Exhibit
10.6





 


 


 


The Bank Business Banks On


 


COMMERCIAL SECURITY AGREEMENT


 


	Principal

$5,000,000.00	Loan Date

07-12-2019	Maturity

05-15-2027	Loan No

40906	Call / Coll	Account

600714	Officer

7001	Initials

CJ
	
        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.

1500 North Lakeview Loop

Anaheim, CA 92807	 	Lender:	Citizens Business Bank

Plaza Business Financial Center

77 Plaza Square

Orange, CA 92866






	 	 	 	 	 


 


THIS COMMERCIAL SECURITY
AGREEMENT dated July 12, 2019, is made and executed between Bisco Industries, Inc. ("Grantor") and Citizens Business
Bank ("Lender").


 


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


 


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


 


All inventory, equipment,
accounts (including but not limited to all health-care-insurance receivables), chattel paper, instruments (including but not limited
to all promissory notes), letter-of-credit rights, letters of credit, documents, deposit accounts, investment property, money,
other rights to payment and performance, and general intangibles (including but not limited to all software and all payment intangibles);
all oil, gas and other minerals before extraction; all oil, gas, other minerals and accounts constituting as-extracted collateral;
all fixtures; all timber to be cut; all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies,
and commingled goods relating to the foregoing property, and all additions, replacements of and substitutions for all or any part
of the foregoing property; all insurance refunds relating to the foregoing property; all good will relating to the foregoing property;
all records and data and embedded software relating to the foregoing property, and all equipment, inventory and software to utilize,
create, maintain and process any such records and data on electronic media; and all supporting obligations relating to the foregoing
property; all whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject
to any rights in the foregoing property; and all products and proceeds (including but not limited to all insurance payments) of
or relating to the foregoing property. Evidenced by a UCC Financing Statement filed in the State of California on February 25,
1992, as instrument no. 92035687.


 


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.


 


CROSS-COLLATERALIZATION.
In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to
Lender, or any one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing
or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not
due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor may be
liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether
recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay
such amounts may be or hereafter may become otherwise unenforceable.


 


RIGHT OF SETOFF. To
the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may
open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited
by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness
against any and all such accounts.


 


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


 






     


    
	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No. 40906	(Continued)
	Page 2

	 	 	 


 


    

 


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 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. 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.


 


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, attorneys' fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any
final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under
any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes,
assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such
payment or may elect to contest any lien 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.


 






     


    
	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No. 40906	(Continued)
	Page 3

	 	 	 


 


    

 


Compliance with Governmental
Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities,
including without limitation all environmental laws, ordinances, rules and regulations, 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, whether or not such casualty or loss
is covered by insurance. Lender may make proof of loss Grantor fails to do so within fifteen (15) days of the casualty. All proceeds
of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,
pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair
or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall
pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor
has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.


 


Insurance 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 will promptly notify Lender of any change
to Grantor's name or the name of any individual Grantor, any individual who is a partner for a Grantor, and any individual
who is a trustee or settlor or trustor for a Grantor under this Agreement. Grantor will also promptly notify Lender of any
change to the name that appears on the most recently issued, unexpired driver's license or state-issued identification card,
any expiration of the most recently issued driver's license or state-issued identification card for Grantor or any individual
for whom Grantor is required to provide notice regarding name changes.


 


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 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.


 






     


    
	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No. 40906	(Continued)
	Page 4

	 	 	 


 


    

 


LENDER'S EXPENDITURES. If any action or proceeding
is commenced that would materially affect Lender's interest in the Collateral or 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.


 


Environmental Default.
Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental
agreement executed in connection with any 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.


 


Default in Favor of Third
Parties. Any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may materially affect any of any guarantor's or Grantor's
property or ability to perform their respective obligations under this Agreement or any of the Related Documents.


 


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 of any of the Indebtedness or Guarantor dies or becomes incompetent
or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.


 


Adverse Change. A
material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.


 


Cure Provisions. If
any default, other than a default in payment, is curable and if Grantor has not been given a notice of a breach of the same
provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends
written notice to Grantor demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) 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.


 


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 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.


 






     


    
	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No. 40906	(Continued)
	Page 5

	 	 	 


 


    

 


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 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 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.


 


COUNTERPARTS. This
document may be executed in any number of counterparts and by different parties on separate counterparts, each of which when executed
and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same
agreement.


 


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.


 


Arbitration. Grantor
and Lender agree that all disputes, claims and controversies between them whether individual, joint, or class in nature, arising
from this Agreement or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to the
financial services rules of J.A.M.S. or its successor in effect at the time the claim is filed, upon request of either party. No
act to take or dispose of any Collateral shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of
sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such property with or without judicial process pursuant Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act,
or exercise of any right, concerning any Collateral, including any claim to rescind, reform, or otherwise modify any agreement
relating to the Collateral, shall also be arbitrated, provided however that no arbitrator shall have the right or the power to
enjoin or restrain any act of any party. Grantor and Lender agree that in the event of an action for judicial foreclosure pursuant
to California Code of Civil Procedure Section 726, or any similar provision in any other state, the commencement of such an action
will not constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such action, including
counterclaims, as lawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Agreement shall preclude any party from seeking equitable relief from a court of
competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable
in an action brought by a party shall be applicable in any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.


 


Attorneys' Fees; Expenses.
Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees
and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services.
Grantor also shall pay all court costs and such additional fees as may be directed by the court.


 






     


    
	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No. 40906	(Continued)
	Page 6

	 	 	 


 


    

 


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.


 


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


 


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.


 


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.


 


Waive Jury. To the extent
permitted by applicable law, all parties to this Agreement hereby waive the right to any jury trial in any action, proceeding,
or counterclaim brought by any party against any other party.


 


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 Bisco Industries, 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.


 






     


    
	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No. 40906	(Continued)
	Page 7

	 	 	 


 


    

 


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 Bisco Industries, Inc..


 


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


 


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


 


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


 


Indebtedness. The
word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any
of the Related Documents. Specifically, without limitation, Indebtedness includes all amounts that may be indirectly secured by
the Cross-Collateralization provision of this Agreement.


 


Lender. The word "Lender"
means Citizens Business Bank, its successors and assigns.


 


Note. The word "Note"
means the Note dated July 12, 2019 and executed by Bisco Industries, Inc. in the principal amount of $5,000,000.00, 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 JULY 12, 2019.


 


GRANTOR:


 


BISCO INDUSTRIES, INC.


 





	By:	/s/ Glen F. Ceiley	 
	 	Glen F. Ceiley, Pres./CEO/CFO/Secretary of Bisco 	 
	 	Industries, Inc.	 
	 	 	 
	LENDER:	 
	 	 
	CITIZENS BUSINESS BANK	 
	 	 	 
	By:	  /s/ Cassaundra Johnson	 
	 	Authorized Officer