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CHANGE IN TERMS AGREEMENT

 

Principal

$10,000,000.00

Loan Date

03-01-2013

Maturity

03-01-2016

Loan No

155354101

Call / Coll

CLS 07 / 240

Account

600714

Officer

765

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: BISCO INDUSTRIES, INC. Lender: COMMUNITY BANK   1500 N. LAKEVIEW
AVENUE   ANAHEIM BRANCH   ANAHEIM, CA 92807   1750 S. STATE COLLEGE BLVD.      
ANAHEIM, CA 92806       (800) 788-9999        

 

Principal Amount:  $10,000,000.00 Date of Agreement:  April 25, 2014

 

DESCRIPTION OF EXISTING INDEBTEDNESS.

 

A loan to Borrower evidenced by a Promissory Note dated November 15, 2000, as
modified by Change in Terms Agreements dated May 1, 2001; July 1, 2001;
September 1, 2001; October 19, 2001; April 30, 2002; June 17, 2002; August 28,
2002; September 16, 2002; October 28, 2002; January 24, 2003; March 27, 2003;
June 1, 2003; October 1, 2003; December 1, 2003; February 1, 2004; May 1, 2004;
June 23, 2004; August 1, 2004; February 1, 2005; April 1, 2005; April 1, 2006;
March 28, 2007; June 1, 2007; July 13, 2007; March 27, 2008, May 15, 2008; March
3, 2009; March 23, 2010; April 16, 2010; October 1, 2010; January 3, 2011; March
1, 2011; May 10, 2012; September 18, 2012 and March 26, 2013 (“Note”).

 

DESCRIPTION OF COLLATERAL.

 

A security interest in personal property assets as described in two (2)
Commercial Security Agreements each dated March 23, 2010 and a security interest
in personal property assets as described in a Commercial Security Agreement
dated August 1, 2004 (“Security Agreement”).

 

DESCRIPTION OF CHANGE IN TERMS.

 

EFFECTIVE AS OF March 27, 2014 (“Effective Date”):

 

MODIFICATION OF BUSINESS LOAN AGREEMENT. The Business Loan Agreement dated June
1, 2007 (“Loan Agreement”) is hereby modified and amended as follows:

 

1)     The paragraph entitled “Individual Guarantor” is hereby deleted in its
entirety and replaced with the following:

 

Individual Guarantor. Borrower shall furnish to Lender as soon as available and
in any event within thirty (30) days after filing, Individual Guarantor’s
federal income tax returns and supporting schedules. Borrower shall furnish to
Lender Individual Guarantor’s financial statement annually.

 

2)     The paragraph entitled “Tax Returns (EACO Corporation)” is hereby deleted
in its entirety and replaced with the following:

 

Tax Returns (EACO Corporation). Borrower shall furnish to Lender as soon as
available and in any event within thirty (30) days after filing, Corporate
Guarantor’s federal income tax returns and supporting schedules, prepared by a
tax professional satisfactory to Lender.

 

3)     The paragraph entitled “Effective Tangible Net Worth” is hereby deleted
in its entirety and replaced with the following:

 

Effective Tangible Net Worth. Maintain an Effective Tangible Net Worth of not
less than $13,500,000.00 to be measured at the end of each fiscal quarter. The
term “Effective Tangible Net Worth” means Borrower’s total assets, less
intangibles [i.e., goodwill, trademarks, patents, copyrights, organizational
expenses, and similar intangible items, but including leaseholds and leasehold
improvements], less amounts due from officers, partners, stockholders,
directors, affiliates, and subsidiaries, less total liabilities, plus amounts
subordinated to Lender, as evidenced by a subordination agreement, if any. The
first measurement will be as of February 28, 2014.

 

4)     The paragraph entitled “Current Assets” is hereby deleted in its entirety
and replaced with the following:

 

Current Assets. Borrower shall maintain a minimum current assets of
$25,000,000.00 on a consolidated basis measured quarterly, per GAAP, Investments
in Data I/O are to continue to be shown as non-current assets. The first
measurement will be as of February 28, 2014.

 

5)     The Affirmative Covenants of Borrower are amended to include the
following covenant:

 

Profit Retention. Notwithstanding anything to the contrary contained herein,
Borrower further covenants and agrees with Lender, that a minimum of 50% of net
profit after tax will be retained in the company at fiscal year end. To be
measured on an annual basis.

 

MODIFICATION OF NOTE. The Note is hereby modified and amended as follows:

 

1)     The maturity date of the Note is hereby extended from March 1, 2015 to
March 1, 2016.

 

PAYMENT. Borrower will pay this loan in full immediately upon Lender’s demand.
If no demand is made. Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on March 1, 2016. In
addition, Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning June 1, 2014, with all
subsequent interest payments to be due on the same day of each month after that.

 

2)     The provision of the Note entitled “PRIMARY BANKING RELATIONSHIP” is
hereby deleted in its entirety and replaced with the following:

 

PRIMARY BANKING RELATIONSHIP. Borrower and Lender acknowledge and agree that
Borrower now maintains or will maintain its primary banking relationship,
including its primary deposit account relationship (“Primary Banking
Relationship”), with Lender. In the event Borrower ceases to maintain its
Primary Banking Relationship with Lender (as determined by Lender in its sole
discretion), the interest rate set forth in this Note shall be increased by one
percent (1.00%), at Lender’s option, following a five (5) day written notice to
the Borrower. The payments due after such notice is given to Borrower shall be
recalculated in an amount necessary to amortize the principal balance for the
remaining term of the loan.

 

 

 

 

  CHANGE IN TERMS AGREEMENT   Loan No: 155354101 (Continued) Page 2

 

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender’s right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.

 

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

 

BORROWER:

 

 

BISCO INDUSTRIES, INC.       By: /s/ GLEN F. CEILEY     GLEN F. CEILEY, Chairman
and CEO of BISCO
INDUSTRIES, INC.        

LASER PRO Lending, Ver. 13.3.0.024 Copr. Harland Financial Solutions, Inc. 1997,
2014. All Rights Reserved. CA G:\CFI50\CFI\LPL\D20C.FC TR.21034 PR-38