Document:

Exhibit 10.16

 

COMMERCIAL SECURITY AGREEMENT

 

	Principal

    $9,000,000.00	Loan
    Date
 08-01-2004	Maturity

    02-01-2005	Loan
    No
 155354101	Call/Coll

    CLS 01 /240	Account

    600714	Officer
    

    644	Initials

/s/
	
        References in the shaded area 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:	bisco industries, inc.	Lender:	community bank
	 	1500 NORTH LAKEVIEW AVENUE	 	ANAHEIM BRANCH
	 	ANAHEIM, CA 92807	 	1750 S. STATE COLLEGE BLVD.
	 	 	 	ANAHEIM, CA 92806
	 	 	 	(800) 788-9999
	 	 	 	 

 

THIS COMMERCIAL SECURITY AGREEMENT dated
August 1, 2004, is made and executed between BISCO INDUSTRIES, INC. (“Grantor”) and COMMUNITY 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 present and future accounts,
contract rights, chattel paper, security agreements and debts secured thereby, documents, notes, drafts, instruments, general intangibles
(including, without limitation, all present and future choses and things in action, goodwill, patents, trademarks, trade names,
customer lists, purchase orders, deposit accounts and tax refunds), and returned goods. All present and hereafter acquired inventory
wherever located, including but not limited to all present and future goods held for sale or lease or to be furnished under a contract
of service and all raw materials, work in process and finished goods. All present and hereafter acquired equipment wherever located,
including but not limited to machinery, machine tools, motors, equipment, controls, attachments, parts, tools, furniture, furnishings,
fixtures and motor vehicles and all attachments, accessories, accessions, replacements, substitutions, additions and improvements
to any of the foregoing. All present and future dies, drawings, blueprints, catalogs and computer programs. All proceeds and products
of the foregoing, including but not limited to accounts, contract rights, general intangibles, equipment, inventory, money, deposit
accounts, goods, chattel paper, documents, notes, drafts, instruments, insurance proceeds, and any other tangible or intangible
property received upon the sale or other disposition of any of the foregoing. All present and future books and records pertaining
to any of the foregoing and the equipment containing said books and records. Except as to inventory held for sale, the Borrower
has no right to sell or otherwise dispose of any of the collateral.

 

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.

 

Despite any other provision of this Agreement,
Lender is not granted, and will not have, a nonpurchase money security interest in household goods, to the extent such a security
interest would be prohibited by applicable law. In addition, if because of the type of any Property, Lender is required to give
a notice of the right to cancel under Truth in Lending for the Indebtedness, then Lender will not have a security interest in such
Collateral unless and until such a notice is given.

 

CROSS-COLLATERAL1ZATION. 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:

 

Perfection of Security Interest. Grantor agrees
to execute financing statements and to take whatever other 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 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: 155354101	(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, 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 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 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 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 thirty (30) 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. 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.

 

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-1 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 financing statements and documents of title in Grantor’s name and to execute all documents necessary
to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement. If Grantor changes
Grantor’s name or address, or the name or address of any person granting a security interest under this Agreement changes, Grantor
will promptly notify the Lender of such change.

 

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.

 

    	 

    	 

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 3

 

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.

 

Default in Favor of Third
Parties. Should Borrower or any Grantor default 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 Grantor’s property
or Grantor’s or any Grantor’s ability to repay the Indebtedness or 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 Collaterallzation.
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 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.

 

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 (and no event of default will have occurred) if Grantor,
after receiving written notice from Lender 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.

 

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.

 

    	 

    	 

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 4

 

POWER OF ATTORNEY. Grantor hereby
appoints Lender as its true and lawful attorney-in-fact, irrevocably, with full power of substitution to do the following: (a)
to demand, collect, receive, receipt for, sue and recover all sums of money or other property which may now or hereafter become
due, owing or payable from the Collateral; (b) to execute, sign and endorse any and all claims, instruments, receipts, checks,
drafts or warrants issued in payment for the Collateral; (c) to settle or compromise any and all claims arising under the Collateral,
and, in the place and stead of Grantor, to execute and deliver its release and settlement for the claim; and (d) to file any claim
or claims or to take any action or institute or take part in any proceedings, either in its own name or in the name of Grantor,
or otherwise, which in the discretion of Lender may seem to be necessary or advisable. This power is given as security for the
indebtedness, and the authority hereby conferred is and shall be irrevocable and shall remain in full force and effect until renounced
by Lender.

 

ADDITIONAL DEFINITION OF INDEBTEDNESS. The word “Indebtedness”
includes all other obligations, debts and liabilities, plus interest thereon, of Grantor, or any one or more of them, to Lender,
as well as all claims by Lender against Grantor, or any one or more of them, whether existing now or later; whether they are voluntary
or involuntary, due or not due, direct o indirect, absolute or contingent, liquidated or unliquidated; whether Grantor may be liable
individually or jointly with others; whether Grantor may be obligated as guarantor, surety, accommodation party or otherwise; whether
recovery upon such indebtedness may be or hereafter may become barred by any statute of limitations; and whether such indebtedness
may be or hereafter may become otherwise unenforceable.

 

ADDITIONAL MAINTENANCE AND INSPECTION OF COLLATERAL-GRANTOR.
Grantor shall immediately notify Lender of all cases involving the return, rejection, repossession, loss or damage of or to
any Collateral; of any request for credit or adjustment or of any other dispute arising with respect to the Collateral; and generally
of all happenings and events affecting the Collateral or the value or the amount of the Collateral.

 

COLLATERAL SCHEDULES AND LOCATIONS.
As often as Lender shall require, and insofar as the Collateral consists of accounts and general intangibles, Grantor shall
deliver to Lender schedules of such Collateral, including such information as Lender may require, including without limitation
names and addresses of account debtors and agings of accounts and general intangibles. Insofar as the Collateral consists of inventory
and equipment, Grantor shall deliver to Lender, as often as Lender shall require, such lists, descriptions, and designations of
such Collateral as Lender may require to identify the nature, extent, and location of such Collateral. Such information shall be
submitted for Grantor and each of its subsidiaries or related companies.

 

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 Rules
of the American Arbitration Association 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 to 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.

 

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, construed and enforced in accordance with federal law and the laws of the State of California. 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.

 

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. 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.

 

    	 

    	 

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 5

 

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:

 

Account. The word “Account”
means a trade account, account receivable, other receivable, or other right to payment for goods sold or services rendered owing
to Grantor (or to a third party grantor acceptable to Lender).

 

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.

 

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 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 COMMUNITY BANK, its successors and assigns.

 

Note. The word “Note”
means the Note executed by BISCO INDUSTRIES, INC. in the principal amount of $8,000,000.00 dated November 15, 2000, 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 AUGUST 1, 2004.

 

GRANTOR:

 

BISCO INDUSTRIES, INC.

 

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

 

 

LASER PRO
Lending, Ver 5.23.20.002 Copr. Harland Financial Solutions, Inc. 1997, 2004. All Rights Reserved - CA o:\CF150\CFl\LPL\E40
FC TR-5384 PR-CERTIFIEExhibit 10.17

 

 

COMMUNITY BANK

 

      Partnership Banking

 

COMMERCIAL SECURITY AGREEMENT

 

	Principal

    $10,000,000.00	Loan
    Date
 03-23-2010	Maturity

    10-01-2010	Loan
    No
 155354101	Call/Coll

    CLS 07 /240	Account

    600714	Officer
    

    765	Initials

/s/ 
	
        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:	bisco industries, inc.	Lender:	community bank
	 	1500 NORTH LAKEVIEW AVENUE	 	ANAHEIM BRANCH
	 	ANAHEIM, CA 92807	 	1750 S. STATE COLLEGE BLVD.
	 	 	 	ANAHEIM, CA 92806
	 	 	 	(800) 788-9999
	 	 	 	 

 

THIS COMMERCIAL SECURITY AGREEMENT
dated  March 23, 2010, is made and executed between BISCO INDUSTRIES, INC. (“Grantor”) and COMMUNITY 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, Instruments and General Intangibles; whether any of the foregoing is owned now or acquired later; all accessions,
attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether
added now or later; all products and produce of any of the property; all accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other disposition of any of the property; all proceeds (including
insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property, 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;
all records and data relating to any of the property, whether in the form of a writing, photograph, microfilm, microfiche, or
electronic media, together with all of debtor'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

  

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-COLLATERAL1ZATION. 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:

 

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.

 

    	 

    	 

    
 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 2

  

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.

 

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 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.

 

    	 

    	 

    
 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 3

 

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 thirty (30) 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 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.

 

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. If Grantor changes
Grantor’s name or address, or the name or address of any person granting a security interest under this Agreement changes, Grantor
will promptly notify the Lender of such change.

 

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.

 

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.

 

    	 

    	 

    
 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 4

 

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.

 

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.

 

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.

 

    	 

    	 

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 5

 

POWER OF ATTORNEY. Grantor hereby
appoints Lender as its true and lawful attorney-in-fact, irrevocably, with full power of substitution to do the following: (a)
to demand, collect, receive, receipt for, sue and recover all sums of money or other property which may now or hereafter become
due, owing or payable from the Collateral; (b) to execute, sign and endorse any and all claims, instruments, receipts, checks,
drafts or warrants issued in payment for the Collateral; (c) to settle or compromise any and all claims arising under the Collateral,
and, in the place and stead of Grantor, to execute and deliver its release and settlement for the claim; and (d) to file any claim
or claims or to take any action or institute or take part in any proceedings, either in its own name or in the name of Grantor,
or otherwise, which in the discretion of Lender may seem to be necessary or advisable. This power is given as security for the
indebtedness, and the authority hereby conferred is and shall be irrevocable and shall remain in full force and effect until renounced
by Lender.

 

ADDITIONAL DEFINITION OF INDEBTEDNESS. The word “Indebtedness”
includes all other obligations, debts and liabilities, plus interest thereon, of Grantor, or any one or more of them, to Lender,
as well as all claims by Lender against Grantor, or any one or more of them, whether existing now or later; whether they are voluntary
or involuntary, due or not due, direct o indirect, absolute or contingent, liquidated or unliquidated; whether Grantor may be liable
individually or jointly with others; whether Grantor may be obligated as guarantor, surety, accommodation party or otherwise; whether
recovery upon such indebtedness may be or hereafter may become barred by any statute of limitations; and whether such indebtedness
may be or hereafter may become otherwise unenforceable.

 

ADDITIONAL MAINTENANCE AND INSPECTION OF COLLATERAL-GRANTOR.
Grantor shall immediately notify Lender of all cases involving the return, rejection, repossession, loss or damage of or to
any Collateral; of any request for credit or adjustment or of any other dispute arising with respect to the Collateral; and generally
of all happenings and events affecting the Collateral or the value or the amount of the Collateral.

 

NATURE OF GUARANTY. Guarantor's
liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of all indebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing
liability of Guarantor in connection with any remaining portions of the indebtedness or any of the indebtedness which subsequently
arises or is thereafter incurred or contracted.

 

COLLATERAL SCHEDULES AND LOCATIONS.
As often as Lender shall require, and insofar as the Collateral consists of accounts and general intangibles, Grantor shall
deliver to Lender schedules of such Collateral, including such information as Lender may require, including without limitation
names and addresses of account debtors and agings of accounts and general intangibles. Insofar as the Collateral consists of inventory
and equipment, Grantor shall deliver to Lender, as often as Lender shall require, such lists, descriptions, and designations of
such Collateral as Lender may require to identify the nature, extent, and location of such Collateral. Such information shall be
submitted for Grantor and each of its subsidiaries or related companies.

 

PRIOR COMMERCIAL SECURITY AGREEMENT.
This Commercial Security Agreement supersedes and replaces that certain prior Commercial Security Agreement dated March 1,
1999 along with all modification(s) and amendment(s) thereto.

 

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 Rules
of the American Arbitration Association 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 to 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.

 

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.

 

    	 

    	 

    
 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 6

 

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.

 

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 COMMUNITY BANK, its successors and assigns.

 

Note. The word “Note”
means the Note executed by BISCO INDUSTRIES, INC. in the principal amount of $8,000,000.00 dated November 15, 2000, together with
all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit
agreement.

 

    	 

    	 

    
 

	 	COMMERCIAL SECURITY AGREEMENT	 
	Loan No: 155354101	(Continued)	Page 7

 

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  MARCH 23,
2010.

 

GRANTOR:

 

BISCO INDUSTRIES, INC.

 

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

 

 

LASER PRO Lending,
Ver 5.46.00.003 Copr. Harland Financial Solutions, Inc. 1997, 2010. All Rights Reserved. - CA G:\CF150\CFl\LPL\E40.FC
TR-6201 PR-TRADASST

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