Document:

Exhibit 10.3

 

BUSINESS LOAN 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.

 

	Borrower:	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 BUSINESS LOAN AGREEMENT dated May 12, 2015, is made and executed between Shimmick Construction Company, Inc. (“Borrower”) and Umpqua Bank (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.	 
	 	 	 
	 	TERM. This Agreement shall be effective as of May 12, 2015, and shall continue in full force and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.	 
	 	 	 
	 	ADVANCE AUTHORITY. The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority: Paul C Camaur, President of Shimmick Construction Company, Inc.; and Scott Allen Fairgrieve, Chief Fin. Officer/Secretary of Shimmick Construction Company, Inc.	 
	 	 	 
	 	CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.	 
	 	 	 	 
	 	 	Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below; (5) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel.	 
	 	 	 	 
	 	 	Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.	 
	 	 	 	 
	 	 	Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.	 
	 	 	 	 
	 	 	Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.	 
	 	 	 	 
	 	 	No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.	 
	 	 	 	 
	 	REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:	 
	 	 	 	 
	 	 	Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of California. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 8201 Edgewater Drive, Suite 202, Oakland, CA 94621-2023. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities.	 
	 	 	 	 
	 	 	Assumed Business Names. Borrower has filed or recorded all documents or filings required
    by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete
    list of all assumed business names under which Borrower does business: None.	 
	 	 	 	 
	 	 	Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties.	 
	 	 	 	 
	 	 	Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.	 
	 	 	 	 
	 	 	Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.	 

 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 2
	 	 	 

	 	 	 	 	 
	 	 	Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.	 
	 	 	 	 
	 	 	Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.	 
	 	 	 	 
	 	 	Litigation and Claims. No litigation, claim, investigation, administrative
    proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event
    has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation,
    claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.	 
	 	 	 	 
	 	 	Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.	 
	 	 	 	 
	 	 	Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral.	 
	 	 	 	 
	 	 	Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.	 
	 	 	 	 
	 	AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:	 
	 	 	 	 
	 	 	Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.	 
	 	 	 	 
	 	 	Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower’s books and records at all reasonable times.	 
	 	 	 	 
	 	 	Financial Statements. Furnish Lender with the following:	 
	 	 	 	 	 
	 	 	 	Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Borrower’s balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender.	 
	 	 	 	 	 
	 	 	 	Interim Statements. As soon as available, but in no event later than forty-five (45) days after the end of each fiscal quarter, Borrower’s balance sheet and profit and loss statement for the period ended, prepared by Borrower.	 
	 	 	 	 	 
	 	 	 	Additional Requirements.	 
	 	 	 	 	 
	 	 	 	Work in Process. Borrower shall furnish Lender, as soon as available, but in no event later than forty-five (45) days after the end of each quarter*, Borrower’s Work in Process.	 
	 	 	 	 	 
	 	 	 	Accounts Payable and Accounts Receivable Aging Schedules. Borrower shall furnish Lender Accounts Payable Aging and Accounts Receivable Aging schedules, as soon as available, but in no event later than forty-five (45) days from the end of each quarter.*	 
	 	 	 	 	 
	 	 	 	Business Debt Schedule. Borrower shall furnish Lender, as soon as available, but in no event later than forty-five (45) days after the end of each quarter*, Borrower’s Business Debt Schedule.	 
	 	 	 	 	 
	 	 	 	Verification of Liquidity. Borrower shall furnish Lender, as soon as available, but in no event later than forty-five (45) days after the end of each quarter with copies of bank statements, brokerage statements, and other records satisfactory to Lender to demonstrate the Borrower’s Liquid Assets. For purposes of this agreement, Liquid Assets shall be defined as cash, bank deposits, and securities readily marketable on public securities exchanges.	 
	 	 	 	 	 
	 	 	 	Management Report. Borrower shall furnish Lender, as soon as available, but in no event later than forty-five (45) days after the end of each year, Borrower’s Management Report.	 
	 	 	 	 	 
	 	 	 	* If at any time the balance on the revolving line of credit, Loan no. 068927425 exceeds $5,000,000.00, the facility will be monitored on a monthly basis by the Walnut Creek Commercial Banking Center with monthly financial reporting requirements (financial statements, Work in Process, Accounts Payable Aging and Accounts Receivable Aging schedules, Business Debt Schedule) and monthly Borrower’s Certificate due within 45 days.	 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 3
	 	 	 

	 	 	 	 	 
	 	 	All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.	 
	 	 	 	 
	 	 	Additional Information. Furnish such additional information and statements, as Lender may request from time to time. 	 
	 	 	 	 
	 	 	Financial Covenants and Ratios. Comply with the following covenants and
    ratios:	 
	 	 	 	 
	 	 	 	Working Capital Requirements. Other Working Capital requirements are as follows:	 
	 	 	 	Working Capital Ratio. Borrower shall maintain Working Capital in excess of $36,000,000.00. The term “Working Capital” means Borrower’s total Current Assets less Borrower’s total Current Liabilities.	 
	 	 	 	 	 
	 	 	 	Minimum Income and Cash flow Requirements. Other Cash Flow requirements are as follows:	 
	 	 	 	 	 
	 	 	 	Debt Service Coverage Ratio. Borrower shall maintain a Debt Service Cover of not less than 1.20 to 1.00 as of the end of each rolling 4 quarters. For the purposes of this agreement, “Debt Service Cover” means the ratio of “cash flow” to “debt service” during each twelve month period ending with the effective date of calculation. “Cash flow” means the sum of Net Profits, Income Tax Expense, if applicable, Depreciation, Depletion, Amortization and Interest Expense minus Distributions, Withdrawals and Dividends. “Debt service” means the regularly scheduled payments of principal upon all long-term debt during that period plus Interest Expense.	 
	 	 	 	 	 
	 	 	 	Tangible Net Worth Requirements. Other Net Worth requirements are as follows:	 
	 	 	 	 	 
	 	 	 	Debt/ Tangible Net Worth. Borrower shall maintain a ratio of Debt / Worth not in excess of 2.50 to 1.00. The ratio “Debt / Worth” means Borrower’s Total Liabilities divided by Borrower’s Tangible Net Worth. This ratio will be measured on a quarterly basis.	 
	 	 	 	 	 
	 	 	 	Tangible Net Worth. Borrower shall maintain Tangible Net Worth in excess of $62,000,000.00. The term “Tangible Net Worth” means the net book value of all of Borrower’s assets exclusive of patents, trademarks, licenses, goodwill and other intangibles and of loans to and notes and receivables from Borrower, officers, employees, directors and shareholders of Borrower, or any other related entity, less total debt. This ratio will be measured on a quarterly basis.	 
	 	 	 	 	 
	 	 	 	Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct.	 
	 	 	 	 	 
	 	 	Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, 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. 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 Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require.	 
	 	 	 	 
	 	 	Insurance Reports. Furnish to Lender, upon request of Lender, reports on
    each existing insurance policy showing such information as Lender may reasonably request, including without limitation the
    following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5)
    the then current property values on the basis of which insurance has been obtained, and the manner of determining those values;
    and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower
    will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost
    of any Collateral. The cost of such appraisal shall be paid by Borrower.	 
	 	 	 	 	 
	 	 	Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.	 
	 	 	 	 
	 	 	Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing.	 
	 	 	 	 
	 	 	Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.	 
	 	 	 	 	 
	 	 	Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.	 
	 	 	 	 	 
	 	 	Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.	 
	 	 	 	 
	 	 	Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.	 
	 	 	 	 
	 	 	Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest.	 
	 	 	 	 
	 	 	Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense.	 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 4
	 	 	 

	 	 	 	 
	 	 	Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.	 
	 	 	 	 
	 	 	Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.	 
	 	 	 	 
	 	RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation or application of any thereof by any court or administrative or governmental authority (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce the amounts payable to Lender under this Agreement or the Related Documents, or (C) reduce the rate of return on Lender’s capital as a consequence of Lender’s obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender’s written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error.	 
	 	 	 	 
	 	LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’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 any Collateral and paying all costs for insuring, maintaining and preserving any 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 Borrower. 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.	 
	 	 	 	 
	 	NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:	 
	 	 	 	 
	 	 	Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender.	 
	 	 	 	 
	 	 	Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure.	 
	 	 	 	 
	 	 	Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.	 
	 	 	 	 
	 	 	Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations under this Agreement or in connection herewith.	 
	 	 	 	 
	 	CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.	 
	 	 	 
	 	DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: 	 
	 	 	 	 
	 	 	Payment Default. Borrower fails to make any payment when due under the Loan.	 
	 	 	 	 
	 	 	Other Defaults. Borrower 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 Borrower.	 
	 	 	 	 
	 	 	False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’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.	 
	 	 	 	 
	 	 	Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’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 Borrower.	 
	 	 	 	 
	 	 	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.	 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 5
	 	 	 

	 	 	 	 	 
	 	 	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 Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.	 
	 	 	 	 	 
	 	 	Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.	 
	 	 	 	 	 
	 	 	Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.	 
	 	 	 	 	 
	 	 	Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.	 
	 	 	 	 	 
	 	 	Insecurity. Lender in good faith believes itself insecure.	 
	 	 	 	 	 
	 	 	Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.	 
	 	 	 	 	 
	 	EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies 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 Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies.	 
	 	 	 	 	 
	 	COMMITMENT LETTER. The terms and provisions of this Agreement, the Note and the Related Documents supersede any inconsistent terms and conditions of Lender’s loan commitment letter to Borrower, provided that all obligations of Borrower under the commitment letter to pay any fees to Lender or any costs and expenses relating to the Loan or the commitment shall survive the execution and delivery of this Agreement. Borrower’s failure to perform any such obligation shall constitute an Event of Default under this Agreement.	 
	 	 	 	 	 
	 	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.	 
	 	 	 	 	 
	 	CROSS DEFAULT. A default on any of the Notes evidencing Loans extended to Borrower shall constitute a default on all other Notes evidencing those loans and shall constitute an Event of Default under this Agreement.	 
	 	 	 	 	 
	 	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.	 
	 	 	 	 	 
	 	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.	 
	 	 	 	 	 
	 	OUT OF DEBT REQUIREMENT. The line of credit shall have a zero balance, with no advances outstanding for a minimum of 30 consecutive days, to be measured every six (6) months from date of initial loan funding.	 

 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 6
	 	 	 

	 	 	 	 	 
	 	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 Loan 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. Borrower 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.	 
	 	 	 	 	 
	 	 	Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.	 
	 	 	 	 	 
	 	 	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.	 
	 	 	 	 	 
	 	 	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 Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any 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, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.	 
	 	 	 	 	 
	 	 	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.	 
	 	 	 	 	 
	 	 	Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates.	 
	 	 	 	 	 
	 	 	Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of Lender.	 
	 	 	 	 	 
	 	 	Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.	 
	 	 	 	 	 
	 	 	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. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:	 
	 	 	 	 	 
	 	 	Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.	 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 7
	 	 	 

	 	 	 	 	 
	 	 	Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan 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 property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.	 
	 	 	 	 	 
	 	 	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.	 
	 	 	 	 	 
	 	 	GAAP. The word “GAAP” means generally accepted accounting principles.	 
	 	 	 	 	 
	 	 	Grantor. The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.	 
	 	 	 	 	 
	 	 	Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan.	 
	 	 	 	 	 
	 	 	Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.	 
	 	 	 	 	 
	 	 	Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.	 
	 	 	 	 	 
	 	 	Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.	 
	 	 	 	 	 
	 	 	Lender. The word “Lender” means Umpqua Bank, its successors and assigns.	 
	 	 	 	 	 
	 	 	Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.	 
	 	 	 	 
	 	 	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.	 
	 	 	 	 
	 	 	Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.	 
	 	 	 	 
	 	 	Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.	 
	 	 	 	 
	 	 	Security Agreement. The words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.	 
	 	 	 	 
	 	 	Security Interest. The words “Security Interest” mean, without
    limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance,
    mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
    trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment
    intended as a security device, or any other security or lien interest whatsoever whether created by law, contract,
    or otherwise.	 

 

    	 

    	 

    

 

	 	BUSINESS LOAN AGREEMENT	 
	Loan No: 068927425	(Continued)	Page 8
	 	 	 

 

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS
OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MAY 12, 2015.

	 	 	 	 	 
	
        BORROWER:

         

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

 

	LaserPro, Ver. 14.5.10.004 Copr. D+H USA Corporation 1997, 2015. All Rights Reserved.     CA W:\CFl\LPL\C40. FC     TR-11171531 PR-62Exhibit 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00252-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00252-of-00352.parquet"}]]