Document:

Exhibit 10.2

 

	
  WELLS FARGO

  	
   

  	
  REVOLVING LINE OF CREDIT NOTE

  
	
   

  	
   

  	
   

  
	
  $10,000,000.00

  	
   

  	
  West
  Covina, California

  
	
   

  	
   

  	
  December 28,
  2007

  

 

FOR VALUE RECEIVED, the
undersigned Willdan Group, Inc. (“Borrower”) promises to pay to the order
of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at San Gabriel Valley RCBO, 1000 Lakes Drive, Suite #250, West
Covina, CA 91790, or at such other place as the holder hereof may designate,
in lawful money of the United States of America and in immediately available
funds, the principal sum of $10,000,000.00, or
so much thereof as may be advanced and be outstanding, with interest
thereon, to be computed on each advance from the date of its disbursement as
set forth herein.

 

1.                         DEFINITIONS:

 

As
used herein, the following terms shall have the meanings set forth after each,
and any other term defined in this Note shall have the meaning set forth at the
place defined:

 

1.1                     “Business Day”
means any day except a Saturday, Sunday or any other day on which commercial
banks in California are authorized or required by law to close.

 

1.2                     “Fixed Rate
Term” means a period commencing on a Business Day and continuing for 1, 2 or 3
months, as designated by Borrower, during which all or a portion of the
outstanding principal balance of this Note bears interest determined in
relation to LIBOR; provided however, that no Fixed Rate Term may be
selected for a principal amount less than $100,000.00;
and provided further, that no Fixed Rate Term shall extend beyond
the scheduled maturity date hereof. If any Fixed Rate Term would end on a day
which is not a Business Day, then such Fixed Rate Term shall be extended to the
next succeeding Business Day.

 

1.3                     “LIBOR” means
the rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of
1%) determined by dividing Base LIBOR by a percentage equal to 100% less any
LIBOR Reserve Percentage.

 

(a)                       “Base
LIBOR” means the rate per annum for United States dollar deposits quoted by
Bank as the Inter-Bank Market Offered Rate, with the understanding that such
rate is quoted by Bank for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of a Fixed Rate
Term for delivery of funds on said date for a period of time approximately
equal to the number of days in such Fixed Rate Term and in an amount
approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation
of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar deposits on the
London Inter-Bank Market.

 

(b)                      “LIBOR
Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency
Liabilities” (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable Fixed Rate Term.

 

1.4                     “Prime Rate”
means at any time the rate of interest most recently announced within Bank at
its principal office as its Prime Rate, with the understanding that the Prime
Rate is one of Bank’s base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference thereto, and
is evidenced by the recording thereof after its announcement in such internal
publication or publications as Bank may designate.

 

1

 

2.                         INTEREST:

 

2.1                     Interest. The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day year, actual days
elapsed) either (a) at a fluctuating rate per annum 0.50000% below the Prime
Rate in effect from time to time, or (b) at a fixed rate per annum
determined by Bank to be 1.25000% above LIBOR in effect on the first day of the
applicable Fixed Rate Term. When interest is determined in relation to the
Prime Rate, each change in the rate of interest hereunder shall become
effective on the date each Prime Rate change is announced within Bank. With
respect to each LIBOR selection option selected hereunder, Bank is hereby
authorized to note the date, principal amount, interest rate and Fixed Rate
Term applicable thereto and any payments made thereon on Bank’s books and
records (either manually or by electronic entry) and/or on any schedule attached
to this Note, which notations shall be prima facie evidence of the accuracy of
the information noted.

 

2.2                     Selection of Interest Rate Options. At any time any portion of this Note bears
interest determined in relation to LIBOR, it may be continued by Borrower
at the end of the Fixed Rate Term applicable thereto so that all or a portion
thereof bears interest determined in relation to the Prime Rate or to LIBOR for
a new Fixed Rate Term designated by Borrower. At any time any portion of this
Note bears interest determined in relation to the Prime Rate, Borrower may convert
all or a portion thereof so that it bears interest determined in relation to
LIBOR for a Fixed Rate Term designated by Borrower. At such time as Borrower
requests an advance hereunder or wishes to select a LIBOR option for all or a
portion of the outstanding principal balance hereof, and at the end of each
Fixed Rate Term, Borrower shall give Bank notice specifying: (a) the
interest rate option selected by Borrower: (b) the principal amount
subject thereto: and (c) for each LIBOR selection, the length of the
applicable Fixed Rate Term. Any such notice may be given by telephone (or
such other electronic method as Bank may permit) so long as, with respect
to each LIBOR selection, (i) if requested by Bank, Borrower provides to
Bank written confirmation thereof not later than 3 Business Days after such
notice is given, and (ii) such notice is given to Bank prior to 10:00 a.m.
on the first day of the Fixed Rate Term, or at a later time during any Business
Day if Bank, at it’s sole option but without obligation to do so, accepts
Borrower’s notice and quotes a fixed rate to Borrower. If Borrower does not
immediately accept a fixed rate when quoted by Bank, the quoted rate shall
expire and any subsequent LIBOR request from Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate. If no specific
designation of interest is made at the time any advance is requested hereunder
or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a
Prime Rate interest selection for such advance or the principal amount to which
such Fixed Rate Term applied.

 

2.3                      Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon
demand, in addition to any other amounts due or to become due hereunder, any
and all (a) withholdings, interest equalization taxes, stamp taxes or
other taxes (except income and franchise taxes) imposed by any domestic or
foreign governmental authority and related in any manner to LIBOR, and (b) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they
are not included in the calculation of LIBOR. In determining which of the
foregoing are attributable to any LIBOR option available to Borrower hereunder,
any reasonable allocation made by Bank among its operations shall be conclusive
and binding upon Borrower.

 

2.4                      Payment of Interest. Interest accrued on this Note shall be
payable on the 1st day of each month, commencing January 1, 2008.

 

2.5                      Default Interest. From and after the maturity date of this
Note, or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, the outstanding principal balance of this
Note shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to 4%
above the rate of interest from time to time applicable to this Note.

 

2

 

3.                         BORROWING AND
REPAYMENT:

 

3.1                      Borrowing and Repayment. Borrower may from time to time during
the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of the Credit Agreement between Borrower and Bank
defined below; provided however, that the total outstanding borrowings under
this Note shall not at any time exceed the principal amount stated above. The
unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on January 1, 2010.

 

3.2                      Advances. Advances hereunder, to the total amount of the principal sum available
hereunder, may be made by the holder at the oral or written request of (a) Thomas
D. Brisbin, Mallory McCamant, Kimberly D. Gant, Roy Gill and Kate Nguyen,
any one acting alone, who are authorized to request advances and direct the
disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or (b) any
person, with respect to advances deposited to the credit of any deposit account
of Borrower, which advances, when so deposited, shall be conclusively presumed
to have been made to or for the benefit of Borrower regardless of the fact that
persons other than those authorized to request advances may have authority
to draw against such account. The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by Borrower.

 

3.3                      Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest determined
in relation to the Prime Rate, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to LIBOR, with
such payments applied to the oldest Fixed Rate Term first.

 

4.                         PREPAYMENT:

 

4.1                      Prime Rate. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to the Prime Rate at any time, in any
amount and without penalty.

 

4.2                      LIBOR. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to LIBOR at any time and in the minimum
amount of $100,000.00; provided however, that if the outstanding principal
balance of such portion of this Note is less than said amount, the minimum
prepayment amount shall be the entire outstanding principal balance thereof. In
consideration of Bank providing this prepayment option to Borrower, or if any
such portion of this Note shall become due and payable at any time prior to the
last day of the Fixed Rate Term applicable thereto by acceleration or
otherwise, Borrower shall pay to Bank immediately upon demand a fee which is
the sum of the discounted monthly differences for each month from the month of
prepayment through the month in which such Fixed Rate Term matures, calculated
as follows for each such month:

 

(a)                       Determine the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to such amount had
it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.

 

(b)                      Subtract from the
amount determined in (a) above
the amount of interest which would have accrued for the same month on the
amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in
effect on the date of prepayment for new loans made for such term and in a
principal amount equal to the amount prepaid.

 

(c)                       If the result obtained in (b) for any month is greater than zero, discount that difference by LIBOR used in (b) above.

 

3

 

Borrower
acknowledges that prepayment of such amount may result in Bank incurring
additional costs, expenses and/or liabilities, and that it is difficult to
ascertain the full extent of such costs, expenses and/or liabilities. Borrower,
therefore, agrees to pay the above-described prepayment fee and agrees that
said amount represents a reasonable estimate of the prepayment costs, expenses
and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when
due, the amount of such prepayment fee shall thereafter bear interest until
paid at a rate per annum 2.000% above the Prime Rate in effect from time to
time (computed on the basis of a 360-day year, actual days elapsed).

 

5.                         EVENTS OF DEFAULT:

 

This Note is made pursuant to and is subject to the
terms and conditions of that certain Credit Agreement between Borrower and Bank
dated as of December 28, 2007, as
amended from time to time (the “Credit Agreement”). Any default in the payment
or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default”
under this Note.

 

6.                         MISCELLANEOUS:

 

6.1                      Remedies. Upon the occurrence of any Event of Default, the holder of this Note,
at the holder’s option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by Borrower, and the obligation, if
any, of the holder to extend any further credit hereunder shall immediately
cease and terminate. Borrower shall pay to the holder 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 the holder’s in-house counsel), expended or incurred by the
holder in connection with the enforcement of the holder’s rights and/or the
collection of any amounts which become due to the holder under this Note, and
the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, 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 Borrower or any other person or entity.

 

6.2                      Obligations Joint and Several. Should more than one person or entity sign
this Note as a Borrower, the obligations of each such Borrower shall be joint
and several.

 

6.3                      Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of California.

 

IN
WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

 

	
  Willdan
  Group, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/  Kimberly D. Gant

  	
   

  	
   

  
	
   

  	
    Kimberly
  D. Gant

  	
   

  
	
  Title:

  	
    Chief
  Financial Officer

  	
   

  	
   

  
								

 

4

 

ADDENDUM TO PROMISSORY NOTE

(PRIME/LIBOR PRICING ADJUSTMENTS)

 

THIS ADDENDUM is attached to and made a part of that certain
promissory note executed by WILLDAN GROUP, INC. (“Borrower”) and payable
to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), or order, dated as of December 28,
2007, in the principal amount of Ten Million Dollars ($10,000,000.00) (the “Note”).

 

The following
provisions are hereby incorporated into the Note to reflect the interest rate
adjustments agreed to by Bank and Borrower:

 

INTEREST RATE
ADJUSTMENTS:

 

(a)                              Initial
Interest Rates. The initial interest rates applicable to this Note shall be
the rates set forth in the “Interest” paragraph herein.

 

(b)                             Interest
Rate Adjustments. In addition to any interest rate adjustments resulting from
changes in the Prime Rate, Bank shall adjust the Prime Rate and LIBOR margins
used to determine the rates of interest applicable to this Note on a quarterly
basis, commencing with Borrower’s fiscal quarter ending March 28, 2008, if
required to reflect a change in Borrower’s ratio of Total Funded Debt to EBITDA
(as defined in the Credit Agreement referenced herein), in accordance with the
following grid:

 

	
   

  	
   

  	
  Applicable

  	
   

  	
  Applicable

  	
   

  
	
  Total Funded Debt to

  	
   

  	
  Prime Rate

  	
   

  	
  LIBOR

  	
   

  
	
  EBITDA

  	
   

  	
  Margin

  	
   

  	
  Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  at
  least 1.75 to 1.0 but less than 2.50 to 1.0

  	
   

  	
  0

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  at
  least 1.25 to 1.0 but less than 1.75 to 1.0

  	
   

  	
  -0.25

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  less
  than 1.25 to 1.0

  	
   

  	
  -0.50

  	
  %

  	
  1.25

  	
  %

  

 

Each such adjustment
shall be effective on the first Business Day of Borrower’s fiscal quarter
following the quarter during which Bank receives and reviews Borrower’s most
current fiscal quarter-end financial statements in accordance with any
requirements established by Bank for the preparation and delivery thereof.

 

IN WITNESS
WHEREOF, this Addendum has been executed as of the same date as the Note.

 

	
  Willdan Group, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/  Kimberly D. Gant

  	
   

  	
   

  
	
   

  	
    Kimberly
  D. Gant

  	
   

  
	
  Title:

  	
    Chief
  Financial Officer

  	
   

  	
   

  
							

 

1Exhibit 10.3

 

	
   

  	
  SECURITY AGREEMENT

  
	
  WELLS FARGO

  	
  EQUIPMENT

  

 

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

 

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

 

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

 

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

 

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

 

1

 

6.                               COVENANTS
OF DEBTOR.

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

  	
   

  
				

 

5

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