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