shall be available for issuance
during any one calendar year.  Any shares
of Stock delivered by the Company under the Plan may consist, in whole or in
part, of authorized and unissued shares or treasury shares or shares of Stock
purchased on the open market.  If, at the
end of any Offering Period, the number of shares of Stock with respect to which
Purchase Rights are to be exercised exceeds the number of shares of Stock then
available under the Plan, the Board shall make a pro rata allocation of the
shares of Stock remaining available for purchase in as uniform a manner as
shall be practicable and as it shall determine to be equitable.

 2
 

5.                                      ENROLLMENT AND CONTRIBUTIONS.

(a)                      ELIGIBILITY.  An employee of the Company or any
Subsidiary designated by the Board may be enrolled in the Plan for any Offering
Period if such employee is employed by the Company or a Subsidiary authorized
to participate in the Plan on the first day of the Offering Period, unless one
of the following applies to the employee:

(i)                                    such person is customarily employed by the Company or
a Subsidiary for 20 hours or less a week; or

(ii)                                such person is customarily employed by the Company or
a Subsidiary for not more than five months in any calendar year.

The
Company will notify an employee of the date as of which he or she is eligible
to enroll in the Plan, and will make available to each eligible employee the
necessary enrollment forms.

(b)                      INITIAL ENROLLMENT.  An employee who is eligible under
Section 5(a) (or who will become eligible on or before a given Offering Period)
may, after receiving current information about the Plan, initially enroll in
the Plan by executing and filing with the Company a properly completed
enrollment form, including the employee’s election as to the rate of payroll
contributions for the Offering Period. 
To be effective for any Offering Period, such properly executed
enrollment form must be filed with the Company at such time prior to such
Offering Period as may be determined by the Board.

(c)                      AUTOMATIC RE-ENROLLMENT FOR SUBSEQUENT OFFERING
PERIODS.  A Participant whose enrollment in, and
payroll contributions under, the Plan continues throughout a Offering Period
will automatically be re-enrolled in the Plan for the next Offering Period
unless (i) the Participant terminates enrollment before the next Offering
Period in accordance with Section 7(a), or (ii) the Participant is ineligible
to participate under Section 5(a).  The
initial rate of payroll contributions for a Participant who is automatically
re-enrolled for a Offering Period will be the same as the rate of payroll
contribution in effect at the end of the preceding Offering Period, unless the
Participant files a new properly executed enrollment form designating a
different rate of payroll contributions and such new enrollment form is filed
with the Company at such time prior to the beginning of the next Offering
Period as may be determined by the Board.

(d)                      PAYROLL CONTRIBUTIONS.  A
Participant will make contributions under the Plan only by means of payroll
deductions from Earnings for each payroll period that is paid during the
Offering Period, at the rate elected by the Participant in his or her
enrollment form in effect for that Offering Period (except that such rate may
be changed during the Offering Period to the extent permitted below).  The rate of payroll contributions elected by
a Participant may not be less than one percent (1%) nor more than ten percent
(10%) of the Participant’s Earnings for each payroll period, and only whole
percentages may be elected; provided, however, that the Board may specify a
lower minimum rate and higher maximum rate, subject to Section 9(b).  Notwithstanding the above, a Participant’s
payroll contributions will be adjusted downward by the Company as necessary to
ensure that the limit on the amount of Stock 

 3
 

purchased for an Offering Period set
forth in Section 6(a)(iii) is not exceeded. 
A Participant may elect to increase, decrease, or discontinue payroll
contributions for a future Offering Period by filing a new enrollment form
designating a different rate of payroll contributions, which properly executed
form must be filed with the Company at such time prior to the beginning of an
Offering Period as may be determined by the Board to be effective for that
Offering Period.  In addition, a
Participant may elect to discontinue payroll contributions during an Offering
Period by filing a new properly executed enrollment form, such change to be
effective for the next payroll after the Participant’s new enrollment form is
filed with the Company.

(e)                      CREDITING PAYROLL CONTRIBUTIONS TO BOOK ACCOUNTS.  All payroll
contributions by a Participant under the Plan will be credited to a Book
Account maintained by the Company on behalf of such Participant. The Company
will credit payroll contributions by a Participant to such Book Account as soon
as practicable after the contributions are withheld from such Participant’s Earnings.

(f)                        NO INTEREST ON BOOK ACCOUNTS.  No interest
will be credited or paid on cash balances in the Book Accounts pending
investment in Stock.

6.                                      PURCHASES OF STOCK.

(a)                      PURCHASE RIGHTS.  Enrollment in the Plan for any
Offering Period by a Participant will constitute a grant by the Company of a
Purchase Right to such Participant for such Offering Period as long as the
participant remains eligible pursuant to Section 5(a) hereof.  Each Purchase Right will be subject to the
following terms:

(i)                                    The purchase price of each share of Stock purchased
for each Offering Period will equal 95% of the Fair Market Value of a share of
Stock on the last day of an Offering Period;

(ii)                                The number of shares of Stock that may be purchased
upon exercise of the Purchase Right for a Offering Period will equal the number
of shares that can be purchased at the purchase price specified in Section
6(a)(i) with the aggregate amount credited to the Participant’s Book Account as
of the last day of an Offering Period.

(iii)                            Notwithstanding
the foregoing, the maximum number of shares of Stock that any one individual
may acquire upon exercise of his or her Purchase Right with respect to any one
Offering Period is 10,000, subject to adjustments pursuant to Section 8(a) (the
“Individual Limit”).  The Board may amend the Individual Limit,
effective no earlier than the first Offering Period commencing after the
adoption of such amendment, without stockholder approval.

(iv)                               The Purchase Right will be automatically exercised on
the last day of the Offering Period.

 4
 

(v)                                   Payments by a Participant for Stock purchased under a
Purchase Right will be made only through payroll deduction in accordance with
Section 5(d) and (e).

(vi)                               The Purchase Right will expire on the earlier of the
last day of the Offering Period or the date on which the Participant’s
enrollment in the Plan terminates.

(b)                      LIMITS ON SHARE PURCHASES. 
Notwithstanding anything else contained herein, any person who is
otherwise an eligible to participate in this Plan shall not be granted any
Purchase Right (or any Purchase Right granted such person shall be subject to
compliance with the following limitations) or other right to purchase shares
under this Plan to the extent:

(i)                                    it would, if
exercised, cause the person to own stock (within the meaning of Section
423(b)(3) of the Code) possessing 5% or more of the total combined voting power
or value of all classes of stock of the Company, or of any Parent, or of any
Subsidiary; or

(ii)                                such Purchase Right
causes such individual to have rights to purchase stock under this Plan and any
other plan of the Company, any Parent, or any Subsidiary which is qualified
under Section 423 of the Code which accrue at a rate which exceeds $25,000 of
the fair market value of the stock of the Company, of any Parent, or of any
Subsidiary (determined at the time the right to purchase such stock is granted,
before giving effect to any discounted purchase price under any such plan) for
each calendar year in which such right is outstanding at any time.

For purposes of
the foregoing, a right to purchase stock accrues when it first become
exercisable during the calendar year.  In
determining whether the stock ownership of any employee equals or exceeds the
5% limit set forth above, the rules of Section 424(d) of the Code
(relating to attribution of stock ownership) shall apply, and stock which the employee
may purchase under outstanding purchase rights shall be treated as stock owned
by the employee.

(c)                      PURCHASE OF STOCK.  At or as promptly as practicable
after the last day of an Offering Period, amounts credited to each Participant’s
Book Account will be applied by the Company to purchase Stock, in accordance
with the terms of the Plan.  Shares of
Stock will be purchased from the Company or in the open market, as the Board
determines.  The Company will aggregate
the amounts in all Book Accounts when purchasing Stock, and shares purchased
will be allocated to each Participant in proportion to the balance allocated from
each Participant’s Book Account.  After
completing purchases for each Offering Period (which will be completed in not
more than 15 calendar days after the last day of an Offering Period), the
Company’s stock transfer agent will issue to each Participant a stock
certificate for the number of shares of Stock purchased by such Participant.

 5
 

(d)                      EXCESS ACCOUNT BALANCES.  If any
amounts remain in a Book Account following the date on which the Company
purchases Stock for an Offering Period for any reason, such amounts will be
returned to the Participant as promptly as practicable.

7.                                      TERMINATION AND DISTRIBUTIONS.

(a)                      TERMINATION OF ENROLLMENT.  A
Participant’s enrollment in the Plan will terminate upon (i) the beginning of
any payroll period or Offering Period that begins after he or she files a written
notice of termination of enrollment with the Company, provided that such
Participant will continue to be deemed to be enrolled with respect to any
completed Offering Period for which purchases have not been completed, (ii)
such time as the Participant becomes ineligible to participate under Section
5(a) of the Plan, or (iii) the termination of the Participant’s employment by
the Company and its Subsidiaries.  An
employee whose enrollment in the Plan terminates may again enroll in the Plan
as of any subsequent Offering Period if he or she satisfies the eligibility
requirements of Section 5(a) as of such Offering Period.  A Participant’s election to discontinue
payroll contributions will not constitute a termination of enrollment.

(b)                      DISTRIBUTION.  As soon as practicable after a
Participant’s enrollment in the Plan terminates, amounts in the Participant’s
Book Account which resulted from payroll contributions will be repaid to the
Participant.  If a Participant’s
termination of enrollment results from his or her death, all amounts payable
will be paid to his or her designated beneficiary or beneficiaries and if no
such designation is made, to his or her estate.

8.                          ADJUSTMENTS; POSSIBLE EARLY TERMINATION OF
PURCHASE RIGHTS

(a)                      ADJUSTMENTS.  Upon or in contemplation of
any reclassification, recapitalization, stock split (including a stock split in
the form of a stock dividend), or reverse stock split; any merger, combination,
consolidation, or other reorganization; split-up, spin-off, or any similar
extraordinary dividend distribution in respect of the Stock (whether in the
form of securities or property); any exchange of Stock or other securities of
the Company, or any similar, unusual or extraordinary corporate transaction in
respect of the Stock; or a sale of substantially all the assets of the Company
as an entirety occurs; then the Board shall equitably and proportionately
adjust (1) the number and type of shares or the number and type of other
securities that thereafter may be made the subject of Purchase Rights
(including the specific maxima and numbers of shares set forth elsewhere in
this Plan), (2) the number, amount and type of shares (or other securities or
property) subject to any or all outstanding Purchase Rights, (3) the purchase price
of any or all outstanding Purchaser Rights, and/or (4) the securities,
cash or other property deliverable upon exercise of any outstanding Purchase
Rights, in each case to the extent necessary to preserve (but not increase) the
level of incentives intended by this Plan and the then-outstanding Purchase
Rights.

Upon the occurrence of any event described in the
preceding paragraph, or any other event in which the Company does not survive
(or does not survive as a public company in respect of its Stock); then the Board
may make provision for a cash payment or for the substitution or exchange of
any or all outstanding Purchase Rights for cash, securities or property 

 6
 

to be
delivered to the holders of any or all outstanding Purchase Rights based upon
the distribution or consideration payable to holders of the Stock upon or in
respect of such event.

The Board may
adopt such valuation methodologies for outstanding Purchase Rights as it deems
reasonable in the event of a cash or property settlement and, without
limitation on other methodologies, may base such settlement solely upon the
excess (if any) of the amount payable upon or in respect of such event over the
purchase price of the Purchase Right.

In any of such
events, the Board may take such action sufficiently prior to such event to the
extent that the Board deems the action necessary to permit the Participant to
realize the benefits intended to be conveyed with respect to the underlying
shares in the same manner as is or will be available to stockholders generally.

(b)                      POSSIBLE EARLY TERMINATION OF PLAN AND PURCHASE
RIGHTS.  Upon a dissolution or liquidation of
the Company, or any other event described in Section 8(a) that the Company does
not survive or does not survive as a publicly-traded company in respect of its
Stock, as the case may be, the Plan and, if prior to the last day of an
Offering Period, any outstanding Purchase Right granted with respect to that
Offering Period shall terminate, subject to any provision that has been
expressly made by the Board for the survival, substitution, assumption,
exchange or other settlement of the Plan and Purchase Rights.  In the event a Participant’s Purchase Right
is terminated pursuant to this Section 8(b) without a provision having been
made by the Board for a substitution, exchange or other settlement of the
Purchase Right, such Participant’s Book Account shall be paid to him or her in
cash without interest.

9.                                      GENERAL PROVISIONS.

(a)                      COSTS.  Costs and expenses incurred in the
administration of the Plan and maintenance of Book Accounts will be paid by the
Company, to the extent provided in this Section 9(a).  Any brokerage fees and commissions for the
purchase of Stock under the Plan will be paid by the Company, but any brokerage
fees and commissions for the sale of Stock by a Participant will be borne by
such Participant.

(b)                      COMPLIANCE WITH SECTION 423.  It is the
intent of the Company that this Plan comply in all respects with applicable
requirements of Section 423 of the Code and regulations thereunder.  Accordingly, if any provision of this Plan
does not comply with such requirements, such provision will be construed or
deemed amended to the extent necessary to conform to such requirements.

(c)                      COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS.  The Plan,
the granting and exercising of Purchase Rights hereunder, and the other
obligations of the Company under the Plan will be subject to all applicable
federal and state laws, rules, and regulations, and to such approvals by any
regulatory or governmental agency as may be required.  The Company may, in its discretion, postpone
the issuance or delivery of Stock upon exercise of Purchase Rights until
completion of such registration or qualification of such Stock or other
required action under any federal or state law, rule, or regulation, or the
laws of any country in 

 7
 

which employees of the Company and a
Subsidiary who are nonresident aliens and who are eligible to participate
reside, or other required action with respect to any automated quotation system
or stock exchange upon which the Stock or other Company securities are
designated or listed, or compliance with any other contractual obligation of
the Company, as the Company may consider appropriate.  In addition, the Company may require any
Participant to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Stock in
compliance with applicable laws, rules, and regulations, designation or listing
requirements, or other contractual obligations.

(d)                      LIMITS ON ENCUMBERING RIGHTS.  No right or
interest of a Participant under the Plan, including any Purchase Right, may be
pledged, encumbered, or hypothecated to or in favor of any party, subject to
any lien, obligation, or liability of such Participant, or otherwise assigned,
transferred, or disposed of except pursuant to the laws of descent or
distribution, and any right of a Participant under the Plan will be exercisable
during the Participant’s lifetime only by the Participant.

(e)                      NO RIGHT TO CONTINUED EMPLOYMENT.  Neither the
Plan nor any action taken hereunder, including the grant of a Purchase Right,
will be construed as giving any employee the right to be retained in the employ
of the Company or any of its Subsidiaries, nor will it interfere in any way with
the right of the Company or any of its Subsidiaries to terminate any employee’s
employment at any time.

(f)                        TAXES.  The Company or any Subsidiary is authorized
to withhold from any payment to be made to a Participant, including any payroll
and other payments not related to the Plan, amounts of withholding and other
taxes due in connection with any transaction under the Plan, and a Participant’s
enrollment in the Plan will be deemed to constitute his or her consent to such
withholding.  In addition, Participants
may be required to advise the Company of sales and other dispositions of Stock
acquired under the plan in order to permit the Company to comply with tax laws
and to claim any tax deductions to which the Company may be entitled with
respect to the Plan.  This provision and
other Plan provisions do not set forth an explanation of the tax consequences
to Participants under the Plan.  A brief
summary of the tax consequences will be included in disclosure documents to be
separately furnished to Participants.

(g)                     CHANGES TO THE PLAN.  The Board may amend, alter,
suspend, discontinue, or terminate the Plan without the consent of stockholders
or Participants, except that any such action will be subject to the approval of
the Company’s stockholders within one year after such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any automated quotation system or stock exchange on which the Stock may then be
quoted or listed, or if such stockholder approval is necessary in order for the
Plan to continue to meet the requirements of Section 423 of the Code, and the
Board may otherwise, in its discretion, determine to submit other such actions
to stockholders for approval.  However,
without the consent of an affected Participant, no amendment, alteration,
suspension, discontinuation, or termination of the Plan may materially and
adversely affect the rights of such Participant with respect to outstanding
Purchase Rights relating to any Offering Period that has been completed prior
to such Board action.  Changes
contemplated by Section 8(a) or 8(b) shall not be deemed to constitute
changes or amendments requiring Participant consent.  The foregoing
notwithstanding, upon termination of the Plan the Board may (i) elect to
terminate all outstanding Purchase Rights 

 8
 

at such time as the Board may
designate, and all amounts contributed to the Plan which are reflected in a
Participant’s Book Account will be returned to the Participant (without
interest) as promptly as practicable, or (ii) shorten the Offering Period to
such period determined by the Board and use amounts credited to a Participant
Book Account to purchase Stock.

(h)                     NO RIGHTS TO PARTICIPATE; NO STOCKHOLDER RIGHTS.  No
Participant or employee will have any claim to participate in the Plan with
respect to Offering Periods that have not commenced, and the Company will have
no obligation to continue the Plan.  No
Purchase Right will confer on any Participant any of the rights of a stockholder
of the Company unless and until Stock is duly issued or transferred and
delivered to the Participant.

(i)                        NO FRACTIONAL SHARES.  Unless
otherwise determined by the Board, purchases of Stock under the Plan shall not
result in the issuance of fractional shares of Stock to a Participant.  Any amounts in a Participant’s Book Account
after the purchase of whole shares of Stock shall be paid to such Participant
as soon as practicable following the end of the Offering Period.

(j)                        GOVERNING LAW.  The validity, construction, and
effect of the Plan and any rules and regulations relating to the Plan will be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.

(k)                    EFFECTIVE DATE.  The Plan will become effective on
February 10, 2007, subject to the Plan being approved by stockholders of the
Company, if not previously approved, by a vote sufficient to meet the
requirements of Section 423 (b) (2) of the Code. 
If the Plan is not approved in accordance with Section 423 (b) (2) of
the Code, each Participant’s Purchase Right shall be void and amounts credited
to the Participant’s Book Account shall be promptly returned to the
Participant.

 9

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