Exhibit 10.4


 


COMMERCIAL
SECURITY AGREEMENT 


 


	Principal
    

    $18,000,000.00 	Loan
    Date

05-12-2015 	Maturity

04-05-2017 	Loan
    No 

068927425 	Call
    / Coll 1763 / UC 92,93,94 and EQ 43 	Account
    

01004527 	Officer
    82675 	Initials
    
	References
    in the boxes above 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:
    	Shimmick
    Construction Company, Inc. 

8201 Edgewater Drive, Suite 202 

Oakland, CA 94621-2023
    	Lender:
     	Umpqua
    Bank 

Walnut Creek Commercial Banking Center 

C/O Loan Support Services 

PO Box 1580 

Roseburg, OR 97470
    
	 	 	 	 


 


THIS
COMMERCIAL SECURITY AGREEMENT dated May 12, 2015, is made and executed between Shimmick Construction Company, Inc. (“Grantor”)
and Umpqua 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, Chattel Paper, Accounts, Equipment and General Intangibles


 


All
equipment including but not limited to equipment listed on Exhibit “A”


 


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.


 


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) 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.


 






    	 



    	 



    

 


COMMERCIAL
SECURITY AGREEMENT 





	Loan No:
    068927425	(Continued)	Page
    2
	 	 	 









 


Removal
of the Collateral. Except in the ordinary course of Grantor’s business, including the sales of inventory, Grantor shall
not remove the Collateral from its existing location without Lender’s prior written consent. To the extent that the Collateral
consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for
certificates of title for the vehicles outside the State of California, without Lender’s prior written consent. Grantor
shall, whenever requested, advise Lender of the exact location of the Collateral.


 


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.


 


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, permissible 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.


 


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, including stipulations that coverages will not be cancelled or diminished without at least ten (10) 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 loss or damage to the Collateral if the estimated cost
of repair or replacement exceeds 1,000.00, 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.


 






    	 



    	 



    

 




COMMERCIAL
SECURITY AGREEMENT




	Loan No:
    068927425	(Continued)	Page
    3
	 	 	 







 


Insurance
Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall
be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days
before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment
is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be
held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of
the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust for
Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility
for the payment of premiums shall remain Grantor’s sole responsibility.


 


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.


 


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. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and
to notify account debtors to make payments directly to Lender for application to the Indebtedness. 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.


 


Other
Defaults. Grantor fails to comply with or to perform any other 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.


 


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 or
furnished or becomes false or misleading at any time thereafter.


 


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.


 


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.


 


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, endorser, surety, or accommodation
party of any of the Indebtedness or guarantor, endorser, surety, or accommodation party 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, or Lender believes the prospect of payment
or performance of the Indebtedness is impaired.


 


Insecurity.
Lender in good faith believes itself insecure.


 


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 Lender sends
written notice to Grantor demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires
more than fifteen (15) 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.


 






    	 



    	 



    

 


COMMERCIAL
SECURITY AGREEMENT 


	Loan No:
    068927425 	(Continued)	Page
    4
	 	 	 






 


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 California 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.


 


WAIVE
JURY. All parties hereby waive the right to any jury trial in any action, proceeding or counterclaim brought by any party
against any other party.


 


INCONSISTENT
STATE AND FEDERAL LAWS. From time to time, state and federal laws are inconsistent such that an activity permitted under state
law is prohibited under federal law, or vice versa. As noted elsewhere in this Agreement, Grantor shall at all times comply with
all governmental requirements, both federal and state, and cause all tenants, agents and other users of the Property or Collateral
to so comply. For example, although the retail sale or distribution of marijuana products is allowed under law in some states,
it is now prohibited under the federal Controlled Substances Act and Grantor must comply, and cause tenants, agents and other
users to comply, with federal law in this instance.


 


SURETYSHIP
WAIVERS. Except as prohibited by applicable law, Grantor waives any right to require Lender: (a) to continue lending money
or to continue to extend other credit to Borrower; (b) to obtain Grantor’s consent to any modification or extension of the
Indebtedness (except an increase in the principal to be advanced under the Note); (c) to resort for payment or to proceed directly
or at once against any person, including Borrower or any Guarantor; (d) to proceed directly against or exhaust any collateral
held by Lender from Borrower, any Guarantor or any other person; and (e) to pursue any other remedy within Lender’s power.
Except as prohibited by law, Grantor also waives: any and all rights or defenses based on suretyship, if applicable, or impairment
of collateral or any law which may prevent Lender from bringing any action, including a claim for deficiency, before or after
Lender’s commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; any
election of remedies by Lender, which destroys or otherwise adversely affects Grantor’s subrogation rights or Grantor’s
rights to proceed against Borrower, if applicable, for reimbursement; any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness or based upon any extension, modification, adjustment,
restatement, substitution or amendment of the Note or any other document that evidences the Indebtedness, which is made without
Grantor’s consent.


 


ERRORS
AND OMISSIONS. Grantor and Borrower shall if requested by Lender or Lender’s closing agent fully cooperate with Lender
to adjust and correct clerical errors or omissions on any Loan documents and closing documents if Lender in its reasonable discretion,
deems it necessary or desirable to maintain compliance with existing laws and regulations or to fulfill the intent of the parties
relating to this Loan.


 


VENUE.
The loan transaction that is evidenced by this Agreement has been applied for, considered, approved and made in the State
of California. If there is a lawsuit relating to this Agreement, the undersigned shall, at Lender’s request, submit to the
jurisdiction of the courts of Sacramento County, California except and only to the extent of procedural matters related to Lender’s
perfection and enforcement of its rights and remedies against the collateral for the loan, if the law requires that such a suit
be brought in another jurisdiction. As used in this paragraph, the term “Agreement” means the promissory note, guaranty,
security agreement or other agreement, document or instrument in which this paragraph is found, even if this document is described
by another name, as well.


 






    	 



    	 



    

  


COMMERCIAL
SECURITY AGREEMENT 


	Loan No:
    068927425	(Continued)	Page
    5
	 	 	 












 


JUDICIAL
REFERENCE. In any judicial action or cause of action arising from this Agreement or otherwise, including without limitation
contract and tort disputes, all decisions of fact and law shall, at the request of either Borrower or Lender or other holder of
this Agreement, be referred to a referee in accordance with Section 638 et seq. of the California Code of Civil Procedure if the
action is before a court of any judicial district of the State of California. The referee shall prepare written findings of fact
and conclusions of law, and judgment upon the referee’s award shall be entered in court in which such proceeding was commenced.
No provision or exercise of any right under this provision shall limit the right of the undersigned or Lender or other holder
of this Agreement to exercise self-help remedies, such as foreclosure against or sale of any real or personal property collateral
or security, or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, during or after the
pendency of any judicial reference proceeding. The exercise of a remedy does not waive the right of either party to resort to
judicial reference. Borrower and Lender further agree that all disputes, claims and controversies between them shall be brought
in their individual capacities and not as a plaintiff or class member in any purported class or representative proceeding.


 


ATTORNEY
FEES AND EXPENSES. The undersigned agrees to pay on demand all of Lender’s costs and expenses, including Lender’s
attorney fees and legal expenses, incurred in connection with enforcement of this Agreement. Lender may hire or pay someone else
to help enforce this Agreement. Lender may also use attorneys who are salaried employees of Lender to enforce this Agreement.
The undersigned shall pay all costs and expenses of all such enforcement. In the event suit, action or other legal proceeding
is brought to interpret or enforce this Agreement, the undersigned agrees to pay all additional sums as the referee or court may
adjudge reasonable as Lender’s costs, disbursements, and attorney fees at hearing, trial, and on any and all appeals. As
used in this paragraph “Agreement” means the loan agreement, promissory note, guaranty, security agreement, or other
agreement, document, or instrument in which this paragraph is found, even if this document is also described by another name.
Whether or not a court action is filed, all reasonable attorney fees and expenses Lender incurs in protecting its interests and/or
enforcing this Agreement shall become part of the Indebtedness evidenced or secured by this Agreement, shall bear interest at
the highest applicable rate under the promissory note or credit agreement, and shall be paid to Lender by the other party or parties
signing this Agreement on demand. The attorney fees and expenses covered by this paragraph include without limitation all of Lender’s
attorney fees (including the fees charged by Lender’s in-house attorneys, calculated at hourly rates charged by attorneys
in private practice with comparable skill and experience), Lender’s fees and expenses for bankruptcy proceedings (including
efforts to modify, vacate, or obtain relief from any automatic stay), fees and expenses for Lender’s post-judgment collection
activities, Lender’s cost of searching lien records, searching public record databases, on-line computer legal research,
title reports, surveyor reports, appraisal reports, collateral inspection reports, title insurance, and bonds issued to protect
Lender’s collateral, all to the fullest extent allowed by law.


 


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.


 


Expenses.
If Lender institutes any suit or action to enforce any of the terms of this Agreement, Lender shall be entitled to recover
such sum as the court may adjudge reasonable. Whether or not any court action is involved, and to the extent not prohibited by
law, all reasonable expenses Lender incurs that in Lender’s opinion are necessary at any time for the protection of its
interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at
the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender’s expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, to the extent permitted
by applicable law. Grantor also will pay any court costs, in addition to all other sums provided by law.


 


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. 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. This Agreement has been accepted by Lender
in the State of California.


 


Preference
Payments. Any monies Lender pays because of an asserted preference claim in Grantor’s bankruptcy will become a part
of the Indebtedness and, at Lender’s option, shall be payable by Grantor as provided in this Agreement.


 


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.


 


Waiver
of Co-Obligor’s Rights. If more than one person is obligated for the Indebtedness, Grantor irrevocably waives, disclaims
and relinquishes all claims against such other person which Grantor has or would otherwise have by virtue of payment of the Indebtedness
or any part thereof, specifically including but not limited to all rights of indemnity, contribution or exoneration.


 






    	 



    	 



    

  


COMMERCIAL
SECURITY AGREEMENT 


	Loan No:
    068927425 	(Continued)	Page
    6
	 	 	 






 


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 Shimmick Construction Company, 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”.


 


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 Shimmick Construction Company, Inc..


 


Guaranty.
The word “Guaranty” means the guaranty from guarantor, endorser, surety, or accommodation party 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 Umpqua Bank, its successors and assigns.


 


Note.
The word “Note” means the Note executed by Borrower in the original principal amount of $5,014,000.00 dated May
12, 2015 as loan no. 70042227, the Note executed by Borrower in the original principal amount of $18,000,000.00 dated October
22, 2012 as loan no. 68927425, and the Note executed by Borrower in the original principal amount of $9,700,000.00 dated October
22, 2012 as loan no. 70000864, 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, 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
MAY 12, 2015.





 






    	 



    	 



    

 


COMMERCIAL
SECURITY AGREEMENT


	Loan No:
    068927425 	(Continued)	Page
    7
	 	 	 










	 	 	 	 	 	 
	GRANTOR:	 	 	 	 
	 	 	 	 	 	 
	SHIMMICK CONSTRUCTION COMPANY, INC.	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	By:	 	 
	 	Paul Alexander Cocotis, Chairman & CEO of	 	 	Scott Allen Fairgrieve, Chief Fin. Officer/Secretary
    of
	 	Shimmick Construction Company, Inc.	 	 	Shimmick Construction Company, Inc.	 








	 	 	 
	LENDER: 	 
	 	 	 
	UMPQUA BANK	 
	 	 	 
	X	 	 
	 	Authorized Signer	 
	 	 	 
	 	 	 
	 
	LaserPro, Ver. 14.5.10.004 Copr. D+H USA Corporation 1997,
    2015. All Rights Reserved    -CA W:\CFI\LPL\E40.FC TR-11171531 PR-62