EACO Corporation
Annual Report 2011

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KEACO CORP - EACOFiled: November 29, 2011 (period: August 31, 2011)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549 FORM 10-K xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended August 31, 2011 ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year ended Commission File No. 000-14311 EACO CORPORATION(Exact name of Registrant as specified in its charter) Florida 59-2597349(State of Incorporation) (I.R.S. EmployerIdentification No.)1500 North Lakeview AvenueAnaheim, California 92807(Address of Principal Executive Offices)Registrant’s telephone number, including area code: (714) 876-2490Securities registered pursuant to Section 12(b) of the Act:NoneSecurities registered pursuant to Section 12(g) of the Act:Common Stock, $.01 Par Value(Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨ NO xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. YES x NO ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files). YES ¨ NO ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form10-K. ¨Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Large accelerated filer ¨ Accelerated filer ¨Non-accelerated filer ¨ Smaller reporting company xIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO xThe aggregate market value of the registrant’s common stock as of the last business day of the registrant’s most recently completed second fiscal quarter(based upon the average bid and asked price of the common stock on that date) held by non-affiliates of the registrant was approximately $16,276.As of November 28, 2011, 4,861,590 shares of the registrant’s common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCENo documents required to be listed hereunder are incorporated by reference in this report on Form 10-K. Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Forward-Looking InformationThis report may contain forward-looking statements. Such statements can be identified by the use of terminology such as “anticipate,” “believe,” “could,”“estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “project,” “should,” “will” and similar words or expressions. These forward-lookingstatements include, but are not limited to, statements regarding our anticipated revenue, expenses, profits, capital needs, and potential transactions withaffiliates. Forward-looking statements are based on our current expectations, estimates and forecasts of future events and results and involve a number of risksand uncertainties that could cause actual results to differ materially including, among other things, the following: failure of facts to conform to managementestimates and assumptions; economic conditions, including the recent economic downturn and continuing economic uncertainties; our ability to maintain aneffective system of internal controls over financial reporting; potential losses from trading in securities; our ability to retain key personnel and relationshipswith suppliers; the willingness of GE Capital, Community Bank or other lenders to extend financing commitments and the availability of capital resources;repairs or similar expenditures required for existing properties due to weather or acts of God; and other risks identified from time to time in the Company’sreports and other documents filed with the Securities and Exchange Commission (the “SEC”), and in public announcements. It is not possible to foresee oridentify all factors that could cause actual results to differ materially from those anticipated. As such, investors should not consider any of such factors to bean exhaustive statement of all risks or uncertainties.No forward-looking statements can be guaranteed and actual results may vary materially. The Company undertakes no obligation to update any forward-looking statement except as required by law, but investors are advised to consult any further disclosures by the Company in its filings with the SEC,especially on Forms 10-K, 10-Q and 8-K, in which the Company discusses in more detail various important factors that could cause actual results to differfrom expected or historical results.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART I ITEM 1 Business 1 ITEM 1A. Risk Factors 4 ITEM 1B. Unresolved Staff Comments 8 ITEM 2. Properties 8 ITEM 3. Legal Proceedings 9 ITEM 4. (Removed and Reserved) 9 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 9 ITEM 6. Selected Financial Data 10 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 15 ITEM 8. Financial Statements and Supplementary Data 15 ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 15 ITEM 9A. Controls and Procedures 15 ITEM 9B. Other Information 16 PART III ITEM 10. Directors, Executive Officers and Corporate Governance 16 ITEM 11. Executive Compensation 18 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 19 ITEM 13. Certain Relationships and Related Transactions and Director Independence 20 ITEM 14. Principal Accounting Fees and Services 21 PART IV ITEM 15. Exhibits and Financial Statement Schedules 21 Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IItem 1. BusinessOrganization and Merger with Bisco Industries, Inc.EACO Corporation (“EACO”) was incorporated in Florida in September 1985. From the inception of EACO through June 2005, EACO’s business consistedof operating restaurants in the State of Florida. On June 29, 2005, EACO sold all of its operating restaurants (the “Asset Sale”) including sixteen restaurantbusinesses, premises, equipment and other assets used in restaurant operations. The only remaining activity of the restaurant operations relates to an accruedliability recorded by the Company in connection with a former self-insured workers’ compensation policy, which is presented as liabilities of discontinuedoperations on the Company’s balance sheets. Prior to the acquisition of Bisco (described below), EACO’s operations principally consisted of managing fivereal estate properties held for leasing located in Florida and California.On March 24, 2010, EACO completed the acquisition of Bisco Industries, Inc. (“Bisco”), a company under the common control of Glen Ceiley, EACO’sChairman of the Board, Chief Executive Officer and majority shareholder. Bisco is a distributor of electronic components and fasteners with 40 sales officesand six distribution centers located throughout the United States and Canada. Bisco supplies parts used in the manufacture of products in a broad range ofindustries, including the aerospace, circuit board, communication, computer, fabrication, instrumentation, industrial equipment and marine industries.Pursuant to an Agreement and Plan of Merger by and among EACO, Bisco Acquisition Corp., a wholly-owned subsidiary of EACO, Bisco, and Glen Ceiley,Bisco Acquisition Corp. was merged with and into Bisco; Bisco was the surviving corporation in the merger and became a wholly-owned subsidiary ofEACO. The transaction (the “Acquisition”) was accounted for as a combination of companies under common control using the historical balances of Bisco.(See Basis of Presentation in Note 1 to the accompanying financial statements.)In connection with the Acquisition, EACO issued an aggregate of 4,705,669 shares of its common stock (the “Merger Shares”) to the sole shareholder ofBisco, Glen Ceiley, in exchange for all of the outstanding capital stock of Bisco. Immediately after the Acquisition and the issuance to him of the MergerShares, Mr. Ceiley owned 98.9% of the outstanding common stock of EACO. Mr. Ceiley also owns 36,000 shares of the Series A Cumulative ConvertiblePreferred Stock of EACO.EACO, Bisco and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited are hereinafter collectively referred to herein as the “Company”,“we”, “us” and “our”.OperationsEACO Corporation (Real Estate Rental Operations)At August 31, 2011, EACO owned three restaurant properties, one located in Orange Park, Florida (the “Orange Park Property”), one in Brooksville, Florida(the “Brooksville Property”) and the third in Deland, Florida (the “Deland Property”). All three restaurant properties were leased at August 31, 2011. Inaddition, EACO owns two income producing real estate properties held for investment in Sylmar, California (the “Sylmar Property”) which, at August 31,2011, is leased to two industrial tenants.EACO operates in a single segment: Real Estate Rental Operations. During the year ended August 31, 2011 (“fiscal 2011”), the Company had five tenantsthat accounted for 100% of the Company’s rental revenue. The tenants and their related percentage contribution to revenue are summarized below: Tenant Percentage of Revenue Hertz 40% Boeing Corporation 23 International Buffet 15 Hibachi Grill 11 Orange Buffet 11 1Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Bisco Industries, Inc. (Distribution Operations)OverviewBisco is a premier distributor of electronic components and fasteners. Through its 40 sales offices and six distribution centers located throughout the UnitedStates and Canada, Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace, circuit board,communication, computer, fabrication, instrumentation, industrial equipment and marine industries.Bisco commenced operations in Illinois in 1973 and was incorporated in 1974. Bisco moved its corporate headquarters in 1981 to California and its principalexecutive offices are now located at 1500 N. Lakeview Avenue, Anaheim, California 92807. Bisco’s website address is www.biscoind.com. The inclusion ofBisco’s website address in this annual report does not include or incorporate by reference into this annual report any information on or accessible through thewebsite.Products and ServicesBisco currently stocks over 87,000 items from more than 260 manufacturers, and is an authorized distributor for over 120 of these manufacturers. Bisco’sproducts include electronic components such as spacers and standoffs, card guides and ejectors, component holders and fuses, circuit board connectors, andcable components, as well as a large variety of fasteners and hardware. The breadth of Bisco’s products and extensive inventory provide a one-stop shoppingexperience for many customers.Bisco also provides customized services and solutions for a wide range of production needs, including special packaging, bin stocking, kitting and assembly,bar coding, electronic requisitioning, and integrated supply programs, among others. Bisco works with its customers to design and develop systems to meettheir specific needs.DivisionsAs “Bisco Industries,” Bisco sells the full spectrum of products that it offers to all markets that Bisco serves, but primarily sells to original equipmentmanufacturers (“OEMs”). While historically, the substantial majority of Bisco’s revenues have been derived from the Bisco division, Bisco has alsoestablished additional divisions that specialize in specific industries and products. Bisco believes that the focus by industry and/or product enhances Bisco’sability to provide superior service and devise tailored solutions for its customers.National-PrecisionThe National-Precision division primarily sells electronic hardware and commercial fasteners to OEMs in the aerospace, fabrication and industrial equipmentindustries. National-Precision seeks to be the leading global distributor of mil-spec and commercial fasteners, hardware and distribution services used inproduction. Since January 1, 2008, Bisco has opened five additional National-Precision offices.Fast-CorThe Fast-Cor division was established to be a distributor’s source for a broad range of components and fasteners. Fast-Cor has access to the entire inventory ofproducts that Bisco offers but primarily focuses on selling to other distributors, not manufacturers. 2Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Component PowerThe Component Power division specialized in electronic active and passive components and sold products primarily to customers in the instrumentation,computer, communication, aerospace and industrial equipment industries. In fiscal 2011, the Company decided to merge the Component Power division withthe main Bisco division due to declining sales in the Component Power specialized market place.Customers and SalesBisco’s customers operate in a wide variety of industries and range from large, global companies to small local businesses. Bisco strives to provideexceptional service to all customers, including smaller businesses, and continues to focus on growing its share of that market. As of August 31, 2011, Biscohad more than 10,600 active customers; however, no single customer accounted for more than 10% of Bisco’s revenues for the year ended August 31, 2011.For the fiscal years ended August 31, 2011 and 2010, Bisco’s top 20 customers represented in the aggregate approximately 10% and 14%, respectively, ofBisco’s distribution sales.Bisco generally sells its products through its sales representatives located in its 40 sales offices located in the United States and Canada. Customers can alsoplace orders through Bisco’s website. Bisco currently maintains six distribution centers located in Anaheim and San Jose, California; Dallas, Texas; Chicago,Illinois; Boston, Massachusetts and Toronto, Canada. Each of Bisco’s selling facilities and distribution centers are linked to Bisco’s central computer system,which provides Bisco’s salespersons with online, real-time data regarding inventory levels throughout Bisco and facilitates control of purchasing, shippingand billing. Bisco generally ships products to customers from one of its six distribution centers, based on the geographic proximity and the availability of theordered products.Bisco sells its products primarily in the United States and Canada. Bisco’s international sales represented 7% and 6% of its distribution sales for each of thefiscal years ended August 31, 2011 and 2010, respectively. Sales to customers in Canada accounted for approximately 62% and 80% of such internationalsales in each of those years, respectively.SuppliersAs of August 31, 2011, Bisco offered the products of over 260 manufacturers and is an authorized distributor for over 120 manufacturers. The authorizeddistributor agreements with most manufacturers are typically cancelable by either party at any time or on short notice. While Bisco doesn’t manufacture itsproducts, it does provide kitting and packaging services for certain of its customers. Although Bisco sells more products of certain brands, Bisco believes thatmost of the products it sells are available from other sources at competitive prices. No single supplier accounted for more than 10% of Bisco’s revenues infiscal 2011.EmployeesAs of August 31, 2011, the Company had 358 full-time employees, of which 250 were in sales and marketing and 108 were in management, administrationand finance.Working Capital RequirementsThe Company’s Distribution Operations has historically funded its operations from cash generated from its operations and/or by trading in marketabledomestic equity securities. In addition, the Company has a revolving credit agreement with Community Bank, which currently provides for borrowings of upto $10.0 million and bears interest at either the 30, 60 or 90 day London Inter-Bank Offered Rate (“LIBOR”) (the 90 day LIBOR at August 31, 2011 and 2010was 0.33% and 0.29%, respectively) plus 1.75% and/or the bank’s reference rate (3.25% at August 31, 2011 and 2010). Borrowings are secured bysubstantially all assets of the Company’s Distribution Operations and are guaranteed by the Company’s Chief Executive 3Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Officer, Chairman of the Board and majority shareholder Glen F. Ceiley. The original agreement, as amended in April 2008, expired in October 2010, but wasextended to and renewed in March 2011. The new credit agreement expires in March 2013. The amount outstanding under this line of credit as of August 31,2011 and 2010 was $8,500,000 and $8,900,000, respectively. Availability under the line of credit was $1,500,000 and $1,100,000 at August 31, 2011 and2010, respectively.The Company’s Real Estate Rental Operations has historically been funded by rents received from the tenants of its five rental properties. Any cashrequirements of the Real Estate Rental Operations in excess of such rental income have historically been funded by the Distribution Operations. Theseborrowings and related interest have been eliminated in the accompanying consolidated financial statements.Long-Term DebtIn April 2008, the Company financed the Brooksville Property with a $1,216,400 loan from Zion’s Bank. The loan agreement with Zion’s Bank requires theCompany to comply with certain financial covenants and ratios measured annually. As of August 31, 2011, the Company was in compliance with thecovenants of the Zion’s Bank loan.In October 2002, the Company entered into a loan agreement with GE Capital for the Orange Park Property. The loan agreement with GE Capital requires theCompany to comply with certain financial covenants and ratios measured. As of August 31, 2011, the Company was not in compliance with one covenantincluded in the debt agreement. The defaulted covenant required EACO to maintain a fixed charge coverage ratio of at least 1.25:1. GE Capital has grantedthe Company a waiver for this covenant for the year ended August 31, 2011.Item 1A. Risk FactorsOur business is subject to a number of risks, some of which are discussed below. Other risks are presented elsewhere in this report and in our other filingswith the SEC, including our subsequent reports on Forms 10-Q and 8-K. If any of the risks actually occur, our business, financial condition, or results ofoperations could be seriously harmed. In that event, the market price for shares of our common stock may decline, and you could lose all or part of yourinvestment.Changes and uncertainties in the economy have harmed and could continue to harm our operating results.As a result of the recent economic downturn and continuing economic uncertainties, our operating results, and the economic strength of our customers andsuppliers, are increasingly difficult to predict. Our distribution sales are affected by many factors, including, among others, general economic conditions,interest rates, inflation, liquidity in the credit markets, unemployment trends, geopolitical events, and other factors. Although we sell our products tocustomers in a broad range of industries, the significant weakening of economic conditions on a global scale has caused some of our customers to experiencea slowdown that has adversely impacted our sales and operating results. Changes and uncertainties in the economy also increase the risk of uncollectibleaccounts receivable. The pricing we receive from suppliers may also be impacted by general economic conditions. Continued and future changes anduncertainties in the economic climate in the United States and elsewhere could have a similar negative impact on the rate and amounts of purchases by ourcurrent and potential customers, create price inflation for our products, or otherwise have a negative impact on our expenses, gross margins and revenues, andcould hinder our growth.If we fail to maintain an effective system of internal controls over financial reporting or experience additional material weaknesses in our system ofinternal controls, we may not be able to report our financial results accurately or timely or detect fraud, which could have a material adverse effect onthe market price of our common stock and our business. 4Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We have from time to time had material weaknesses in our internal controls over financial reporting due to a lack of process related to the preparation of ourfinancial statements and the lack of segregation of duties and sufficient control in the area of financial reporting oversight and review, and the lack ofappropriate personnel to ensure the complete and proper application of generally accepted accounting principles (“GAAP”) as it relates to certain routineaccounting transactions. Although we have addressed these material weaknesses as of August 31, 2011, we may experience additional material weaknesses inthe future and may fail to maintain a system of internal controls over financial reporting that complies with the reporting requirements applicable to publiccompanies in the United States. Our failure to address any deficiencies or weaknesses in our internal control over financial reporting or to properly maintainan effective system of internal control over financial reporting could impact our ability to prevent fraud or to issue our financial statements in a timelymanner that presents fairly (in accordance with GAAP) our financial condition and results of operations. The existence of any such deficiencies and/orweaknesses, even if cured, may also lead to the loss of investor confidence in the reliability of our financial statements, could harm our business andnegatively impact the trading price of our common stock. Such deficiencies or material weaknesses may also subject us to lawsuits, investigations and otherpenalties.We have recently incurred significant losses from trading in securities, and we may continue to incur such losses in the future, which may also cause usto be in violation of covenants under our line of credit agreement.Bisco has historically funded its operations from cash generated from its operations and/or by trading in marketable domestic equity securities. Bisco’sinvestment strategy has included taking both long and short positions, as well as utilizing options to maximize return. This strategy can lead, and has led, tosignificant losses based on market conditions and trends. During the year ended August 31, 2010, Bisco realized losses of $3,479,000 in its brokerageaccounts used for its investments. We may incur losses in future periods from such trading activities, which could materially and adversely affect ourliquidity and financial condition.In addition, unanticipated losses from our trading activities may cause Bisco to be in violation of certain covenants under its line of credit agreement withCommunity Bank. As of August 31, 2011 and 2010, Bisco had outstanding $8,500,000 and $8,900,000, respectively, under its revolving credit agreement,which loan is secured by substantially all of Bisco’s assets and is guaranteed by Mr. Ceiley, our Chairman and CEO. The loan agreement contains covenantswhich require that, on a quarterly basis, Bisco’s losses from trading in securities not exceed its pre-tax operating income. We cannot assure you thatunanticipated losses from our trading activities will not cause us to violate the covenant in the future or that the bank will grant a waiver for any such defaultor that it will not exercise its remedies, which could include the acceleration of the obligation’s maturity date and foreclosure on Bisco’s assets, with respectto any such noncompliance, which could have a material adverse effect on our business and operations.We rely heavily on our internal information systems, which, if not properly functioning, could materially and adversely affect our business.Our information systems have been in place for many years, and are subject to system failures as well as problems caused by human error, which could have amaterial adverse effect on our business. Many of our systems consist of a number of legacy or internally developed applications, which can be more difficultto upgrade to commercially available software. It may be time consuming for us to retrieve data that is necessary for management to evaluate our systems ofcontrol and information flow. In the future, management may decide to convert our information systems to a single enterprise solution. Such a conversion,while it would enhance the accessibility and reliability of our data, could be costly and would not be without risk of data loss, delay or business interruption.Maintaining and operating these systems requires continuous investments. Failure of any of these internal information systems or material difficulties inupgrading these information systems could have material adverse effects on our business and our timely compliance with our reporting obligations. 5Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We may not be able to attract and retain key personnel.Our future performance will depend to a significant extent upon the efforts and abilities of certain key management and other personnel, including GlenCeiley, our Chairman of the Board and Chief Executive Officer, as well as other executive officers and senior management. The loss of service of one or moreof our key management members could have a material adverse effect on our business.We do not have long-term supply agreements or guaranteed price or delivery arrangements with the majority of our suppliers.In most cases, we have no guaranteed price or delivery arrangements with our suppliers. Consequently, we may experience inventory shortages on certainproducts. Furthermore, our industry occasionally experiences significant product supply shortages and customer order backlogs due to the inability of certainmanufacturers to supply products as needed. We cannot assure you that suppliers will maintain an adequate supply of products to fulfill our orders on atimely basis, at a recoverable cost, or at all, or that we will be able to obtain particular products on favorable terms or at all. Additionally, we cannot assureyou that product lines currently offered by suppliers will continue to be available to us. A decline in the supply or continued availability of the products ofour suppliers, or a significant increase in the price of those products, could reduce our sales and negatively affect our operating results.Our supply agreements are generally terminable at the suppliers’ discretion.Substantially all of the agreements we have with our suppliers, including our authorized distributor agreements, are terminable with little or no notice andwithout any penalty. Suppliers that currently sell their products through us could decide to sell, or increase their sales of, their products directly or throughother distributors or channels. Any termination, interruption or adverse modification of our relationship with a key supplier or a significant number of othersuppliers would likely adversely affect our operating income, cash flow and future prospects.The competitive pressures we face could have a material adverse effect on our business.The market for our products and services is very competitive. we compete for customers with other distributors, as well as with many of our suppliers. Afailure to maintain and enhance our competitive position could adversely affect our business and prospects. Furthermore, our efforts to compete in themarketplace could cause deterioration of gross profit margins and, thus, overall profitability. Some of our competitors may have greater financial, personnel,capacity and other resources or a more extensive customer base than we do.Our estimate of the potential for opening offices in new geographic areas could be incorrect.One of our primary growth strategies for our Distribution Operations segment is to grow our business through the introduction of sales offices into newgeographic markets. Based on our analysis of demographics in the United States, Canada and Mexico, we currently estimate there is potential marketopportunity in North America to support additional sales offices. We cannot guarantee that our estimates are accurate or that we will open enough offices tocapitalize on the full market opportunity or that any new offices will be successful. In addition, a particular local market’s ability to support a sales office maychange because of a change due to competition, or local economic conditions.We may be unable to meet our goals regarding new office openings.Our growth, in part, is primarily dependent on our ability to attract new customers. Historically, the most effective way to attract new customers has beenopening new sales offices. Our current business strategy focuses on opening a specified number of new sales offices each year, and quickly growing each newsales office. Although we have opened three new offices during the year ended August 31, 2011, we may not be able to continue to open or grow new officesat our projected rates. Failure to do so could negatively impact our long-term growth. 6Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Opening sales offices in new markets presents increased risks that may prevent us from being profitable in these new locations, and/or may adverselyaffect our operating results.Our new sales offices do not typically achieve operating results comparable to our existing offices until after several years of operation. The added expensesrelating to payroll, occupancy and transportation costs can impact our ability to leverage earnings. In addition, offices in new geographic areas faceadditional challenges to achieving profitability. In new markets, we have less familiarity with local customer preferences and customers in these markets areless familiar with our name and capabilities. Entry into new markets may also bring us into competition with new, unfamiliar competitors. These challengesassociated with opening new offices in new markets may have an adverse effect on our business and operating results.We may not be able to identify new products and products lines, or obtain new product on favorable terms and prices or at all.Our success depends in part on our ability to develop product expertise and identify future products and product lines that complement existing products andproduct lines and that respond to our customers’ needs. We may not be able to compete effectively unless our product selection keeps up with trends in themarkets in which we compete.Our ability to successfully attract and retain qualified sales personnel is uncertain.Our success depends in large part on our ability to attract, motivate and retain a sufficient number of qualified sales employees, who understand andappreciate our strategy and culture and are able to adequately represent us to our customers. Qualified individuals of the requisite caliber and number neededto fill these positions may be in short supply in some areas, and the turnover rate in the industry is high. If we are unable to hire and retain personnel capableof consistently providing a high level of customer service, as demonstrated by their enthusiasm for our culture and product knowledge, our sales could bematerially adversely affected. Additionally, competition for qualified employees could require us to pay higher wages to attract a sufficient number ofemployees. An inability to recruit and retain a sufficient number of qualified individuals in the future may also delay the planned openings of new offices.Any such delays, material increases in existing employee turnover rates, or increases in labor costs, could have a material adverse effect on our business,financial condition or operating results.We generally do not have long-term sales contracts with our customers.Most of our sales are made on a purchase order basis, rather than through long-term sales contracts. A variety of conditions, both specific to each customerand generally affecting each customer’s industry, may cause customers to reduce, cancel or delay orders that were either previously made or anticipated, gobankrupt or fail, or default on their payments. Significant or numerous cancellations, reductions, delays in orders by customers, losses of customers, and/orcustomer defaults on payment could materially adversely affect our business.Increases in the costs of energy, shipping and raw materials used in our products could impact our cost of goods and distribution and occupancyexpenses, which would result in lower operating margins.Costs of raw materials used in our products and energy costs have been rising during the last several years, which has resulted in increased production costsfor our suppliers. These suppliers typically look to pass their increased costs along to us through price increases. The shipping costs for our distributionoperation have risen as well and may continue to rise. While we typically try to pass increased supplier prices and shipping costs through to our customers orto modify our activities to mitigate the impact, we may not be successful. Failure to fully pass these increased prices and costs through to our customers or tomodify our activities to mitigate the impact would have an adverse effect on our operating margins. 7Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company’s Chairman and CEO holds almost all of our voting stock and can control the election of directors and significant corporate actions.Glen Ceiley, our Chairman and CEO, owns approximately 99% of our outstanding voting stock. Mr. Ceiley is able to exert significant influence over theoutcome of almost all corporate matters, including significant corporate transactions requiring a shareholder vote, such as a merger or a sale of the Companyor our assets. This concentration of ownership and influence in management and board decision-making could also harm the price of our common stock by,among other things, discouraging a potential acquirer from seeking to acquire shares of our common stock (whether by making a tender offer or otherwise) orotherwise attempting to obtain control of the Company.Sales of our common stock by Glen Ceiley could cause the price of our common stock to decline.There is currently no established trading market for our common stock, and the volume of any sales is generally low. As of August 31, 2011, the number ofshares held by non-affiliates of Mr. Ceiley or Bisco is less than 50,000 shares. If Mr. Ceiley sells or seeks to sell a substantial number of his shares of ourcommon stock in the future, the market price of our common stock could decline. The perception among investors that these sales may occur could producethe same effect.Inclement weather and other disruptions to the transportation network could impact our distribution system.Our ability to provide efficient shipment of products to our customers is an integral component of our overall business strategy. Disruptions at distributioncenters or shipping ports may affect our ability to both maintain core products in inventory and deliver products to our customers on a timely basis, whichmay in turn adversely affect our results of operations. In addition, severe weather conditions could adversely impact demand for our products in particularlyhard hit regions.Our advertising and marketing efforts may be costly and may not achieve desired results.We incur substantial expense in connection with our advertising and marketing efforts. Postage represents a significant advertising expense for us because wegenerally mail fliers to current and potential customers through the U.S. Postal Service. Any future increases in postal rates will increase our mailing expensesand could have a material adverse effect on our business, financial condition and results of operations.We may not have adequate or cost-effective liquidity or capital resources.Our ability to satisfy our cash needs depends on our ability to generate cash from operations and to access to the capital markets, both of which are subject togeneral economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may need to satisfy our cash needs throughexternal financing. However, external financing may not be available on acceptable terms or at all.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe have 40 sales offices and six distribution centers located throughout the United States and in Canada. Our corporate headquarters and one of our primarydistribution centers are located in Anaheim, California in approximately 40,000 square feet of office and warehouse space. We lease all of our properties,consisting of office and warehouse space, under leases generally having a term of three years. For additional information regarding our obligations underproperty leases, see Note 3 of the Notes to Consolidated Financial Statements, included in Part IV, Item 15 of this report. 8Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We also own and operate the following properties in connection with our Real Estate Rental Operations: Locations DescriptionDeland, FL Restaurant land and building. Leased to third party restaurant operator.Orange Park, FL(1) Restaurant land and building. Leased to third party restaurant operator.Sylmar, CA(2) Two properties leased to industrial tenants.Brooksville, FL(3) Restaurant land and building. Leased to a restaurant operator. (1)Property subject to mortgage securing promissory note issued to GE Capital.(2)Property subject to mortgage securing promissory note issued to Community Bank.(3)Property subject to mortgage securing promissory note issued to Zion’s Bank.Item 3. Legal ProceedingsFrom time to time, the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims are pendingagainst us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business or financialcondition.Item 4. (Removed and Reserved)PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket Information and HoldersThe Company’s common stock is quoted on the OTCQB operated by the OTC Markets Group Inc., and previously on the OTC Bulletin Board, under thetrading symbol “EACO”; however, there is no established public trading market for the Company’s common stock. As of November 1, 2011, there were 1,131shareholders of record of the Company’s common stock, not including individuals holding shares in street names. The closing sale price of the Company’sstock on November 1, 2011 was $1.60 per share.The quarterly high and low bid information of the Company’s common stock as quoted on such over-the-counter markets are set forth below. These quotedprices represent inter-dealer prices, without retail markup, markdown or commission, and may not necessarily represent actual transactions. All share pricesreflect the 1-for-25 reverse stock split effective March 23, 2010. High Low Year Ended August 31, 2010 Quarter ended November 30, 2009 2.50 1.50 Quarter ended February 28, 2010 7.00 1.50 Quarter ended May 31, 2010 3.00 1.50 Quarter ended August 31, 2010 3.20 1.95 Year Ended August 31, 2011 Quarter ended November 30, 2010 5.00 1.95 Quarter ended February 28, 2011 3.88 2.26 Quarter ended May 31, 2011 3.94 2.56 Quarter ended August 31, 2011 2.56 2.25 9Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.As of August 31, 2011, the Company had no options outstanding under any equity compensation plans. The Company did not grant or issue anyunregistered shares during the year ended August 31, 2011. The Company did not repurchase any of its own common stock during the year ended August 31,2011.Dividend PolicyThe Company has never paid cash dividends on its common stock and does not expect to pay any dividends on its common stock in the foreseeable future.Item 6. Selected Financial DataThe Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required underthis item.Item 7. Management’s Discussion and Analysis of Financial Condition and Results Of OperationsOverviewEACO was incorporated in Florida in September l985. From the inception of the Company through June 2005, EACO’s business consisted of operatingrestaurants in the State of Florida. On June 29, 2005, EACO sold all of its operating restaurants and other assets used in the restaurant operations. Therestaurant operations are presented as discontinued operations in the accompanying financial statements. From June 2005 until the acquisition of Bisco inMarch 2010, our operations principally consisted of managing five real estate properties held for leasing in Florida and California. As a result of ouracquisition of Bisco, the Company currently operates in two reportable segments: the Real Estate Rental Operations segment, which consists of managing thefour rental properties in Florida and California, and the Distribution Operations segment, which consists of the business of Bisco. Revenues derived from theDistribution Operations segment represented approximately 99% of the Company’s total revenues for the year ended August 31, 2011 and is expected tocontinue to represent the substantial majority of the Company’s total revenues for the foreseeable future. The accompanying financial statements include thefinancial position and results of operations of Bisco for all periods presented. As a result of Mr. Ceiley having majority voting control over both entitiesduring all periods presented, the consolidated financial statements were prepared in accordance with Accounting Standards Codification (“ASC”) 805-50,Transactions Between Entities Under Common Control, which specifies that in a combination of entities under common control, the entity that receives theassets or the equity interests shall initially recognize the assets and liabilities transferred at their historical carrying amounts at the date of transfer (“as-ifpooling-of-interests” accounting). The financial statements of the receiving entity shall also report the results of operations for the period, the financialposition and other financial information as though the transfer of net assets or exchange of equity interests had occurred at the beginning of the period.Financial statements and financial information presented for prior years have been retrospectively adjusted to furnish comparative historical information forperiods during which the entities were under common control.Critical Accounting PoliciesLong-Lived AssetsLong-lived assets (principally real estate, equipment and leasehold improvements) are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, real estate properties are reviewed on an asset-by-asset basis. Recoverability of real estate property assets is measured by a comparison of the carrying amount of each operating property and related assetsto future net cash flows expected to be generated by such assets. For measuring recoverability of Distribution Operations assets, long-lived assets are groupedwith other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. 10Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Revenue RecognitionFor the Company’s Distribution Operations, the Company’s shipping terms are FOB shipping point. As such, management generally recognizes Companyrevenue at the time of product shipment. Revenue is considered to be realized or realizable and earned when there is persuasive evidence of a salesarrangement in the form of an executed contract or purchase order, the product has been shipped (and installed when applicable), the sales price is fixed ordeterminable, and collectability is reasonably assured.For the Real Estate Rental Operations, the Company leases its real estate properties to tenants under operating leases with terms exceeding one year. Some ofthese leases contain scheduled rent increases. We record rent revenue for leases which contain scheduled rent increases on a straight-line basis over the termof the lease.Impairment of Long Lived AssetsThe Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of anasset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measuredby a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets areconsidered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their estimated fair value.During the years ended August 31, 2011 and 2010, the Company did not record an impairment charge on its rental property assets.Liabilities of Discontinued OperationsPrior to June 2005, EACO self-insured workers’ compensation claims losses up to certain limits. The liability for workers’ compensation represents anestimate of the present value of the ultimate cost of uninsured losses which are unpaid as of the balance sheet dates. The estimate is frequently reviewed andadjustments to the Company’s estimated claim liability, if any, are reflected in discontinued operations. At fiscal year end, the Company obtains an actuarialreport which estimates its overall exposure based on historical claims and an evaluation of future claims. An actuarial evaluation was obtained by theCompany as of August 31, 2011 and 2010. The Company pursues recovery of certain claims from an insurance carrier. Recoveries, if any, are recognizedwhen realization is reasonably assured.Deferred Tax AssetsA valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realizetheir benefit, or when future deductibility is uncertain. The Company records net deferred tax assets to the extent management believes these assets will morelikely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduledreversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. Forming a conclusionthat a valuation allowance is not required is difficult when there is negative evidence such as cumulative losses and/or significant decreases in operations. Asa result of the Company’s disposal of significant business operations in June 2005, management concluded that a valuation allowance should be recordedagainst certain federal and state tax credits. The utilization of these credits requires sufficient taxable income after consideration of net operating lossutilization. 11Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Results of OperationsComparison of the Years Ended August 31, 2011 and 2010Distribution Sales and Gross Margin (dollars in thousands) Year Ended August 31, $ % 2011 2010 Change Change Distribution sales $103,467 $91,547 $11,920 13.0% Cost of sales 74,865 67,048 (7,817) (11.6)% Gross profit $28,602 $24,499 $4,103 Gross margin 27.6% 26.7% (0.9)% Distribution sales related to the Distribution Operations segment consist primarily of sales of component parts and fasteners, but also include, to a lesserextent, kitting charges and special order fees, as well as freight charged to customers. Distribution sales generated by the Bisco division represented thesubstantial majority of distribution sales in both periods. The increase in distribution sales in the year ended August 31, 2011 compared to the year endedAugust 31, 2010 (“fiscal 2010”) was largely due to increased unit sales, resulting primarily from increases in the salesperson headcount and the number ofSales Focus Teams (“SFT”). The Company uses SFTs to focus on specific markets management has identified and believes that such focus contributes toincreases in sales. The Company also increased the number of offices during the year, adding three new offices in Virginia, Missouri and Georgia.Rental Income (dollars in thousands) Year Ended August 31, $ % 2011 2010 Change Change Rental revenue $1,242 $1,086 $156 14.3% Cost of rental operations 583 1,706 1,123 65.8 Gross profit $659 $(620) $1,279 Gross margin 53.0% (57.0)% 110.0% Rental revenue in the Real Estate Rental Operations segment increased in fiscal 2011 due to the rental of the Deland and Orange Park Properties for all offiscal 2011. The Orange Park Property was vacant during the first three quarters of fiscal 2010, while the Deland Property was vacant for the first two. All ofthe Company’s rental properties are currently leased. Gross margin improved in fiscal 2011 primarily due to a decrease in the cost of rental operations. Thisdecrease was due mainly to expenses related to the acquisition of Bisco in fiscal 2010 that did not occur again in 2011.Selling, General and Administrative Expense (dollars in thousands) Year Ended August 31, $ % 2011 2010 Change Change Selling, general and administrative expense $25,031 $21,763 $(3,268) (15.0)% Percent of distribution sales 24.1% 23.7% (0.4)% Selling, general and administrative expense (“SG&A”) consists primarily of payroll and related expenses for the sales and administrative staff,professional fees (including accounting, legal and technology costs and expenses), and sales and marketing costs for the Distribution Operations. SG&Aexpense in fiscal 2011 increased from fiscal 2010 due largely to increased headcount in sales employees and to a lesser extent to the opening of three newoffices. The Company also incurred increased legal and accounting fees during fiscal 2010 due to the acquisition of Bisco in fiscal 2010 that did not occuragain in fiscal 2011. As a percentage of distribution sales, SG&A increased as the Company increased the size of its sales staff with new hires, because thosenew hires generally do not contribute as much revenue during their first twelve months as veteran sales staff. 12Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Other Income (Expense), Net (dollars in thousands) Year Ended August 31, $Change %Change 2011 2010 Other income (expense): Realized gain (loss) on sales of marketable trading securities $313 $(3,481) $3,794 108.9% Unrealized gain (loss) on marketable trading securities (172) 1,314 (1,486) (113.0) Interest and other income 3 26 (23) (88.4) Interest expense, net (770) (796) 26 3.2 Other income (expense), net $(626) $(2,937) $2,311 78.6% Other income (expense), net as a percent of sales (0.5)% (3.1)% 2.6% Other income (expense), net primarily consists of income or losses on investments in short-term marketable equity securities of publicly-held domesticcorporations. The Company’s investment strategy consists of both long and short positions, as well as utilizing options to maximize return. During fiscal2010, the Company recognized $2,167,000 in net realized and unrealized losses, which losses were primarily due to short positions the Company washolding. The Company experienced an increase of $141,000 during fiscal 2011, due mainly to holding long positions during a time of a general marketincrease.Income Tax Provision (dollars in thousands) Year Ended August 31, $ % 2011 2010 Change Change Income tax provision $1,465 $532 $(933) (175.3)% Percent of net sales 1.3% 0.5% (0.8)% The provision for income taxes increased by $0.9 million in fiscal 2011 as compared to fiscal 2010, which primarily resulted from a change in the tax law forthe State of California, which would further decrease the likelihood of the Company’s ability to use all of its California net operating losses. In addition, inJune 2011, the Company amended its state tax returns for the years ended August 31, 2007 and 2008 in accordance with the findings of a previouslydisclosed Internal Revenue Service audit, which resulted in a direct increase to income tax expense for fiscal 2011.Liquidity and Capital ResourcesThe accompanying financial statements include the financial position and results of operations of Bisco for all periods presented. As a result of Mr. Ceileyhaving majority voting control over both entities during all periods presented, the consolidated financial statements were prepared in accordance with ASC805-50, Transactions Between Entities Under Common Control, which specifies that in a combination of entities under common control, the entity thatreceives the assets or the equity interests shall initially recognize the assets and liabilities transferred at their historical carrying amounts at the date of transfer(“as-if pooling-of-interests” accounting). The financial statements of the receiving entity shall also report the results of operations for the period, the financialposition and other financial information as though the transfer of net assets or exchange of equity interests had occurred at the beginning of the period.Financial statements and financial information presented for prior years have been retrospectively adjusted to furnish comparative historical information forperiods during which the entities were under common control. The Distribution Operations segment consists of the operations of Bisco.The Company’s Distribution Operations have historically generated positive cash flow from its operations and/or by trading in marketable domestic equitysecurities. In addition, the Company has a revolving credit agreement with Community Bank, which currently provides for borrowings of up to $10.0 millionand bears interest at either the 30, 60 or 90 day LIBOR (the 90 day LIBOR at August 31, 2011 and 2010 was 0.38% and 0.29%, respectively) plus 1.75%and/or the bank’s reference rate (3.25% at August 31, 2011 and 2010). Borrowings are secured by substantially all assets of the Company’s DistributionOperations and are 13Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.guaranteed by the Company’s Chief Executive Officer and Chairman of the Board, Glen F. Ceiley. The original agreement, as amended in April 2008, expiredin October 2010, but was extended to and renewed in March 2011. The new credit agreement expires in March 2013. The amount outstanding under this lineof credit as of August 31, 2011 and 2010 was $8,500,000 and $8,900,000, respectively. Availability under the line of credit was $1,500,000 and $1,100,000at August 31, 2011 and 2010, respectively.The Company’s Real Estate Rental Operations are funded by rents received from the tenants of its five rental properties. Any cash requirements in excess ofthe rental income required by the Real Estate Rental Operations have historically been funded by the Distribution Operations. These borrowings and relatedinterest have been eliminated in the accompanying consolidated financial statements.Cash Flows from Operating ActivitiesThe Company’s principal uses of cash during fiscal 2011 was the payment of the Company’s operating expenses.During the year ended August 31, 2011, the Company used $712,000 in net cash from its operating activities. This was due mainly to increases in bothaccounts receivable and inventory during fiscal 2011 combined with paying down accounts payable. This was offset by the Company’s income for the yearand changes in the deferred tax asset resulting from the Company’s ability to use its net operating losses to decrease payments due to the Internal RevenueService.During the year ended August 31, 2010, the Company generated $879,000 in net cash from its operating activities. This was due mainly to an increase inaccounts payable resulting from extending credit terms and checks held at the end of the period.Cash Flows from Investing ActivitiesNet cash flow provided by investing activities was $114,000 for the year ended August 31, 2011. This was due to the release of restricted cash required as partof the Company’s self-insured worker’s compensation program by Florida SIGA and an increase in the sales of the Company’s investments during the year.These were offset by the Company’s purchase of equipment relating to its Distribution Operations segment.Net cash flow used by investing activities was $1,032,000 for the year ended August 31, 2010. This was due to required repurchases of securities sold, not yetpurchased and an increase in purchases of the Company’s investments not related to its short positions. This was offset by the release of restricted cash relatedto the liabilities for short sales and a reduction in the collateral requirement regarding the Company’s self-insured worker’s compensation program by FloridaSIGA.Cash Flows from Financing ActivitiesFor the year ended August 31, 2011, net cash generated by financing activities was $791,000. This was due to the Company’s payment in fiscal 2011 of$228,000 in dividends on the Company’s preferred stock that had been in arrears and the increase in the Company’s bank overdraft in fiscal 2011, due to ahigher volume of outstanding checks at year end. Additionally, the Company borrowed $1,000,000 in long term debt, which was used to partially pay downthe Company’s revolving credit facility.Cash used in financing activities for the year ended August 31, 2010 was $432,000 mainly due to the Company’s settlement of a capital lease obligationrelating to the Deland Property.Off-Balance Sheet ArrangementsThe Company has no off-balance sheet arrangements that are reasonably likely to have a current or future effect on the financial position, revenues, results ofoperations, liquidity or capital expenditures. 14Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Contractual Financial ObligationsIn addition to using cash flow from operations, the Company finances its operations through the issuance of debt, and previously by entering intoleases. These financial obligations are recorded in accordance with accounting rules applicable to the underlying transactions, with the result that some arerecorded as liabilities in the balance sheet while others are required to be disclosed in the Notes to the accompanying financial statements and Management’sDiscussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K for the year ended August 31, 2011.Item 7A. Quantitative and Qualitative Disclosures About Market RiskThe Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required underthis item.Item 8. Financial Statements And Supplementary DataFinancial StatementsThe financial statements required by Regulation S-X are included in Part IV, Item 15 of this report.Item 9. Changes In and Disagreements With Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and Procedures(a) Evaluation of disclosure controls and procedures. As required by Rule 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the periodcovered by this report the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls andprocedures. This evaluation was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, who also serves asthe Company’s principal financial officer. Based upon that evaluation, the Company’s Chief Executive Officer has concluded that the Company’s controlsand procedures were effective for the year ended August 31, 2011.(b) Management’s annual report on internal control over financial reporting. Management is responsible for establishing and maintaining adequateinternal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financialreporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles.The Company’s management, with the participation of its Chief Executive Officer, assessed the effectiveness of the Company’s internal control over financialreporting as of August 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (COSO) in its report entitled “Internal Control-Integrated Framework.” Based on that assessment under such criteria, managementconcluded that the Company’s internal control over financial reporting was effective as of August 31, 2011.Due to its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and/or that the degree ofcompliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore,even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 15Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act. As such, this annual report does not include an attestationreport of our independent registered public accounting firm regarding internal control over financial reporting.(c) Changes in internal control over financial reporting. During the quarter ended August 31, 2011, the Company implemented month-end checklists andestablished a more diligent review and approval process for its period end closing procedures. The Company has concluded that such changes, inconjunction with the consolidation of the Company’s financial reporting with Bisco, has remediated the material weaknesses previously disclosed by theCompany.Item 9B. Other InformationNone.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceSet forth below is certain information, as of November 1, 2011, regarding our directors and executive officers, including information regarding theexperience, qualifications, attributes or skills of each director that led the Board of Directors conclusion that the person should serve on the Board.Directors and Executive OfficersGlen F. Ceiley currently serves as Chairman of the Board and Chief Executive Officer of the Company. Stephen Catanzaro, Jay Conzen and William L. Meansalso currently serve as directors of the Company. Each director serves a one-year term, or until such director’s successor has been elected and qualified. Eachofficer holds office at the discretion of the Company’s Board, or until the officer’s successor has been elected and qualified.Glen F. Ceiley, 65, has served as EACO’s Chief Executive Officer and Chairman of the Board since 1999. Mr. Ceiley is also the Chief Executive Officer andChairman of the Board of Bisco, and has held those positions since he founded Bisco in 1973. He also served as President of Bisco prior to June 2010. Inaddition, Mr. Ceiley is a former director of Data I/O Corporation, a publicly-held company that provides programming systems for electronic devicemanufacturers. Mr. Ceiley has served as a director of the Company since 1998. As the founder of Bisco with over 35 years of experience in that industry,Mr. Ceiley is uniquely qualified to provide insights into and guidance on the industry and growth and development of the Company.Stephen Catanzaro, 58, has served as the Controller of Allied Business Schools, Inc., a company that provides home study courses and distance education,since April 2004. Prior to that, Mr. Catanzaro was the Chief Financial Officer of V&M Restoration, Inc., a building restoration company, from September2002 to February 2004, and the Chief Financial Officer of Bisco. Mr. Catanzaro has served as a director of the Company since 1999. Mr. Catanzaro offers tothe Board valuable business and strategic insights obtained through his work in a variety of industries, as well as experience as a certified public accountwhich is invaluable to his service in the Audit Committee.Jay Conzen, 65, has served as the President of Old Fashioned Kitchen, Inc., a national food distributor, since April 2003. Prior to that, from October 1992 toApril 2003, Mr. Conzen was the principal of Jay Conzen Investments, an investment advisor. Mr. Conzen also served as a consultant to EACO from August1999 until January 2001 and from October 2001 to April 2003. Mr. Conzen has served as a director of the Company since 1998. Having served as anexecutive officer of several companies, Mr. Conzen offers to the Board a wealth of management and leadership experience as well as an understanding ofissues faced by businesses. He also served as a certified public accountant for a number of years. 16Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.William L. Means, 68, served as the Vice President of Information Technology of Bisco from 2001 until his retirement in June 2010. Prior to that, from 1997to 2001, Mr. Means was Vice President of Corporate Development of Bisco. Mr. Means has served as a director of the Company since July 1999. He holds anM.B.A. degree from San Jose State University. Mr. Means provides extensive industry expertise to the Board, as well as a deep and broad understanding ofthe Company and its operations resulting from his years of service as an officer of Bisco.Donald S. Wagner, 49, has served as the President of Bisco since June 2010 and as its Chief Operating Officer since November 2007. Prior to his promotionto President, Mr. Wagner also held the title of Executive Vice President of Bisco from November 2007. Mr. Wagner has worked at Bisco since 1994 in anumber of other capacities, including as Vice President of Product Management. Prior to joining Bisco, Mr. Wagner worked in the Defense division atRockwell International. He holds a B.A. degree in Communications from California State University, Fullerton.Michael Bains, 42, has served as the Controller of EACO since March 2010 and as the Controller of Bisco since December 2004. Prior to joining Bisco,Mr. Bains worked as the Controller of several service companies and as an accountant in a number of public accounting firms. He is a Certified PublicAccountant and holds a B.S. degree in Accounting from Loyola Marymount University.Robert Rist, 43, has served as the Vice President of Sales and Marketing of Bisco since September 2010. Since he joined Bisco in 1995, Mr. Rist has servedthe Company in a number of capacities, most recently as Northern Regional Manager from March 2001 to August 2010.There are no family relationships among any of our directors or executive officers.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires certain officers of the Company and its directors, and persons who beneficially own more than ten percent of anyregistered class of the Company’s equity securities, to file reports of ownership in such securities and changes in ownership in such securities with the SECand the Company.Based solely on a review of the reports and written representations provided to the Company by the above referenced persons, the Company believes thatduring the year ended August 31, 2011, all filing requirements applicable to its reporting officers, directors and greater than ten percent beneficial ownerswere timely satisfied.Code of Ethical ConductThe Company has adopted a code of ethics applicable to the Company’s senior executive and financial officers. You may receive, without charge, a copy ofthe Financial Code of Ethical Conduct by contacting our Corporate Secretary at 1500 N. Lakeview Avenue, Anaheim, California 92807.Corporate Governance (Audit Committee)The Audit Committee’s basic functions are to assist the Board in discharging its fiduciary responsibilities to the shareholders and the investment communityin the preservation of the integrity of the financial information published by the Company, to maintain free and open means of communication between theCompany’s directors, independent auditors and financial management, and to ensure the independence of the independent auditors. The Board has adopted awritten charter for the Audit Committee which is attached as Annex E to the Company’s Proxy Statement for the 2010 Annual Meeting of Shareholders, asfiled with the SEC on January 8, 2010. The Audit Committee charter is not available on the Company’s website. Currently, the members of the AuditCommittee are Messrs. Catanzaro, Conzen (Chairman) and Means. As indicated in Item 13 below, the Board has determined that both Messrs. Catanzaro andConzen are independent as defined by the NASDAQ Stock Market’s Marketplace Rules. The Board has identified Mr. Conzen as the member of the AuditCommittee who qualifies as an “audit committee financial expert” under applicable SEC rules and regulations governing the composition of the AuditCommittee. 17Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 11. Executive CompensationThe Executive Compensation Committee (the “Committee”) is responsible for establishing the salary and annual bonuses paid to executive officers of EACOand administering EACO’s equity incentive plans, including granting stock options to officers and employees of EACO. The Committee has not adopted aformal charter. The current members of the Committee are Messrs. Glen Ceiley and William Means.Prior to the acquisition of Bisco in March 2010, EACO had only one officer — Mr. Ceiley, the Chief Executive Officer of EACO. Due to the nature ofEACO’s operations and related financial results in recent years, the Committee and Mr. Ceiley agreed that no salary or other compensation for his services asthe Chief Executive Officer of EACO was justified and no such compensation was provided to Mr. Ceiley for fiscal 2011 and fiscal 2010. However, bothMr. Ceiley and Michael Bains, the Controller of EACO and Bisco, receive compensation from Bisco for their services to Bisco.All compensation for the named executive officers for fiscal 2011 and fiscal 2010, other than the amounts payable to Messrs. Ceiley and Means inconnection with their service as directors of EACO, were paid by Bisco. The compensation of named executive officers who serve as officers of Bisco aredetermined by Bisco’s Chairman of the Board, Glen Ceiley. Bisco currently does not pay bonuses or other incentive compensation to the named executiveofficers.Summary CompensationThe following table sets forth information regarding compensation earned from the Company (including from Bisco, our wholly-owned subsidiary) duringfiscal 2011 and fiscal 2010 by (i) our Chief Executive Officer, (ii) our Controller and (iii) two other most highly compensated executive officers who wereemployed by the Company (including Bisco) as of August 31, 2011 and whose total compensation exceeded $100,000 during that year. The officers listedbelow are collectively referred to as the “named executive officers” in this report. Name and PrincipalPosition Fiscal Year Salary All OtherCompensation Total Glen F. Ceiley, 2011 $353,887 $500(1) $354,387 Chief Executive Officer and Chairman of the Board of EACO and Bisco 2010 340,521 12,000(1) 352,521 Donald Wagner, 2011 212,747 — 212,747 President of Bisco 2010 190,321 — 190,321 Robert Rist, Vice President of Sales and Marketing of Bisco (2) 2011 148,323 — 148,323 Michael Bains, Controller of EACO and Bisco 2011 150,459 — 150,459 2010 131,721 — 131,721 (1)Consists of fees paid to such person in his capacity as a director of EACO.(2)Mr. Rist has served as the Vice President of Sales and Marketing of Bisco only since September 2010. Accordingly, only fiscal 2011 information isprovided.Outstanding Equity Awards at Fiscal Year-EndThe Company did not grant any equity awards during fiscal 2011 to any named executive officer and no outstanding equity awards were held by the namedexecutive officers at August 31, 2011. 18Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Director CompensationThe Company pays $10,000 per year in cash to each director not employed by EACO or its subsidiary as compensation for his services. During fiscal 2011,this fee was prorated to account for the Company’s change to a fiscal year ending August 31, beginning with the year ended August 31, 2009. In addition,directors who do not receive a salary from EACO receive a fee of $500 for each Board meeting attended. No fees are awarded to directors for attendance atmeetings of the Audit Committee or the Executive Compensation Committee of the Board.The following table sets forth the compensation of certain Company directors for the year ended August 31, 2011. (See the above “Summary CompensationTable” for information regarding Mr. Ceiley). Director Fees Earned orPaid in Cash Total Stephen Catanzaro $9,167 $9,167 Jay Conzen 9,167 9,167 William Means 9,167 9,167 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersSecurity Ownership of Certain Beneficial Owners and ManagementThe table below presents certain information regarding beneficial ownership of the Company’s common stock (the Company’s only voting security) as ofNovember 1, 2011 (i) by each shareholder known to the Company to own, or have the right to acquire within sixty days of November 1, 2011, more than fivepercent (5%) of the outstanding common stock, (ii) by each named executive officer and director of the Company, and (iii) by all directors and executiveofficers of the Company as a group. Name and Address ofBeneficial Owner (1) Shares ofCommon StockBeneficially Owned Percent ofClass(2) Stephen Catanzaro 765 * Glen F. Ceiley(3) 4,851,705 99.0% William L. Means 322 * Donald Wagner — — Robert Rist — — Michael Bains — — All executive officers and directors as a group (6 persons)(3) 4,852,792 99.8% *Less than 1%(1)The address for each person named in the table is c/o Bisco Industries, Inc., 1500 North Lakeview Avenue, Anaheim, CA 92807.(2)Based on 4,861,590 shares outstanding as of November 1, 2011. Under the rules of the SEC, the determinations of “beneficial ownership” of theCompany’s common stock are based upon Rule 13d-3 under the Exchange Act. Under Rule 13d-3, shares will be deemed to be “beneficially owned”where a person has, either solely or with others, the power to vote or to direct the voting of shares and/or the power to dispose, or to direct thedisposition of shares, or where a person has the right to acquire any such power within 60 days after the date such beneficial ownership is determined.Shares of the Company’s common stock that a beneficial owner has the right to acquire within 60 days are deemed to be outstanding for the purpose ofcomputing the percentage ownership of such owner but are not deemed outstanding for the purpose of computing the percentage ownership of anyother person.(3)Includes (i) 4,775,895 shares held directly by Mr. Ceiley; (ii) 6,000 shares held by Mr. Ceiley’s wife; (iii) 27,543 shares held by the Bisco IndustriesProfit Sharing and Savings Plan (the “Bisco Plan”); (iv) 2,267 shares held in his IRA; and (v) 40,000 shares issuable upon conversion of the36,000 shares of Series A Cumulative Convertible Preferred Stock (not including any dividends accrued but not yet 19Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. paid) held by Mr. Ceiley. Mr. Ceiley has the sole power to vote and dispose of the shares of common stock he owns individually and the shares ownedby the Bisco Plan. Mr. Ceiley is the Chief Executive Officer and the sole director of Bisco. Mr. Ceiley disclaims beneficial ownership of the shares heldby the Bisco Plan except to the extent of his pecuniary interest therein.Equity Compensation PlansThe following table provides information as of August 31, 2011 with respect to shares of our common stock that may be issued under existing equitycompensation plans. Plan Category Number ofSecurities to beIssued UponExercise ofOutstandingOptions, Warrantsand Rights Weighted AverageExercise Price ofOutstandingOptions, Warrantsand Rights Number ofSecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation Plans(ExcludingSecuritiesReflected in FirstColumn) Equity Compensation Plans Approved by Security Holders 2002 Long-Term Incentive Plan — N/A 200,000 Equity Compensation Plans Not Approved by Security Holders None Total — N/A 200,000 Item 13. Certain Relationships and Related Transactions and Director IndependenceCertain Relationships and Related TransactionsSince September 1, 2009, except as described below, there has not been, nor is there any proposed transaction, where we (or any of our subsidiaries) were orwill be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets atyear end for the last two fiscal years and in which any director, director nominee, executive officer, holder of more than 5% of any class of our votingsecurities, or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.The Company leases three buildings under operating lease agreements from its majority shareholder, Glen Ceiley. During the years ended August 31, 2011and 2010, the Company paid approximately $529,000 and $514,000, respectively, in rent with respect to these leases.Director IndependenceThe Company’s Board consists of the following directors: Stephen Catanzaro, Glen Ceiley, Jay Conzen and William L. Means. The Board has determinedthat two of its four directors, Stephen Catanzaro and Jay Conzen, are independent as defined by the NASDAQ Stock Market’s Marketplace Rules. In additionto such rules, the Board considered transactions and relationships between each director (and his immediate family) and the Company to determine whetherany such relationships or transactions were inconsistent with a determination that the director is independent. As a result, the Board determined that Messrs.Ceiley and Means are not independent, as they are (or recently served as) employees of Bisco and members of Bisco’s steering committee. Bisco’s steeringcommittee handles the day to day operations of the Company, and Messrs. Ceiley and Means have been intimately involved with decision-making thatdirectly affects the financial statements of the Company. 20Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Currently, the members of the Audit Committee are Messrs. Catanzaro, Conzen (Chairman) and Means.Item 14. Principal Accounting Fees and ServicesAudit Committee Pre-Approval Policies and ProceduresThe Audit Committee is required to pre-approve all auditing services and permissible non-audit services, including related fees and terms, to be performed forthe Company by its independent auditor, subject to the de minimus exceptions for non-audit services described under the Exchange Act, which are approvedby the Audit Committee prior to the completion of the audit. The Audit Committee also considers whether the provision by its independent accounting firmof any non-audit related services is compatible with maintaining the independence of such firm. For fiscal 2011 and fiscal 2010, the Audit Committee pre-approved all services performed for the Company by the auditor.Audit FeesThe aggregate fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP (“Squar Milner”) for the years ended August 31, 2011 and 2010 forprofessional services rendered for the audit of such financial statements and for the reviews of the unaudited financial statements included in the Company’squarterly reports on Form 10-Q for the quarters ended during the years ended August 31, 2011 and 2010 were $160,000 and $175,000, respectively.Audit-Related FeesThe Company was billed no audit-related fees by Squar Milner for the years ended August 31, 2011 and 2010.Tax FeesThe Company was billed no fees by Squar Milner for the years ended August 31, 2011 and 2010 for professional services rendered for tax compliance, taxadvice or tax planning.All Other FeesThere were no fees billed by Squar Milner for the years ended August 31, 2011 and 2010 for products and services provided to the Company, other than forthe services described above.PART IVItem 15. Exhibits, Financial Statement Schedules(a) The financial statements listed below and commencing on the pages indicated are filed as part of this report on Form 10-K. Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance sheets as of August 31, 2011 and 2010 F-2 Consolidated Statements of Operations for the years ended August 31, 2011 and 2010 F-3 Consolidated Statements of Shareholders’ Equity for the years ended August 31, 2011 and 2010 F-4 Consolidated Statements of Cash Flows for the years ended August 31, 2011 and 2010 F-5 Notes to the Consolidated Financial Statements F-6 Schedule II – Valuation and Qualifying Accounts F-19 (b) The following exhibits are filed as part of this report on Form 10-K as required by Item 601 of Regulation S-K. 21Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Number Exhibit 2.1 Agreement and Plan of Merger dated December 22, 2009 by and between EACO Corporation, Bisco Acquisition Corp., Bisco Industries, Inc. andGlen Ceiley (Exhibit 2.1 of the Company’s Transition Report on Form 10-K filed with the SEC on December 23, 2009) 3.1 Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.01 to the Company’s Registration Statement on Form S-1,Registration No. 33-1887, is incorporated herein by reference.) 3.2 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.03 to the Company’s RegistrationStatement on Form S-1, , Registration No. 33-1887, is incorporated herein by reference.) 3.3 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.04 to the Company’s RegistrationStatement on Form S-1, Registration No. 33-17620, is incorporated herein by reference.) 3.4 Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to the Company’s registration statement on Form 8-A, filedwith the SEC on March 19, 1997, is incorporated herein by reference.) 3.5 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report onForm 10-K filed with the SEC on March 31, 1998, is incorporated herein by reference.) 3.6 Amendment to Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report on Form10-K filed with the SEC on March 15, 2000, is incorporated herein by reference.) 3.7 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.09 to the Company’s Annual Report onForm 10-K filed with the SEC on March 29, 2004 is incorporated herein by reference.) 3.8 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc., changing the name of the corporation to EACOCorporation. (Exhibit 3.10 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on September 3, 2004, is incorporated herein byreference.) 3.9 Articles of Amendment Designating the Preferences of Series A Cumulative Convertible Preferred Stock $0.10 Par Value of EACOCorporation (Exhibit 3.1 to the Company’s current report on Form 8-K filed with the SEC on September 8, 2004, is incorporated herein byreference.) 3.10 Certificate of Amendment to Amended and Restated Bylaws effective December 21, 2009 (Exhibit 3.10 to the Company’s transition report onForm 10-K filed with the SEC on December 23, 2009 is incorporated herein by reference.) 3.11 Articles of Amendment to Articles of Amendment Designating the Preferences of Series A Cumulative Convertible Preferred Stock, as filed withthe Secretary of State of the State of Florida on December 22, 2009 (Exhibit 3.11 to the Company’s transition report on Form 10-K filed with theSEC on December 23, 2009 is incorporated herein by reference.)10.1 Form of Amended and Restated Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing between the Company andGE Capital Franchise Corporation dated October 21, 2002. (Exhibit 10.01 to the Company’s Quarterly Report on Form 10-Q, filed with the SECon November 14, 2002, is incorporated herein by reference.)10.2 Form of Amended and Restated Promissory Note between the Company and GE Capital Franchise Finance Corporation dated October 21, 2012.(Exhibit 10.02 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2002, Registration No. 33-1887, isincorporated herein by reference.)10.3 Form of Loan Agreement between the Company and GE Capital Franchise Finance Corporation dated October 21, 2002. (Exhibit 10.03 to theCompany’s Quarterly Report on Form 10-Q, filed with the SEC on November 14, 2002, is incorporated herein by reference.)10.4+ 2002 Long-Term Incentive Plan (Appendix A to the Company’s Proxy Statement on Schedule 14A, filed with the SEC on May 1, 2002, isincorporated herein by reference)10.5 Purchase and Sale Agreement dated July 31, 2009 by and between Gottula Properties, LLC and EACO Corporation (Exhibit 10.8 to theCompany’s Transition Report on Form 10-K, filed with the SEC on December 23, 2009, is incorporated herein by reference) 22Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.6 Administrative Services Agreement dated March 3, 2006 by and between EACO Corporation and Bisco Industries, Inc. (Exhibit 10.9 to theCompany’s Transition Report on Form 10-K, filed with the SEC on December 23, 2009, is incorporated herein by reference)10.7 Business Loan Agreement dated March 28, 2008 by and between EACO Corporation and Zions First National Bank10.8 Promissory Note dated March 28, 2008 in the principal amount of $1,216,354 executed by EACO in favor of Zions First National Bank10.9 Commercial Guaranty dated March 28, 2008 executed by Glen F. Ceiley and Barbara A. Ceiley Revocable Trust dated 5/15/0810.10 Business Loan Agreement dated November 9, 2007 by and between EACO Corporation and Community Bank10.11 Promissory Note dated November 9, 2007 in the principal amount of $5,875,000 executed by EACO in favor of Community Bank10.12 Commercial Guaranties dated November 9, 2007 executed by Glen F. Ceiley, Bisco Industries, Inc. and the Glen F. Ceiley and Barbara A. CeileyRevocable Trust21.1 Subsidiaries of the Company.23.1 Consent of Squar, Milner, Peterson, Miranda and Williamson LLP.31.1 Certification of Chief Executive Officer (principal executive officer and principal financial officer) pursuant to Securities and Exchange ActRules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 Certification of Chief Executive Officer (principal executive officer and principal financial officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +Indicates a management contract or compensatory plan or arrangement. 23Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. EACO CorporationNovember 29, 2011 /s/ Glen Ceiley By: Glen Ceiley Its: Chairman of the Board and Chief Executive Officer (principal executive officer and principal financial officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in thecapacities and on the date indicated. Signature Title Date/s/ Glen F. Ceiley Chairman of the Board and Chief Executive Officer 11/29/11Glen F. Ceiley (principal executive officer andprincipal financial officer) /s/ Michael Bains Controller (principal accounting officer) 11/29/11Michael Bains /s/ Steve Catanzaro Director 11/29/11Steve Catanzaro /s/ Jay Conzen Director 11/29/11Jay Conzen /s/ William Means Director 11/29/11William Means 24Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of August 31, 2011 and 2010 F-2 Consolidated Statements of Operations for the years ended August 31, 2011 and 2010 F-3 Consolidated Statements of Shareholders’ Equity for the years ended August 31, 2011 and 2010 F-4 Consolidated Statements of Cash Flows for the years ended August 31, 2011 and 2010 F-5 Notes to the Consolidated Financial Statements F-6 Schedule II – Valuation and Qualifying Accounts F-19 25Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and ShareholdersEACO CorporationAnaheim, CaliforniaWe have audited the accompanying consolidated balance sheets of EACO Corporation and Subsidiaries (the “Company”) as of August 31, 2011 and 2010and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years then ended and financial statement schedule. Ouraudits also included the financial statement schedule of EACO Corporation listed in Item 15(a). These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internalcontrol over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of EACO Corporation andSubsidiaries as of August 31, 2011 and 2010 and the results of their operations and their cash flows for the years then ended, in conformity with U.S.generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basicconsolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Squar, Milner, Peterson, Miranda and Williamson, LLPNewport Beach, CaliforniaNovember 29, 2011 F-1Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EACO Corporation and SubsidiariesConsolidated Balance Sheets(in thousands, except share amounts) August 31,2011 August 31,2010 ASSETS Current Assets: Cash and cash equivalents $1,368 $1,260 Trade accounts receivable, net 12,348 11,114 Inventory, net 11,389 10,009 Marketable securities, trading 892 817 Prepaid expenses and other current assets 320 260 Deferred tax asset, current 1,062 1,896 Total current assets 27,379 25,356 Non-current assets: Restricted cash 632 866 Real estate properties held for leasing, net 10,085 10,316 Equipment and leasehold improvements, net 972 1,079 Deferred tax asset 2,623 2,561 Other assets, principally deferred charges, net of accumulated amortization 1,187 1,147 Total assets $42,878 $41,325 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Trade accounts payable $8,541 $9,226 Accrued expenses and other current liabilities 2,325 1,823 Line of credit — 8,900 Liabilities of discontinued operations – short-term 147 147 Current portion of long-term debt 778 300 Total current liabilities 11,791 20,396 Liabilities of discontinued operations – long-term 2,708 2,928 Deposit liability 147 147 Long-term debt 15,626 7,074 Total liabilities 30,272 30,545 Commitments and contingencies (Note 11) Shareholders’ equity: Convertible preferred stock of $0.01 par value; authorized 10,000,000 shares; 36,000 shares outstanding at August 31, 2011and 2010 (liquidation value $900) 1 1 Common stock of $0.01 par value; authorized 8,000,000 shares; 4,861,590 shares outstanding at August 31, 2011 and 2010 49 49 Additional paid-in capital 12,378 12,378 Accumulated other comprehensive income 554 639 Accumulated deficit (376) (2,287) Total shareholders’ equity 12,606 10,780 Total liabilities and shareholders’ equity $42,878 $41,325 See accompanying notes to consolidated financial statements. F-2Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EACO Corporation and SubsidiariesConsolidated Statements of Operations(in thousands, except per share amounts) Year EndedAugust 31, 2011 Year EndedAugust 31, 2010 Distribution sales $103,467 $91,547 Cost of goods sold 74,865 67,048 Gross margin 28,602 24,499 Rental revenue 1,242 1,086 Cost of rental operations 583 1,706 Gross income (loss) from rental operations 659 (620) Operating expenses: Selling, general and administrative expenses 25,031 21,763 Total operating expenses 25,031 21,763 Income from operations 4,230 2,116 Other non-operating income (expense): Income (loss) on sale of trading securities 313 (3,481) Unrealized gain (loss) on trading securities (172) 1,314 Interest and other income 3 26 Interest expense (770) (796) Income (loss) from continuing operations before income taxes 3,604 (821) Provision for income taxes 1,465 532 Net income (loss) 2,139 (1,353) Undeclared cumulative preferred stock dividend (76) (95) Net income (loss) attributable to common shareholders $2,063 $(1,448) Basic and diluted net loss per share: $0.42 $(0.30) Basic and diluted weighted average common shares outstanding 4,861,590 4,861,590 See accompanying notes to consolidated financial statements. F-3Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EACO Corporation and SubsidiariesConsolidated Statements of Shareholders’ Equity (Deficit)For the Years Ended August 31, 2011 and 2010(in thousands, except share information) ConvertiblePreferred Stock Common Stock AdditionalPaid-in AccumulatedOtherComprehensive AccumulatedEarnings Shares Amount Shares Amount Capital Income (Deficit) Total Balance, August 31, 2009 36,000 $1 4,861,590 $49 $12,378 $476 $(934) $11,970 Net loss (1,353) (1,353) Comprehensive loss: Foreign translation gain 163 163 Comprehensive loss (1,190) Balance, August 31, 2010 36,000 1 4,861,590 49 12,378 639 (2,287) 10,780 Preferred dividends (228) (228) Net income 2,139 2,139 Comprehensive income: Foreign translation loss (85) (85)Comprehensive income 2,054 Balance, August 31, 2011 36,000 $1 4,861,590 $49 $12,378 $554 $(376) $12,606 See accompanying notes to consolidated financial statements. F-4Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EACO Corporation and SubsidiariesConsolidated Statements of Cash Flows(in thousands) Year EndedAugust 31, 2011 Year EndedAugust 31, 2010 Operating activities: Net income (loss) $2,139 $(1,353) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 752 783 Gain (loss) on investments (342) 2,167 Bad debt expense 165 49 (Increase) decrease in: Trade accounts receivable (1,399) (2,072) Inventory (1,380) 284 Prepaid expenses and other assets (127) 32 Increase (decrease) in: Trade accounts payable (1,574) 1,592 Receipt (repayment) of deposit liability — 40 Accrued expenses and other current liabilities 502 (511) Deferred taxes 772 114 Liabilities of discontinued operations (220) (246) Net cash (used in) provided by operating activities (712) 879 Investing activities: Purchase of property and equipment (387) (524) Change in restricted cash 234 1,545 Sales (purchase) of investments 267 (952) Securities sold, not yet purchased — (1,101) Net cash provided by (used in) investing activities 114 (1,032) Financing activities: Net (payments) borrowings on revolving credit facility (400) 433 Payment on capital lease obligation settlement — (1,562) Payments on long-term debt (470) (185) Borrowings on long-term debt 1,000 — Bank overdraft 889 882 Preferred stock dividends paid (228) — Net cash provided by (used in) financing activities 791 (432) Effect of exchange rate changes to cash (85) 162 Net increase (decrease) in cash and cash equivalents 108 (423) Cash and cash equivalents - beginning of period 1,260 1,683 Cash and cash equivalents - end of period $1,368 $1,260 Supplemental disclosures of cash flow information: Cash paid during the period for interest $771 $297 Cash paid during the period for taxes $258 $1,268 See accompanying notes to consolidated financial statements. F-5Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EACO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSAugust 31, 2011 and 2010Note 1. Organization and Basis of PresentationOrganization and Merger with Bisco Industries, Inc.EACO Corporation (“EACO”) was incorporated in the State of Florida in September 1985. From the inception of EACO through June 2005, EACO’s businessconsisted of operating restaurants in the State of Florida. On June 29, 2005, EACO sold all of its operating restaurants (the “Asset Sale”) including sixteenrestaurant businesses, premises, equipment and other assets used in restaurant operations. The only remaining activity of the restaurant operations relates tothe workers’ compensation claim liability, which is presented as liabilities of discontinued operations on the Company’s balance sheets. Prior to theacquisition of Bisco (described below), EACO’s operations principally consisted of managing five real estate properties held for leasing located in Floridaand California.On March 24, 2010, EACO completed the acquisition of Bisco Industries, Inc. (“Bisco”), a company under the common control of EACO’s majorityshareholder (Glen Ceiley). Bisco is a distributor of electronic components and fasteners with 40 sales offices and six distribution centers located throughoutthe United States and Canada. Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace, circuit board,communication, computer, fabrication, instrumentation, industrial equipment and marine industries. Pursuant to an Agreement and Plan of Merger by andamong EACO, Bisco Acquisition Corp., a wholly-owned subsidiary of EACO, Bisco and Glen Ceiley, Bisco Acquisition Corp. was merged with and intoBisco; Bisco was the surviving corporation in the merger and became a wholly-owned subsidiary of EACO. The transaction (the “Acquisition”) wasaccounted for as a combination of companies under common control using the historical balances of Bisco. (See Basis of Presentation below)In connection with the Acquisition, EACO issued and aggregate of 4,705,669 shares of its common stock (the “Merger Shares”) to the sole shareholder ofBisco Glen Ceiley in exchange for all of the outstanding capital stock of Bisco. Immediately after the Acquisition and the issuance to him of the MergerShares, Mr. Ceiley owned 98.9% of the outstanding common stock of EACO. Mr. Ceiley also owns 36,000 shares of the Series A Cumulative ConvertiblePreferred Stock of EACO.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance fordoubtful trade accounts receivable, slow moving and obsolete inventory reserves, recoverability of the carrying value and estimated useful lives of long-lived assets, workers’ compensation liability and the valuation allowance against deferred tax assets. Actual results could differ from those estimates.Principles of ConsolidationThe consolidated financial statements for all periods presented include the accounts of EACO, its wholly-owned subsidiary Bisco Industries, Inc. and Bisco’swholly-owned Canadian subsidiary Bisco Industries Limited (which are collectively referred to herein as the “Company”, “we”, “us” and “our”). Allsignificant intercompany transactions and balances have been eliminated in consolidation. F-6Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Basis of PresentationThe accompanying financial statements include the financial position and results of operations of Bisco and EACO for all periods presented. As a result ofMr. Ceiley having majority voting control over both entities during all periods presented, the consolidated financial statements were prepared in accordancewith Accounting Standards Codification (“ASC”) 805-50, Transactions Between Entities Under Common Control, which specifies that in a combination ofentities under common control, the entity that receives the assets or the equity interests shall initially recognize the assets and liabilities transferred at theirhistorical carrying amounts at the date of transfer (“as-if pooling-of-interests” accounting). The financial statements of the receiving entity shall also reportthe results of operations for the period, the financial position and other financial information as though the transfer of net assets or exchange of equityinterests had occurred at the beginning of the period. Financial statements and financial information presented for prior years have been retrospectivelyadjusted to furnish comparative historical information for periods during which the entities were under common control.Note 2. Significant Accounting PoliciesCash and Cash EquivalentsThe Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.Restricted CashThe State of Florida Division of Workers’ Compensation (the “Division”) requires self-insured companies to pledge collateral in favor of the Division in anamount sufficient to cover the projected outstanding liability. In compliance with this requirement, the Company pledged three irrevocable letters of credittotaling $3,322,000 as of August 31, 2010. In November 2010, the Division lowered the required collateral required by the Company to $3,088,000. Theseletters are secured by certificates of deposits, totaling $632,000 and $866,000 at August 31, 2011 and 2010, respectively, and the Company’s SylmarProperty.Trade Accounts ReceivableTrade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines theallowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate thecollectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveriesof trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of thereceivable balance is outstanding for more than 30 days. The Company does not charge interest on past due balances. The allowance for doubtful accountswas $253,000 and $190,000 at August 31, 2011 and 2010, respectively.InventoriesInventories consist of electronic fasteners and components stated at the lower of cost or estimated market value. Cost is determined using the average costmethod. Inventories are net of a reserve for slow moving or obsolete items of $768,000 and $732,000 at August 31, 2011 and 2010, respectively. The reserveis based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company.Real Estate PropertiesReal estate properties held for leasing are stated at cost, net of accumulated depreciation. Maintenance, repairs and betterments which do not enhance thevalue or increase the life of the assets are expensed as incurred. Depreciation is provided for financial reporting purposes principally on the straight-linemethod F-7Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.over the following estimated useful lives: buildings and improvements - 25 years; land improvements - 25 years; and equipment – 3 to 8 years. Leaseholdimprovements are amortized over the estimated useful life of the asset or remaining lease term, whichever is less.Equipment and Leasehold ImprovementsEquipment and leasehold improvements not used in conjunction with real estate properties are stated at cost net of accumulated amortization. Depreciationon equipment is calculated on the straight-line method over the estimated useful lives of the assets, ranging from five to seven years. Leaseholdimprovements are amortized over the estimated useful life of the asset or the remaining lease term, whichever is less.Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement ordisposition of property and equipment, the cost and accumulated depreciation or amortization are removed from the accounts and any gains or losses arereflected in earnings.Long-Lived AssetsLong-lived assets (principally real estate, equipment and leasehold improvements) are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, real estate properties are reviewed on an asset-by-asset basis. Recoverability of real estate property assets is measured by a comparison of the carrying amount of each operating property and related assetsto future net cash flows expected to be generated by such assets. For measuring recoverability of Distribution Operations assets, long-lived assets are groupedwith other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Ifassets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds theirestimated fair values.InvestmentsInvestments consist of marketable trading securities and short sale positions, which represent securities sold, not yet purchased. Short sales result inobligations to purchase securities at a later date.These securities are stated at fair value. Market value is determined using the quoted closing or latest bid prices. Realized gains and losses on investmenttransactions are determined by the average cost method and are recognized as incurred in the statements of operations. Net unrealized gains and losses arereported in the statements of operations and represent the change in the market value of investment holdings during the period. At August 31, 2011 and2010, marketable securities consisted of equity securities (including stock options) of publicly-held domestic companies.As of August 31, 2011 and 2010, the Company’s had no short sale positions. The Company recognized unrealized gains on short sales of $0 and of$1,101,000 for the years ended August 31, 2011 and 2010, respectively. The Company recognized realized losses on short sales of $0 and $179,000 for theyears ended August 31, 2011 and 2010, respectively.The Company recognized unrealized losses on trading securities not related to short sales of $172,000 and gains of $213,000 for the years ended August 31,2011 and 2010, respectively. The Company recognized realized gains on trading securities not related to short sales of $313,000 and losses of $3,302,000 forthe years ended August 31, 2011 and 2010, respectively.Revenue RecognitionFor the Company’s Distribution Operations, the Company’s shipping terms are FOB shipping point. As such, management generally recognizes Companyrevenue at the time of product shipment. Revenue is considered to be realized or realizable and earned when there is persuasive evidence of a salesarrangement in the form of an executed contract or purchase order, the product has been shipped, the sales price is fixed or determinable, and collectability isreasonably assured. F-8Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company leases its real estate properties to tenants under operating leases with terms exceeding one year. Some of these leases contain scheduled rentincreases. We record rent revenue for leases which contain scheduled rent increases on a straight-line basis over the term of the lease.Income TaxesDeferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuationallowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized.We provide tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and complianceresponsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of these taxaudits is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. Ifactual outcomes differ materially from these estimates, they could have a material impact on our results of operations.Freight and Shipping/HandlingShipping and handling expenses are included in cost of goods sold, and were approximately $2,322,000 and $2,013,000 for the years ended August 31, 2011and 2010, respectively.LeasesCertain of the Company’s operating leases provide for minimum annual payments that adjust over the life of the lease. The aggregate minimum annualpayments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when theamount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense.Earnings/Loss Per Common ShareBasic earnings (loss) per common share for the years ended August 31, 2011 and 2010 were computed based on the weighted average number of commonshares outstanding. Diluted earnings (loss) per share for those periods have been computed based on the weighted average number of common sharesoutstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods. Potentially dilutive shares representthose issuable upon conversion of convertible preferred stock, which were 36,000 at August 31, 2011 and 2010. Such securities are excluded from dilutedearnings per share as their effect would be anti-dilutive.Foreign Currency Translation and TransactionsAssets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for the Company’s Canadian subsidiary) are translatedinto U.S. dollars at the period-end rate of exchange. Revenue and expenses are translated at the weighted-average exchange rates for the years endedAugust 31, 2011 and 2010. The resulting translation adjustments are charged or credited directly to accumulated other comprehensive income or loss. Theaverage exchange rates for the years ended August 31, 2011 and 2010 were $1.01 and $0.95, respectively. F-9Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ConcentrationsFinancial instruments that subject the Company to credit risk include cash balances maintained in the United States in excess of federal depository insurancelimits and accounts receivable. Cash accounts maintained by the Company at domestic financial institutions are insured by the Federal Deposit InsuranceCorporation. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risks on cash.Net sales to customers outside the United States and related trade accounts receivable were approximately 7% and 5% of total sales and trade accountsreceivable, respectively, at August 31, 2011, and 6% and 5%, respectively, at August 31, 2010.No single customer accounted for more than 10% of revenues for either of the years ended August 31, 2011 or 2010.Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and LiabilitiesThe Company’s financial instruments other than its marketable securities include cash and cash equivalents, trade accounts receivable, prepaid expenses,security deposits, trade accounts payable, line of credit, accrued expenses and long-term debt. Management believes that the fair value of these financialinstruments approximate their carrying amounts based on current market indicators, such as prevailing interest rates and the short-term maturities of suchfinancial instruments. The Company’s marketable securities are measured at fair value (see Note 14).During the years ended August 31, 2011 and 2010, the Company did not have any nonfinancial assets or liabilities that were measured at estimated fair valueon a nonrecurring basis.Segment ReportingOperating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chiefoperating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision makeris our Chief Executive Officer. Management has evaluated its approach for making operating decisions and assessing the performance of our business anddetermined that the Company has two reportable segments: Distribution Operations and Real Estate Rental Operations. The Distribution Operations are thoseresults of Bisco, while the Real Estate Rental Operations reflect the results of EACO Corporation (see Note 13).Note 3. Real Estate PropertiesReal estate properties held for leasing consist of five properties and are as follows at August 31, 2011 and 2010: August 31,2011 August 31,2010 Land $5,841,000 5,841,000 Buildings & improvements 5,888,000 5,843,000 Equipment 1,521,000 1,485,000 Total 13,250,000 13,169,000 Accumulated depreciation (3,165,000) (2,853,000) Book value $10,085,000 10,316,000 One of the properties is located in Sylmar, California and the other three properties are located in Orange Park, Deland and Brooksville, Florida. The SylmarProperty consists of two industrial properties with 65,000 total square feet. The other properties are suited for restaurant use and are approximately 30,000square feet combined. F-10Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table shows the future minimum rentals due under non-cancelable operating leases (where the Company is the lessor or sublessor) in effect atAugust 31, 2011: IndustrialProperties RestaurantProperties Total 2012 797,000 526,000 1,323,000 2013 327,000 397,000 724,000 2014 260,000 336,000 596,000 2015 — 346,000 346,000 2016 — 357,000 357,000 Thereafter — 708,000 708,000 $1,384,000 $2,670,000 $4,054,000 For the years ended August 31, 2011 and 2010, depreciation expense was $312,000 and $335,000, respectively.Note 4. Equipment and Leasehold ImprovementsEquipment and leasehold improvements are summarized as follows at August 31, 2011 and 2010: August 31, 2011 August 31, 2010 Machinery and equipment 3,719,000 3,483,000 Furniture and equipment 648,000 633,000 Vehicles 173,000 173,000 Leasehold improvements 1,148,000 1,097,000 5,688,000 5,386,000 Less accumulated depreciation and amortization (4,716,000) (4,307,000) $972,000 $1,079,000 For the years ended August 31, 2011 and 2010, depreciation expense was $413,000 and $448,000, respectively.Note 5. Line of CreditThe Company has a revolving credit agreement with Community Bank, which currently provides for borrowings of up to $10.0 million and bears interest ateither the 30, 60 or 90 day London Inter-Bank Offered Rate (“LIBOR”) (.33% and .29% for the 90 day LIBOR at August 31, 2011 and 2010, respectively)plus 1.75% and/or the bank’s reference rate (3.25% at August 31, 2011 and 2010). Borrowings are secured by substantially all assets of the Company’sDistribution Operations and are guaranteed by the Company’s Chief Executive Officer and Chairman of the Board, Glen F. Ceiley. The agreement, asamended in April 2008, expired in October 2010, but was extended to and renewed in March 2011. The new agreement expires in March 2013. The amountoutstanding under this line of credit as of August 31, 2011 and 2010 was $8,500,000 and $8,900,000, respectively. The line of credit has been classified aslong-term debt as of August 31, 2011 based on the maturity in 2013 (see Note 6). Availability under the line of credit was $1,500,000 and $1,100,000 atAugust 31, 2011 and 2010, respectively. The Company is in compliance with all related covenants at August 31, 2011. F-11Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Note 6. Long-Term DebtLong-term debt is summarized as follows: August 31,2011 August 31,2010 Note payable to GE Capital Franchise Finance Corporation (“GE Capital”), secured by real estate, monthly principal andinterest payments totaling $10,400, interest at thirty-day LIBOR rate +3.75% (minimum interest rates of 7.3%), dueDecember 2016 $546,000 $626,000 Note payable to Zion’s Bank, secured by real estate, monthly principal and interest payment totaling $8,402, interest at6.7%, due April 2033 1,144,000 1,165,000 Note payable to Community Bank, secured by real estate, monthly principal and interest payment totaling $39,700, interestat 6.0%, due December 2017 5,395,000 5,541,000 Line of credit payable to Community Bank, secured by all Company assets, only monthly interest payment due, interest atthe prime rate, due March 2013 8,500,000 — Note payable to Community Bank, secured by all Company assets, monthly principal and interest payment totaling$43,083, interest at the prime rate (3.25% at August 31, 2011), due March 2013 797,000 — Note payable to BMW Bank of North America, secured by automobile, monthly principal and interest payments totaling$1,800, interest at 0.9%, due July 2012 22,000 42,000 16,404,000 7,374,000 Less current portion (778,000) (300,000) $15,626,000 $7,074,000 The scheduled payments for the above loans are as follows at August 31 2011: 2012 $778,000 2013 9,086,000 2014 307,000 2015 328,000 2016 350,000 Thereafter 5,555,000 $16,404,000 In October 2002, the Company entered into a loan agreement with GE Capital for the Orange Park Property. The loan agreement with GE Capital requires theCompany to comply with certain financial covenants and ratios measured. As of August 31, 2011, the Company was not in compliance with one covenantincluded in the debt agreement. The defaulted covenant required EACO to maintain a fixed charge coverage ratio of at least 1.25:1. The Company violatedthis covenant by not maintaining the minimum required ratio. GE Capital has granted the Company a waiver for this covenant for the year ended August 31,2011.The GE Capital loan is secured by the Company’s Orange Park Property The Community Bank loan is secured by the Company’s Sylmar Property. TheZion’s Bank loan is secured by the Company’s Brooksville Property. F-12Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Note 7. Shareholders’ EquityEarnings (Loss) per Common ShareThe following is a reconciliation of the numerators and denominators of the basic and diluted computations for income (loss) from continuing operations andnet income (loss) from continuing operations attributable to common shareholders: (In thousands, except per share information) For the Year EndedAugust 31, 2011 For the Year EndedAugust 31, 2010 EPS from continuing operations – basic and diluted: Net income (loss) from continuing operations $2,139 $(1,353) Less: undeclared cumulative preferred stock dividends (76) (95) Net income (loss) from continuing operations for basic and diluted EPScomputation $2,063 $(1,448) Weighted average common shares outstanding for basic and dilutedEPS computation 4,861,590 4,861,590 Earnings (loss) per common share from continuing operations – basicand diluted $0.42 $(0.30) Stock OptionsThe Company has no stock options outstanding and has 200,000 shares of common stock reserved for future grants at August 31, 2011. During the yearsended August 31, 2011 and 2010, the Company awarded no stock options, nor did any option awards vest during the periods noted, and thus, the Companyrecorded no compensation expense related to stock options during these periods. During the years ended August 31, 2011 and 2010, no stock options wereexercised, and therefore, no cash was received from stock option exercises.Preferred StockThe Company’s Board of Directors is authorized to establish the various rights and preferences for the Company’s preferred stock, including voting,conversion, dividend and liquidation rights and preferences, at the time shares of preferred stock are issued. In September 2004, the Company sold 36,000shares of its Series A Cumulative Convertible Non-Voting Preferred Stock (the “Preferred Stock”) to the Company’s CEO, with an 8.5% dividend rate at aprice of $25 per share for a total cash purchase price of $900,000. Holders of the Preferred Stock have the right at any time to convert the Preferred Stock andaccrued but unpaid dividends into shares of the Company’s common stock at the conversion price of $22.50 per share. In the event of a liquidation ordissolution of the Company, holders of the Preferred Stock are entitled to be paid out of the assets of the Company available for distribution to shareholders$25 per share plus all unpaid dividends before any payments are made to the holders of common stock.Note 8. Profit Sharing PlanThe Company has a defined contribution 401(k) profit sharing plan for all eligible employees. Employees are eligible to contribute to the 401(k) plan aftersix months of employment. Under the plan, employees may contribute up to 15% of their compensation. The Company has a discretionary match of 50% ofthe employee contributions up to 4% of employees’ compensation. The Company’s contributions are subject to a five-year vesting period beginning thesecond year of service. The Company’s contribution expense was approximately $139,000 and $0 for the years ended August 31, 2011 and 2010,respectively. F-13Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Note 9. Discontinued OperationsWhen the Company was active in the restaurant business, the Company self-insured losses for workers’ compensation claims up to certain limits. TheCompany exited the restaurant business in 2005. The liability for workers’ compensation represents an estimate of the present value of the ultimate cost ofuninsured losses which are unpaid as of the balance sheet dates. This liability is presented as liabilities of discontinued operations in the accompanyingbalance sheets. The estimate is continually reviewed and adjustments to the Company’s estimated claim liability, if any, are reflected in discontinuedoperations. On a periodic basis, the Company obtains an actuarial report which estimates its overall exposure based on historical claims and an evaluation offuture claims. An actuarial evaluation was last obtained by the Company as of August 31, 2011. As of August 31, 2011 and 2010, the estimated claimliability was $2,855,000 and $3,075,000, respectively.Note 10. Income TaxesThe following summarizes the Company’s provision for income taxes on loss from continuing operations: For the Year EndedAugust 31,2011 For the Year EndedAugust 31,2010 Current: Federal $281,000 $246,000 State 413,000 172,000 Foreign — — 694,000 418,000 Deferred: Federal 729,000 226,000 State 12,000 (38,000) Foreign 30,000 (73,000) 771,000 114,000 $1,465,000 $532,000 Income taxes for the years ended August 31, 2011 and 2010 differ from the amounts computed by applying the federal statutory corporate rate of 34% to thepre-tax loss from continuing operations.The differences are reconciled as follows: For the Year EndedAugust 31, 2011 For the Year EndedAugust 31, 2010 Current: Expected income tax (benefit) at statutory rate $1,226,000 $(279,000) Increase (decrease) in taxes due to: State tax, net of federal benefit 184,000 (29,000) Permanent differences 48,000 20,000 Change in deferred tax asset valuation allowance (120,000) 845,000 Other, net 127,000 (25,000) Income tax expense $1,465,000 $532,000 F-14Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The components of deferred taxes at August 31, 2011 and 2010 are summarized below: August 31,2011 August 31,2010 Deferred tax assets: Net operating loss $2,643,000 $3,662,000 Capital losses 3,445,000 3,620,000 Allowance for doubtful accounts 84,000 74,000 Accrued expenses 217,000 283,000 Accrued worker’s compensation 1,102,000 1,200,000 Related party interest accrual 376,000 144,000 Inventory reserve 483,000 456,000 Unrealized losses on investment 75,000 9,000 Excess of tax over book depreciation 236,000 135,000 Other 222,000 209,000 Total deferred tax assets 8,883,000 9,792,000 Valuation allowance (4,064,000) (4,184,000) 4,819,000 5,608,000 Deferred tax liabilities: Deferred gains (1,134,000) (1,151,000) Total deferred tax liabilities (1,134,000) (1,151,000) Net deferred tax asset $3,685,000 $4,457,000 At August 31, 2011, the Company has federal net operating loss carryforwards (“NOLs”) of approximately $6.2 million, which will begin to expire in 2024and state NOLs of approximately $11.4 million, which will begin to expire in 2014. The Company also had federal and state capital loss carryforwards ofapproximately $8.97 million and $9.28 million, respectively, which are deductible only to the extent the Company has future capital gains.In accordance with Sections 382 and 383 of the Internal Revenue Code, the utilization of Federal NOL’s and other tax attributes may be subject to substantiallimitations if certain ownership changes occur during a three-year testing period (as defined). Management has determined that the merger with Bisco wouldnot limit the Company’s utilization of its NOL or credit carryovers.The Company records net deferred tax assets to the extent management believes these assets will more likely than not be realized. In making suchdetermination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected futuretaxable income (if any), tax planning strategies and recent financial performance.Management reviewed the positive and negative evidence available at August 31, 2011 and 2010 and determined that the capital loss carryforwards,unrealized losses and EACO’s state net operating losses did not meet the more likely than not threshold required to be recognized. As such a valuationallowance was retained on these deferred tax assets.On January 1, 2007, we adopted ASC 740, Income Taxes, formerly the Financial Accounting Standards Board (“FASB”) Interpretation No. 48 aninterpretation of FASB Statement No. 109. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements.ASC 740 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken orexpected to be taken in the tax return. The Company did not recognize any additional liability for unrecognized tax benefit as a result of the implementation.The Company decreased liability for unrecognized tax benefit related to tax positions in prior periods by $15,000 due to the close of a state audit in thecurrent year. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2011 2010 Balance at September 1, — $15,000 Additions based on tax positions related to the current year — — Reductions based on tax positions related to prior years and settlements — (15,000) Reductions based on statute of limitations — — Balance at August 31, — — F-15Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company will recognize interest and penalty related to unrecognized tax benefits and penalties as income tax expense. As of August 31, 2011, theCompany has not recognized liabilities for penalty and interest as the Company does not have any liability for unrecognized tax benefits.The Company is subject to taxation in the U.S., Canada and various states. The Company’s tax years for 2007, 2008, 2009 and 2010 are subject toexamination by the taxing authorities. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by taxingauthorities for years before 2007.Note 11. Commitments and ContingenciesLegal MattersFrom time to time, we may be subject to legal proceedings and claims which arise in the normal course of our business. Any such matters and disputes couldbe costly and time consuming, subject us to damages or equitable remedies, and divert our management and key personnel from our business operations. Wecurrently are not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have amaterial adverse effect on our consolidated results of operations, financial position or cash flowsLease ObligationsThe Company leases its facilities under operating lease agreements (three of which are with its majority shareholder), which expire on various dates throughSeptember 2016 and require minimum rental payments ranging from $1,000 to $32,000 per month. Certain of the leases contain options for renewal undervarying terms.Minimum future rental payments under operating leases are as follows: Years ended August 31: 2012 $1,656,000 2013 1,251,000 2014 841,000 2015 683,000 2016 480,000 Thereafter 515,000 $5,426,000 Rental expense for all operating leases for the years ended August 31, 2011 and 2010 was approximately $1,608,000 and $1,647,000, respectively. F-16Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Note 12. Related Party TransactionsThe Company leases three buildings under operating lease agreements from its majority stockholder. During the years ended August 31, 2011 and 2010, theCompany incurred approximately $529,000 and $529,000, respectively, of expense related to these leases.Note 13. Segment ReportingThe Company operates in two reportable business segments; Distribution Operations and Real Estate Rental Operations. The chief operating decision maker,our CEO, evaluates performance based on gross margins, selling general and administrative expenses and net profits. Management also reviews the returns onthe rental real estate properties, inventory, accounts receivable and marketable securities (segment assets). For the Year EndedAugust 31, 2011 For the Year EndedAugust 31, 2010 Real EstateRental Distribution Total Real EstateRental Distribution Total (In thousands) Revenues $1,242 $103,467 $104,709 $1,086 $91,547 $92,633 Cost of revenues 583 74,865 75,448 1,706 67,048 68,754 Gross margin (loss) 659 28,602 29,261 (620) 24,499 23,879 Selling, general & administrative expense — 25,031 25,031 — 21,763 21,763 Gains (losses) on marketable trading — 141 141 — (2,167) (2,167) Interest and other income 3 — 3 26 — 26 Interest expense 462 308 770 515 281 796 Segment profit (loss) 200 3,404 3,604 (1,641) 288 (1,353) Segment assets 14,859 28,019 42,878 11,280 30,045 41,325 For the Year EndedAugust 31, 2011 For the Year EndedAugust 31, 2010 United States Canada Total United States Canada Total Revenues $99,998 $4,711 $104,709 $88,417 $4,216 $92,633 Identifiable assets 40,178 2,700 42,878 39,062 2,263 41,325 Note 14. Fair Value of Financial InstrumentsManagement estimates the fair value of an asset or a liability. The three levels of the fair-value hierarchy are described as follows:Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the Company, Level 1 inputs include price and marketablesecurities that are actively traded.Level 2: Inputs other than Level 1 that are observable, either directly or indirectly. At this time, the Company holds no Level 2 financial instruments.Level 3: Unobservable inputs. F-17Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table sets forth by level, within the fair value hierarchy, certain assets at estimated fair value as of August 31, 2011 and 2010: Quoted Prices inActive Markets forIdentical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3) Total August 31, 2011 Marketable securities $892,000 — — $892,000 August 31, 2010 Marketable securities $817,000 — — $817,000 Note 15. Subsequent EventsManagement has evaluated events subsequent to August 31, 2011, through the date that these consolidated financial statements are being filed with theSecurities and Exchange Commission, for transactions and other events which may require adjustment of and/or disclosure in such financial statements. F-18Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.SCH. II Allowance for Doubtful Accounts Balance atBeginningof year Changes in/Provisions forDoubtful AccountsReceivable AccountsWritten OffLessRecoveries Balanceat Close ofPeriod Year ended August 31, 2011 $190 $165 $(128) $227 Year ended August 31, 2010 307 48 (165) 190 Tax Valuation Allowance Balance atBeginningof year ValuationAllowanceProvision ValuationAllowanceReversal Balanceat Close ofPeriod Year ended August 31, 2011 $4,184 $— $(120) $4,064 Year ended August 31, 2010 3,339 845 — 4,184 F-19Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT INDEX 2.1 Agreement and Plan of Merger dated December 22, 2009 by and between EACO Corporation, Bisco Acquisition Corp., Bisco Industries, Inc. andGlen Ceiley (Exhibit 2.1 of the Company’s Transition Report on Form 10-K filed with the SEC on December 23, 2009)3.1 Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.01 to the Company’s Registration Statement on Form S-1, RegistrationNo. 33-1887, is incorporated herein by reference.)3.2 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.03 to the Company’s RegistrationStatement on Form S-1, , Registration No. 33-1887, is incorporated herein by reference.)3.3 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.04 to the Company’s RegistrationStatement on Form S-1, Registration No. 33-17620, is incorporated herein by reference.)3.4 Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to the Company’s registration statement on Form 8-A, filed withthe SEC on March 19, 1997, is incorporated herein by reference.)3.5 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report onForm 10-K filed with the SEC on March 31, 1998, is incorporated herein by reference.)3.6 Amendment to Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2000, is incorporated herein by reference.)3.7 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.09 to the Company’s Annual Report onForm 10-K filed with the SEC on March 29, 2004 is incorporated herein by reference.)3.8 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc., changing the name of the corporation to EACOCorporation. (Exhibit 3.10 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on September 3, 2004, is incorporated herein byreference.)3.9 Articles of Amendment Designating the Preferences of Series A Cumulative Convertible Preferred Stock $0.10 Par Value of EACOCorporation (Exhibit 3.1 to the Company’s current report on Form 8-K filed with the SEC on September 8, 2004, is incorporated herein byreference.)3.10 Certificate of Amendment to Amended and Restated Bylaws effective December 21, 2009 (Exhibit 3.10 to the Company’s transition report onForm 10-K filed with the SEC on December 23, 2009 is incorporated herein by reference.)3.11 Articles of Amendment to Articles of Amendment Designating the Preferences of Series A Cumulative Convertible Preferred Stock, as filed withthe Secretary of State of the State of Florida on December 22, 2009 (Exhibit 3.11 to the Company’s transition report on Form 10-K filed with theSEC on December 23, 2009 is incorporated herein by reference.)10.1 Form of Amended and Restated Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing between the Company and GECapital Franchise Corporation dated October 21, 2002. (Exhibit 10.01 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC onNovember 14, 2002, is incorporated herein by reference.)10.2 Form of Amended and Restated Promissory Note between the Company and GE Capital Franchise Finance Corporation dated October 21, 2012.(Exhibit 10.02 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2002, Registration No. 33-1887, isincorporated herein by reference.)10.3 Form of Loan Agreement between the Company and GE Capital Franchise Finance Corporation dated October 21, 2002. (Exhibit 10.03 to theCompany’s Quarterly Report on Form 10-Q, filed with the SEC on November 14, 2002, is incorporated herein by reference.)10.4+ 2002 Long-Term Incentive Plan (Appendix A to the Company’s Proxy Statement on Schedule 14A, filed with the SEC on May 1, 2002, isincorporated herein by reference)10.5 Purchase and Sale Agreement dated July 31, 2009 by and between Gottula Properties, LLC and EACO Corporation (Exhibit 10.8 to theCompany’s Transition Report on Form 10-K, filed with the SEC on December 23, 2009, is incorporated herein by reference)Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.6 Administrative Services Management Agreement dated March 3, 2006 by and between EACO Corporation and Bisco Industries, Inc. (Exhibit 10.9to the Company’s Transition Report on Form 10-K, filed with the SEC on December 23, 2009, is incorporated herein by reference)10.7 Business Loan Agreement dated March 28, 2008 by and between EACO Corporation and Zions First National Bank10.8 Promissory Note dated March 28, 2008 in the principal amount of $1,216,354 executed by EACO in favor of Zions First National Bank10.9 Commercial Guaranty dated March 28, 2008 executed by Glen F. Ceiley and Barbara A. Ceiley Revocable Trust dated 5/15/0810.10 Business Loan Agreement dated November 9, 2007 by and between EACO Corporation and Community Bank10.11 Promissory Note dated November 9, 2007 in the principal amount of $5,875,000 executed by EACO in favor of Community Bank10.12 Commercial Guaranties dated November 9, 2007 executed by Glen F. Ceiley, Bisco Industries, Inc. and the Glen F. Ceiley and Barbara A. CeileyRevocable Trust21.1 Subsidiaries of the Company.23.1 Consent of Squar, Milner, Peterson, Miranda & Williamson LLP.31.1 Certification of Chief Executive Officer (principal executive officer and principal financial officer) pursuant to Securities and Exchange Act Rules13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 Certification of Chief Executive Officer (principal executive officer and principal financial officer) pursuant to Section 906 of the Sarbanes-OxleyAct of 2002. +Indicates a management contract or compensatory plan or arrangement.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.7BUSINESS LOAN AGREEMENT Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials$1,216,354.00 03-28-2008 04-01-2033 9001 5715 1129244 *** 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO CORPORATION, a Florida Corporation Lender: ZIONS FIRST NATIONAL BANK 304 EVENING STAR LANE NATIONAL REAL ESTATE DEPARTMENT NEWPORT BEACH, CA 92660 ONE SOUTH MAIN STREET, SUITE 1400 SALT LAKE CITY, UT 84111 THIS BUSINESS LOAN AGREEMENT dated March 28, 2008, is made and executed between EACO CORPORATION, a Florida Corporation(“Borrower”) and ZIONS FIRST NATIONAL BANK (“Lender”) on the following terms and conditions. Borrower has received prior commercial loansfrom Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described onany exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender isrelying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of anyLoan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the termsand conditions of this Agreement.TERM. This Agreement shall be effective as of March 28, 2008, and shall continue in full force and effect until such time as all of Borrower’s Loans in favorof Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until April 1, 2033.CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreementshall be subject to the fulfillment to Lender’s satisfaction of all the conditions set forth in this Agreement and in the Related Documents.Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lendersecurity interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance asrequired below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactoryto Lender and Lender’s counsel.Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender property certified resolutions, duly authorizingthe execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions,authorizations, documents and instruments as Lender or its counsel, may require.Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specifiedin this Agreement or any Related Document.Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document orcertificate delivered to Lender under this Agreement are true and correct.No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement orunder any Related Document.REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of eachdisbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any indebtedness exists:Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under andby virtue of the laws of the State of Florida. Borrower is duly authorized to transact business in all other states in which Borrower is doing business,having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borroweris, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect onits business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presentlyengaged or presently proposes to engage. Borrower maintains an office at 304 EVENING STAR LANE, NEWPORT BEACH, CA 92660. UnlessBorrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its recordsconcerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change inBorrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shallcomply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable toBorrower and Borrower’s business activities.Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used byBorrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by allnecessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articlesof incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation,court decree, or order applicable to Borrower or to Borrower’s properties.Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition asof the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recentfinancial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered willconstitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 2 Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and asaccepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’sproperties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. Allof Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at leastthe last five (5) years.Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period ofBorrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of anyHazardous Substance by any person on under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there hasbeen (a) any breach or, violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatenedrelease of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral or (c) any actual orthreatened litigation or claims or any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or otherauthorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about orfrom any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, andordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make suchinspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections ortests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liabilityon the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence ininvestigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lenderfor indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend,and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectlysustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal,release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including theobligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreementand shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) againstBorrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties,other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes,assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in theordinary course of business and for which adequate reserves have been provided.Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, orpermitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’sLoan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral.Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well asupon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that so long as this Agreement remains in effect, Borrower will:Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) allexisting and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor whichcould materially affect the financial condition of Borrower or the financial condition of any Guarantor.Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and auditBorrower’s books and records at all reasonable times.Financial Statements. Furnish Lender with such financial statements and other related information at such frequencies and in such detail as Lendermay reasonably request.Additional Information. Furnish such additional information and statements, as Lender may request from time to time.Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’sproperties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, willdeliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will notbe cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsementproviding that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. Inconnection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender withsuch lender’s loss payable or other endorsements as Lender may require.Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender mayreasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) theproperties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values;and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have anindependent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of suchappraisal shall be paid by Borrower.Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantor namedbelow, on Lender’s forms, and in the amount and under, the conditions set forth in these guaranties. Name of Guarantor Amount GLEN CEILEY $1,216,354.00 Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any otherparty and notify Lender immediately in writing of any default in connection with any other such agreements.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 3 Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes,governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on whichpenalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits.Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality ofthe same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserveswith respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the RelatedDocuments, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of anydefault in connection with any agreement.Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive andmanagement personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in areasonable and prudent manner.Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may berequested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or ahazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned,leased or used by Borrower.Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmentalauthorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, includingwithout limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withholdcompliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as,in Lender’s sole opinion. Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a suretybond, reasonably satisfactory to Lender, to protect Lender’s interest.Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s otherproperties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, andrecords. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computersoftware programs for the generation of such records) in the possession of a third party. Borrower, upon request of Lender, shall notify such party topermit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’sexpense.Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, asa result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupiedby Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and incompliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptlyand in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication fromany governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with anyenvironmental activity whether or not there is damage to the environment and/or other natural resources.Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments,financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loansand to perfect all Security Interests.LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower failsto comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due anyamounts Borrower is required to discharge or pay under this Agreement or any Related Documents. Lender on Borrower’s behalf may (but shall not beobligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests,encumbrances and other claims at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral.All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid byLender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable ondemand; (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 atthe Note’s maturity.NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior writtenconsent of Lender.Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by thisAgreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant asecurity interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts,except to Lender.Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged. (2) ceaseoperations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of theordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its stock), provided, however thatnotwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends,if Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on itsstock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income taxpayments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporationbecause of their ownership of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capitalstructure.Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create oracquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Agreements. Borrower will not enter into any agreement containing any provisions which would be violated or breached by the performance ofBorrower’s obligations under this Agreement or in connection herewith.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 4 CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any otheragreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under theterms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or anyGuarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occursa material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan;or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or(E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking,savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower 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. Borrower authorizes Lender, tothe extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, toadministratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:Payment Default. Borrower fails to make any payment when due under the Loan.Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any ofthe Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lenderand Borrower.Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or salesagreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s or any Grantor’s property orBorrower’s or any Grantor’s ability to repay the Loans 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 Borrower or on Borrower’s behalf under this Agreement orthe 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 anytime thereafter.Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver forany part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateraldocument to create a valid and perfected security interest or lien) at any time and for any reason.Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossessionor any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishmentof any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith disputeby Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lenderwritten notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in anamount determined by Lender. In its sole discretion, as being an adequate reserve or bond for the dispute.Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies orbecomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.Adverse Change. A material adverse change occurs in Borrowers, financial condition, or Lender believes the prospect of payment or performance ofthe Loan is impaired.Insecurity. Lender in good faith believes itself insecure.Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given anotice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after receiving writtennotice from Lender demanding cure of such default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days,immediately initiate steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continue and complete allreasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents,all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (includingany obligation to make further Loan Advances or disbursements), and, at Lenders option, all Indebtedness immediately will become due and payable, allwithout notice of any kind to Borrower except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, suchacceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available atlaw, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercisedsingularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures orto take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies.FINANCIAL STATEMENTS. BORROWER COVENANTS AND AGREES WITH LENDER THAT, WHILE THIS AGREEMENT IS IN EFFECT,BORROWER WILL FURNISH LENDER WITH, AS SOON AS AVAILABLE, BUT IN NO EVENT LATER THAN 120 DAYS AFTER THE END OF EACHFISCAL YEAR, BORROWER’S BALANCE SHEET AND INCOME STATEMENT FOR THE YEAR ENDED, COMPILED BY A CERTIFIED PUBLICACCOUNTANT SATISFACTORY TO LENDER. UPON REASONABLE REQUEST BY LENDER, BORROWER SHALL PROVIDE TO LENDERBORROWER’S INTERNALLY PREPARED INTERIM BALANCE SHEET AND INCOME STATEMENT. WITH THE EXCEPTION OF INTERIMSTATEMENTS, ALL FINANCIAL REPORTS REQUIRED TO BE PROVIDED UNDER THIS AGREEMENT SHALL BE PREPARED IN ACCORDANCEWITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, APPLIED ON A CONSISTENT BASIS, AND CERTIFIED BY BORROWER AS BEINGTRUE AND CORRECT.FINANCIAL STATEMENT. GUARANTOR COVENANTS AND AGREES WITH LENDER THAT, WHILE THIS AGREEMENT IS IN EFFECT,Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GUARANTOR WILL FURNISH LENDER WITH, UPON REQUEST, GUARANTOR’S PERSONAL FINANCIAL STATEMENT.TAX RETURNS. BORROWER AND GUARANTOR SHALL PROVIDE TO LENDER, UPON REQUEST, A COPY OF BORROWER’S AND GUARANTOR’SFEDERAL TAX RETURN.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 5 CASH FLOW COVERAGE. 13235 CORTEZ BLVD., WEEKI WACHI, FL 34613 SHALL MAINTAIN A RATIO OF ANNUAL NET OPERATING INCOMEBEFORE INTEREST EXPENSE, INCOME TAXES AND DEPRECIATION/AMORTIZATION (EBITDA) (THE “NUMERATOR”) GREATER THAN OREQUAL TO 1.20 TIMES AGGREGATE ANNUAL DEBT SERVICE INCLUDING ZIONS LOAN PAYMENTS ON THE SUBJECT BUILDING (THE“DENOMINATOR”). MEASURED ANNUALLY BASED UPON FISCAL YEAR END FINANCIAL STATEMENT. MONITORING TO BEGINDECEMBER 31, 2008.ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. BORROWER REPRESENTS AND WARRANTS THAT, EXCEPT AS LENDER HASOTHERWISE PREVIOUSLY BEEN ADVISED BY BORROWER THROUGH THE ENVIRONMENTAL SENSITIVITY QUESTIONNAIRE, NO HAZARDOUSMATERIALS ARE NOW LOCATED ON, IN OR UNDER THE PROPERTY, NOR IS THERE ANY ENVIRONMENTAL CONDITION ON, IN OR UNDER THEPROPERTY AND NEITHER BORROWER NOR, TO BORROWER’S KNOWLEDGE, AFTER DUE INQUIRY AND INVESTIGATION, ANY OTHER PERSONHAS EVER CAUSED OR PERMITTED ANY HAZARDOUS MATERIALS TO BE PLACED, HELD, USED, STORED, RELEASED, GENERATED, LOCATEDOR DISPOSED OF ON, IN OR UNDER THE PROPERTY, OR ANY PART THEREOF, NOR CAUSED OR ALLOWED AN ENVIRONMENTAL CONDITIONTO EXIST ON, IN OR UNDER THE PROPERTY. BORROWER FURTHER REPRESENTS AND WARRANTS THAT NO INVESTIGATION,ADMINISTRATIVE ORDER, CONSENT ORDER AND AGREEMENT, LITIGATION, OR SETTLEMENT WITH RESPECT TO HAZARDOUS MATERIALSIS PROPOSED, THREATENED, ANTICIPATED, OR IN EXISTENCE WITH RESPECT TO THE PROPERTY.HAZARDOUS MATERIALS. BORROWER SHALL NOT PERMIT THE PRESENCE, USE, DISPOSAL, STORAGE OR RELEASE OF ANY HAZARDOUSMATERIALS ON, IN OR UNDER THE PROPERTY, EXCEPT IN THE ORDINARY COURSE OF BORROWER’S BUSINESS UNDER CONDITIONS THATARE GENERALLY RECOGNIZED TO BE APPROPRIATE AND SAFE AND THAT ARE IN STRICT COMPLIANCE WITH ALL APPLICABLEENVIRONMENTAL HEALTH AND SAFETY LAWS.ENVIRONMENTAL INDEMNIFICATION. BORROWER SHALL INDEMNIFY LENDER, ITS AFFILIATES AND ASSIGNS, FROM AND AGAINST ANYAND ALL CLAIMS, DEMANDS, ACTIONS, PROCEEDINGS, LOSSES, LIABILITIES, DAMAGES, COSTS, AND EXPENSES WHICH ARE OR MAY BEAWARDED OR INCURRED BY LENDER, AND FOR ALL REASONABLE ATTORNEY FEES, LEGAL EXPENSES, AND OTHER OUT-OF-POCKETEXPENSES ARISING FROM OR RELATED IN ANY MANNER, DIRECT OR INDIRECT, TO (1) HAZARDOUS MATERIALS LOCATED ON, IN ORUNDER THE PROPERTY; (2) ANY ENVIRONMENTAL CONDITION ON, IN OR UNDER THE PROPERTY; (3) ANY BREACH OR VIOLATION OF THISAGREEMENT AND/OR (4) ANY ACTIVITY OR OMISSION, WHETHER OCCURING ON OR OFF THE PROPERTY, WHETHER PRIOR TO OR DURINGTHE TERM OF THE LOANS SECURED HEREBY, AND WHETHER BY BORROWER OR ANY OTHER PERSON OR ENTITY, RELATING TOHAZARDOUS MATERIALS OR ENVIRONMENTAL CONDITION AND THE PROPERTY. THE INDEMNIFICATION OBLIGATIONS OF BORROWERUNDER THIS AGREEMENT SHALL SURVIVE ANY RECONVEYANCE, RELEASE, OR FORECLOSURE OF THE PROPERTY. ANY TRANSFER IN LIEUOF FORECLOSURE, AND SATISFACTION OF THE OBLIGATIONS SECURED HEREBY. LENDER SHALL HAVE THE SOLE AND COMPLETECONTROL OF THE DEFENSES OF ANY SUCH CLAIMS. LENDER IS HEREBY AUTHORIZED TO SETTLE OR OTHERWISE COMPROMISE ANY SUCHCLAIMS AS LENDER IN GOOD FAITH DETERMINES SHALL BE IN ITS BEST INTERESTS. NOTWITHSTANDING ANYTHING TO THE CONTRARY INTHIS LOAN AGREEMENT, THE PROMISSORY NOTES, THE SECURITY DOCUMENTS, OR ANY OTHER AGREEMENT, ANY INDEMNIFICATIONAMOUNT OWING PURSUANT TO THIS AGREEMENT SHALL NOT BE SECURED BY ANY PROPERTY WHICH IS THE SUBJECT OF ANY BREACHOR VIOLATION OF THIS AGREEMENT.FAILURE TO PROVIDE ACCEPTABLE FINANCIAL STATEMENTS AS REQUIRED. FURNISHING FINANCIAL INFORMATION: DURING THETERM OF THE NOTE AND ANY EXTENSIONS OR RENEWALS THEREOF, BORROWER/GUARANTOR SHALL FURNISH AN ANNUAL FINANCIALSTATEMENT PREPARED IN A FORM ACCEPTABLE TO THE BANK AS SOON AS PRACTICABLE BUT NO LATER THAN 120 DAYS AFTERBORROWER/GUARANTOR’S YEAR END AND SUCH INTERIM FINANCIAL STATEMENTS AND ALL OTHER INFORMATION AND MATERIAL ASBANK MAY FROM TIME TO TIME REQUEST. IF AN EVENT OF DEFAULT (AS DEFINED BELOW AND IN THE NOTE) SHALL HAVE OCCURED ANDBY CONTINUING FOR WHICH THE BANK DOES NOT ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE, WHICH EVENT OFDEFAULT CONSISTS OF THE FAILURE OF BORROWER/GUARANTOR TO PROVIDE FINANCIAL STATEMENTS AND OTHER INFORMATION ASREQUIRED BY THE TERMS OF THIS AGREEMENT, THE INTEREST RATE APPLICABLE TO THE NOTE, FOR A PERIOD BEGINNING THREE(3) DAYS AFTER WRITTEN NOTICE OF SUCH EVENT, OF DEFAULT IS GIVEN AND ENDING UPON THE CURING OF SUCH DEFAULT, SHALL ATBANK’S OPTION, BE INCREASED BY ONE QUARTER OF ONE PERCENT (.25%) FOR THE FIRST 30-DAYS OF SAID EVENT OF DEFAULT AND BYAN ADDITIONAL ONE QUARTER OF ONE PERCENT (.25%) DURING EACH 30-DAY PERIOD THEREAFTER DURING WHICH SUCH EVENT OFDEFAULT CONTINUES. SUCH RATES SHALL APPLY TO THE ENTIRE OUTSTANDING PRINCIPAL BALANCE OF THE NOTE. UPON CURING SUCHEVENT OF DEFAULT, THE INTEREST RATE ON THE NOTE SHALL REVERT TO THE APPLICABLE RATE THEREUNDER EFFECTIVE AS OF THEDATE ON WHICH SAID EVENT OF DEFAULT IS CURED. BORROWER ACKNOWLEDGES THAT SUCH INCREASE INTEREST RATE IS INTENDED TOCOMPENSATE BANK FOR THE POTENTIALLY HIGHER CREDIT RISK AND INCREASED ADMINISTRATIVE COSTS ASSOCIATED WITHBORROWER/GUARANTOR’S FAILURE TO FURNISH TIMELY FINANCIAL INFORMATION.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 thematters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the partyor parties sought to be charged or bound by the alteration or amendment.Arbitration Disclosures. 1.ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. 2.IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. 3DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. 4.ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TOAPPEAL OR SEEK MODIFICATION OF ARBITRATORS’ RULINGS IS VERY LIMITED. 5.A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. 6.ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST THOSE CONCERNING THE AGREEMENT. 7.IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(a) Any claim or controversy (“Dispute”) between or among the parties and their employees, agents, affiliates, and assigns, including, but not limitedto. Disputes arising out of or relating to this agreement, this arbitration provision (“arbitration clause”), or any related agreements or instrumentsrelating hereto or delivered in connection herewith (“Related Agreements”), and including, but not limited to, a Dispute based on or arising from analleged tort, shall at the request of any party be resolved by binding arbitration in accordance with the applicable arbitration rules of the AmericanArbitration Association (the “Administration”). The provisions of this arbitration clause shall survive any termination, amendment, or expiration of thisagreement or Related Agreements. The provisions of this arbitration clause shall supersede any prior arbitration agreement between or among theparties.(b) The arbitration proceedings shall be conducted in a city mutually agreed by the parties. Absent such an agreement, arbitration will be conducted inSalt Lake City, Utah or such other place as may be determined by the Administrator. The Administrator and the arbitrators(s) shall have the authority tothe extent practicable to take any action to require the arbitration proceeding to be completed and theSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 6 arbitrator(s)’ award issued within 150 days of the filing of the Dispute with the Administrator. The arbitiator(s) shall have the authority to imposesanctions on any party that fails to comply with time periods imposed by the Administrator or the arbitrator(s), including the sanction of summarilydismissing any Dispute or defense with prejudice. The arbitrator(s) shall have the authority to resolve any Dispute regarding the terms of thisagreement, this arbitration clause or Related Agreements, including any claim or controversy regarding the arbitrability of any Dispute. All limitationsperiods applicable to any Dispute or defense, whether by statute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s)shall have the authority to decide whether any Dispute or defense is barred by a limitations period and, if so, to summarily enter an award dismissingany Dispute or defense on that basis. The doctrines of compulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitrationproceeding hereunder so that a party must state as a counterclaim in the arbitration proceeding any claim or controversy which arises out of thetransaction or occurrence that is the subject matter of the Dispute. The arbitrator(s) may in the arbilrator(s)’ discretion and at the request of any party:(1) consolidate in a single arbitration proceeding any other claim arising out of the same transaction involving another party to that transaction that isbound by an arbitration clause with Lender, such as borrowers, guarantors, sureties, and owners of collateral: and (2) consolidate or administer multiplearbitration claims or controversies as a class action in accordance with Rule 23 of the Federal Rules of Civil Procedure.(c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitratorshall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by amajority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be apracticing attorney. The arbitrator(s) shall award to the prevailing party recovery of all costs and fees (including attorneys’ fees and costs, arbitrationadministration fees and costs, and arbitrator(s)’ fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of thearbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief, foreclosure, sequestration,attachment, replevin, garnishment, or the appointment of a receiver.(d) Judgement upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award isbinding upon the parties only if the amount does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds that limit, either party maydemand the right to a court trial. Such a demand must be filed with the Administrator within thirty (30) days following the date of the arbitration award;if such a demand is not made with that time period, the amount of the arbitration award shall be binding. The computation of the total amount of anarbitration award shall include amounts awarded for attorneys’ fees and costs, arbitration administration fees and costs, and arbitrator(s)’ fees.(e) No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any party to: (1) judicially or non-judiciallyforeclose against any real or personal property collateral or other security; (2) exercise self-help remedies, including but not limited to repossession andsetoff rights: or (3) obtain from a court having jurisdiction thereover any provisional or ancillary remedies including but not limited to injunctiverelief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. Such rights can be exercised at any time, before orafter initiation of an arbitration proceeding, except to the extent such action is contrary to the arbitration award. The exercise of such rights shall notconstitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise of such rights shall be aDispute to be resolved under the provisions of this arbitration clause. Any party may initiate arbitration with the Administrator. If any party desires toarbitrate a Dispute asserted against such party in a complaint, counterclaim, cross-claim, or third-party complaint thereto, or in an answer or other replyto any such pleading, such party must make an appropriate motion to the trial court seeking to compel arbitration, which motion must be filed with thecourt within 45 days of service of the pleading, or amendment thereto, setting forth such Dispute. If arbitration is compelled after commencement oflitigation of a Dispute, the party obtaining an order compelling arbitration shall commence arbitration and pay the Administrator’s filing fees and costswithin 45 days of entry of such order. Failure to do so shall constitute an agreement to proceed with litigation and waiver of the right to arbitrate. Inany arbitration commenced by a consumer regarding a consumer Dispute, Lender shall pay one half of the Administrator’s filing fee, up to $250.(f) Notwithstanding the applicability of any other law to this agreement, the arbitration clause, or Related Agreements between or among the parties,the Federal Arbitration Act. 9 U.S.C. Section 1 et seq., shall apply to the construction and interpretation of this arbitration clause. If any provision ofthis arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect.Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable attorneys’ fees andLender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce thisAgreement, and Borrower shall pay the costs and expenses of such enforcement. Costs end expenses include Lender’s reasonable attorneys’ fees andlegal expenses whether or not Lender’s salaried employee and whether or not there is a lawsuit, including reasonable attorneys’ fees and legal expensesfor bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgmentcollection services. Borrower 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 provisionsof this Agreement.Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests inthe Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or morepurchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, andBorrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of saleof participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any suchparticipation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under theparticipation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaimthat it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender orsuch purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan.Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defensesthat Borrower may have against Lender.Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws ofthe State of Utah without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Utah.Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of SALT LAKE County, State ofUtah.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 7 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 signedby 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 byLender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with thatprovision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or betweenLender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any futuretransactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall notconstitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in thesole discretion of Lender.Notices. Unless otherwise provided by applicable law, any notice required to be given under this Agreement or required by law shall be given inwriting, and shall be effective when actually delivered in accordance with the law or with this Agreement, 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 Statesmail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party maychange its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is tochange the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwiseprovided by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to allBorrowers.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 provisionshall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considereddeleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shallnot affect the legality, validity or enforceability of any other provision of this Agreement.Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including withoutlimitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries andaffiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan orother financial accommodation to any of Borrower’s subsidiaries or affiliates.Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bandBorrower’s successors and assigns and shall injure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right toassign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of Lender.Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations,warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under thisAgreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warrantiesand covenants will survive the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain infull force and affect until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner providedabove, whichever is the last to occur.Time is of the Essence. Time is of the essence in the performance of this Agreement.DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to thecontrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shallinclude the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall havethe meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have themeanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:Advance. The word “Advance” means a disbursement of Loan funds-made or to be made, to Borrower or on Borrower’s behalf on a line of credit ormultiple advance basis under the terms and conditions of this Agreement.Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time totime, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.Borrower. The word “Borrower” means EACO CORPORATION, a Florida Corporation and includes all co-signers and co-makers signing the Note andall their successors and assigns.Collateral. The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, whethergranted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateralmortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust,conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security orlien Interest whatsoever, whether created by law, contract, or otherwise.Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to theprotection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, andLiability 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. 42U.S.C. Section 6901 et seq. or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.Event of Default. The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.GAAP. The word “GAAP” means generally accepted accounting principles.Grantor. The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including withoutlimitation all Borrowers granting such a Security Interest.Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan.Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical orSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.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 “HazardousSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. BUSINESS LOAN AGREEMENT Loan No: 9001 (Continued) Page 8 Substances” are used in their very broadcast sense and include without limitation any and all hazardous or toxic substances, materials or waste asdefined 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 and includes without limitation all Loans, together with all other obligations, debts and liabilities ofBorrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower, or any one or more of them; whether now or hereafterexisting, voluntary or involuntary, due or not due, absolute or contingent, liquidated or unliquidated; whether Borrower may be liable individually orjointly with others; whether Borrower may be obligated as a guarantor, surety, or otherwise; whether recovery upon such indebtedness may be orhereafter may become barred by any statute of limitations; and whether such indebtedness may be or hereafter may become otherwise unenforceable.Lender. The word “Lender” means ZIONS FIRST NATIONAL BANK, its successors and assigns.Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, andhowever evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or scheduleattached to this Agreement from time to time.Note. The word “Note” means the Note executed by EACO CORPORATION, a Florida Corporation in the principal amount of $1,216,364.00 datedMarch 28, 2008, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note orcredit agreement.Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens fortaxes, assessments, or similar charges either not yet due or being contested In good faith; (3) liens of materialmen, mechanics, warehousemen, orcarriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens orpurchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtednessoutstanding, on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liensand security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens andsecurity interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and Documents,whether now or hereafter existing, executed in connection with the Loan.Security Agreement. The words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements,understandings or other agreements, whether created by law, contract or otherwise, evidencing, governing, representing, or creating a Security Interest.Security Interest. The words “Security Interest” mean, without limitation, any and all types of collateral security, present and future, whether in theform of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral Chattelmortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as asecurity device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.FINAL AGREEMENT. Borrower understands that this Agreement and the related loan documents are the final expression of the agreement between Lenderand Borrower and may not be contradicted by evidence of any alleged oral agreement.BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREESTO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MARCH 28, 2008.BORROWER: EACO CORPORATIONS, A FLORIDA CORPORATIONBy: /s/ GLEN CEILEY GLEN CEILEY, President of EACO CORPORATION,a Florida CorporationLENDER:ZIONS FIRST NATIONAL BANKBy: /s/ Authorized Signer Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.8PROMISSORY NOTE Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials$1,216,354.00 03-28-2008 04-01-2033 9001 5715 1129244 *** 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO CORPORATION, a Florida Corporation304 EVENING STAR LANENEWPORT BEACH, CA 92660 Lender: ZIONS FIRST NATIONAL BANKNATIONAL REAL ESTATE DEPARTMENTONE SOUTH MAIN STREET, SUITE 1400SALT LAKE CITY, UT 84111 Principal Amount: $1,216,354.00 Initial Rate: 6.650% Date of Note: March 28, 2008PROMISE TO PAY. EACO CORPORATION, a Florida Corporation (“Borrower”) promises to pay to ZIONS FIRST NATIONAL BANK (“Lender”),or order, in lawful money of the United States of America, the principal amount of One Million Two Hundred Sixteen Thousand Three Hundred Fifty-Four & 00/100 Dollars ($1,216,354.00), together with Interest the unpaid principal balance from March 28, 2008, until paid in full.PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in 300 payments of $8,401.61 eachpayment. Borrower’s first payment is due May 1, 2008, and all subsequent payments are due on the same day of each month after that, Borrower’s finalpayment will be due on April 1, 2033, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Unlessotherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaidcollection costs; and then to any late charges. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of theannual Interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principalbalance to outstanding. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in waiting.VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the5 year LIBOR/Swap rate. Lender’s LIBOR/Swap rate is to be strictly interpreted and is not intended to serve any other purpose other than providing an indexto determine the interest rate used herein. Lender’s LIBOR/Swap rate may not necessarily be the same as the quoted offer side in the Eurodollar time depositmarket by any particular institution or service applicable to any interest period. As used herein, Lender’s LIBOR/Swap rate shall mean the rate per annumquoted by Lender as Lender’s 5 year LIBOR/Swap rate based upon the LIBOR/Swap rate as quoted for U.S. Dollars by Bloomberg or other comparablepricing services selected by Lender (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomesunavailable during the term of this loan. Lender may designate a substitute Index after notifying Borrower. Lender will tell Borrower the current index rateupon Borrowers request. The interest rate change will not occur more often than each five years. Borrower understands that Lender may make loans based onother rates as well. The Index currently is 3.400% per annum. The interest rate to be applied to the unpaid principal balance during this Note will be at a rateof 3.250 percentage points over the Index, resulting in an initial rate of 6.650% per annum. NOTICE: Under no circumstances will the interest rate on thisNote be more than the maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more ofthe following: (A) increase Borrower’s payments to ensure Borrower’s loan will pay off by its original final maturity date, (B) increase Borrower’s payments tocover accruing interest. (C) increase the number of Borrower’s payments, and (D) continue Borrower’s payments at the same amount and increases Borrower’sfinal payment.PREPAYMENT PENALTY. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not besubject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Upon prepayment of this Note, Lenderis entitled to the following prepayment penalty: during the first five years from Date of Note, Borrower shall be subject to a prepayment penalty as follows: aflat 5% during Note years 1-5 respectively. Principal reductions are permitted without penalty provided such reductions do not exceed 20% of the originalprincipal balance on the long term loan per Note year. (Said 20% allowance is non-cumulative from Note year to Note year.) However, if the loan isrefinanced shared balance, or repaid in full or in an amount exceeding the 20% paydown limitation, the applicable prepayment penalty shall apply to theentire prepaid principal amount at time of such prepayment (including any/all unscheduled principal reductions made during the previous twelve (12) monthperiod). Except for the foregoing, Borrower may pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to byLender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. Rather, early payments will reducethe principal balance due and may result in Borrower’s making fewer payments. Borrower agrees not to send Lender payments marked “paid in full”, “withoutrecourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowerwill remain obligated to pay any further amount owed to Lender. All written communications concerning dispute amounts, including any check or otherpayment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitationsor as full satisfaction of a disputed amount must be mailed or delivered to: ZIONS FIRST NATIONAL BANK, REAL ESTATE, ONE SOUTH MAIN, SUITE1400 SALT LAKE CITY, UT 84111.LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the regularly scheduled payment or $50.00, whichever is greater.INTEREST AFTER DEFAULT. Upon default including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding a3.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would haveapplied had there been no default. However, in no event, will the interest rate exceed the maximum interest rate limitations under applicable law.DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note:Payment Default. Borrower fails to make any payment when due under this Note.Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of therelated documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender andBorrower.Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or salesagreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s abilityto repay this Note or perform Borrower’s obligations under this Note or any of the related documents.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PROMISSORY NOTE Loan No: 9001 (Continued) Page 2 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or therelated 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 timethereafter.Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver forany part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossessionof any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishmentof any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith disputeby Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lenderwritten notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in anamount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies orbecomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance ofthis Note 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 Borrower has not been given a notice of a breach of the sameprovision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after receiving written notice from Lender demanding cureof such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps whichLender deems in lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary stepssufficient to produce compliance as soon as reasonably practical.LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediatelydue, and then Borrower will pay that amount.ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender thatamount. This includes, subject to any limits under applicable law, Lender’s reasonable attorneys’ fees and Lender’s legal expenses, whether or not there is alawsuit, including without limitation all reasonable attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate anyautomatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums providedby law.GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of theState of Utah without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Utah.CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of SALT LAKE County, State ofUtah.RIGHT OF SETOFF. To the extent permitted by applicable law. Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking,savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower 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. Borrower authorizes Lender, tothe extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, toadministratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.ARBITRATION DISCLOSURES. 1.ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. 2.IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. 3.DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. 4.ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TOAPPEAL OR SEEK MODIFICATION OF ARBITRATORS’ RULINGS IS VERY LIMITED. 5.A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. 6.ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST THOSE CONCERNING THE AGREEMENT. 7.IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION.(a) Any claim or controversy (“Dispute”) between or among the parties and their employees, agents, affiliates, and assigns, including, but not limitedto, Disputes arising out of or relating to this agreement this arbitration provision (“arbitration clause”), or any related agreements or instrumentsrelating hereto or delivered in connection herewith (“Related Agreements”), and including, but not limited to, a Dispute based on or arising from analleged tort, shall at the request of any party be reserved by binding arbitration in accordance with the applicable arbitration rules of the AmericanArbitration Association (the “Administrator”). The provisions of this arbitration clause shall survive any termination, amendment, or expiration of thisagreement or Related Agreements. The provisions of this arbitration clause shall supersede any prior arbitration agreement between or among theparties.(b) The arbitration proceedings shall be conducted in a city mutually agreed by the parties. Absent such an agreement, arbitration will be conducted inSalt Lake City, Utah or such other place as may be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority tothe extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)’ award issued within 150 days of theSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.filing of the Dispute with the Administrator. The arbitrator(s) shall have the authority to impose sanctions on any party that fails to comply with timeperiods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. Thearbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this agreement, this arbitration clause, or Related Agreements,including any claim or controversy regarding the arbitrability of any Dispute. All limitations periods applicable to any Dispute or defense, whether bystatute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute ordefense is barred by a limitations period and, if so, to summarily enter an award dismissing any Dispute or defense on that basis. The doctrines ofcompulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that a party must state as acounterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of theDispute. The arbitrator(s) may in the arbitrator(s)’ discretion and at the request of any party: (1) consolidate in a singleSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PROMISSORY NOTE Loan No: 9001 (Continued) Page 3 arbitration proceeding any other claim arising out of the same transaction involving another party to that transaction that is bound by an arbitrationclause with Lender, such as borrowers, guarantors, sureties, and owners of collateral; and (2) consolidate or administer multiple arbitration claims orcontroversies as a class action in accordance with Rule 23 of the Federal Rules of Civil Procedure.(c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitratorshall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by amajority vote of the three arbitrator at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be apracticing attorney’s arbitrator(s) shall award to the prevailing party recovery of all costs and fees (including attorneys’ fees and costs, arbitrationadministration fees and costs, and arbitrator(s)’ fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of thearbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief, foreclosure, sequestration,attachment replevin, garnishment, or the appointment of a receiver.(d) Judgement upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award isbinding upon the parties only if the amount does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds that limit, either party maydemand the right to a court trial. Such a demand must be filed with the Administrator within thirty (30) days following the date of the arbitration award;if such a demand is not made with that time period, the amount of the arbitration award shall be binding. The computation of the total amount of anarbitration award shall include amounts awarded for attorneys’ fees and costs, arbitration administration fees and costs, and arbitrator(s)’ fees.(e) No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any party to: (1) judicially or non-judiciallyforeclose against any real or personal property collateral or other security; (2) exercise self-help remedies, including but not limited to repossession andsetoff rights; or (3) obtain from a court having jurisdiction thereover any provisional or ancillary remedies including but not limited to injunctiverelief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. Such rights can be exercised at any time, before orafter initiation of an arbitration proceeding, except to the extent such action is contrary to the arbitration award. The exercise of such rights shall notconstitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise of such rights shall be aDispute to be resolved under the provisions of this arbitration clause. Any party may initiate arbitration with the Administrator. If any party desires toarbitrate a Dispute asserted against such party in a complaint, counterclaim, cross-claim, or third-party complaint thereto, or in an answer or other replyto any such pleading, such party must make an appropriate motion to the trial court seeking to compel arbitration, which motion must be filed with thecourt within 45 days of service of the pleading, or amendment thereto, setting forth such Dispute. If arbitration is compelled after commencement oflitigation of a Dispute, the party obtaining an order compelling arbitration shall commence arbitration and pay the Administrator’s filing fees and costswithin 45 days of entry of such order. Failure to do so shall constitute an agreement to proceed with litigation and waiver of the right to arbitrate. Inany arbitration commenced by a consumer regarding a consumer Dispute, Lender shall pay one half of the Administrator’s filing fee, up to $250.(f) Notwithstanding the applicability of any other law to this agreement, the arbitration clause, or Related Agreements between or among the parties,the Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall apply to the construction and interpretation of this arbitration clause. If any provision ofthis arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect.SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors andassigns, and shall inure to the benefit of Lender and its successors and assigns.GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing anyof its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extentallowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expresslystated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All suchparties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail torealize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice toanyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom themodification is made. The obligations under this Note are joint and several.PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THEVARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER:EACO CORPORATION, A FLORIDA CORPORATIONBy: /s/ Glen Ceiley GLEN CEILEY, President of EACO CORPORATION,a Florida Corporation Florida Documentary Stamp TaxFlorida documentary stamp tax in the amount required by law has been paid with respect to this Note on the Mortgage and Assignment of Rentssecuring this Note. Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.9COMMERCIAL GUARANTY Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials 5715 *** 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO CORPORATION, a Florida Corporation304 EVENING STAR LANENEWPORT BEACH, CA 92660 Lender: ZIONS FIRST NATIONAL BANKNATIONAL REAL ESTATE DEPARTMENTONE SOUTH MAIN STREET, SUITE 1400SALT LAKE CITY, UT 84111Guarantor: GLEN CEILEY304 EVENING STAR LANENEWPORT BEACH, CA 92660 GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full andpunctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower’s obligations under theNote and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty againstGuarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness or against any collateral securingthe Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legaltender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower’s obligationsunder the Note and Related Documents.INDEBTEDNESS. The word “Indebtedness” as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or moretimes, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, reasonable attorneys’ fees, arising fromany and all debts, liabilities and obligations that Borrower individually or collectively or interchangeably with others, owes or will owe Lender under theNote and Related Documents and any renewals, extensions, modifications, refinancings, consolidations and substitutions of the Note and RelatedDocuments.If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender’s rights under all guaranties shall becumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s liabilitywill be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice toGuarantor or to Borrower, and will continue in full force until all the Indebtedness shall have been fully and finally paid and satisfied and all of Guarantor’sother obligations under this Guaranty shall have been performed in full. Release of any other guarantor or termination of any other guaranty of theIndebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect theliability of any remaining Guarantors under this Guaranty.GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender without notice or demand and without lessening Guarantor’s liabilityunder this Guaranty, from time to time: (A) to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods toBorrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times thetime for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on theIndebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty orthe Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution ofnew collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or inany manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to applysuch security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controllingsecurity agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of theIndebtedness; and (H) to assign or transfer this Guaranty in whole or in part.GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of anykind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s requestand not at the request of Lenders; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do notconflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation,court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber,hyphotecate, transfer, or otherwise dispose of all or substantially all of Guarantor’s assets, or any interest therein; (F) upon Lender’s request, Guarantor willprovide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all futurefinancial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor’s financialcondition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the dateof the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition;(H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending orthreatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means ofobtaining from Borrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed fromsuch means of any facts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that,absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course ofits relationship with Borrower.GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or toextend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of theIndebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, orother guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment orSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held byLender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personalproperty security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any otherremedy within Lender’s power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. COMMERCIAL GUARANTY Loan No: 9001 (Continued) Page 2 Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defensesarising by reason of (1) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor’s subrogation rights or Guarantor’s rightsto proceed against Borrower for reimbursement including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting,qualifying, or discharging the Indebtedness; (2) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of thecessation of Borrower’s liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (3) any right to claim discharge ofthe Indebtedness on the basis of unjustified impairment of any Collateral for the Indebtedness; or (4) any statute of limitations, if at any time any action orsuit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations.Guarantor acknowledges and agrees that Guarantor’s obligations under this Guaranty shall apply to and continue with respect to any amount paid to Lenderwhich is subsequently recovered from Lender for any reason whatsoever (including without limitation as a result of bankruptcy, insolvency or fraudulentconveyance proceeding), notwithstanding the fact that all or a part of the Indebtedness may have been previously paid, or this Guaranty may have beenterminated, or both.Guarantor also waives and agrees not to assert or take advantage of (1) any right (including the right, if any, under Utah’s one-action rule as set forth in UtahCode Annotated, 1953, Section 78-37-1) to require Lender to proceed against or exhaust any security held by Lender at any time or to pursue any otherremedy in Lender’s power before proceeding against Guarantor; (2) the release or surrender of any security held for the payments of the Indebtedness; or (3)any defense based upon an election of remedies (including, if available, an election of remedies to proceed by non-judicial foreclosure) by Lender whichdestroys or otherwise impairs the subrogation rights of Guarantor or the right of Guarantor to proceed against Borrower for reimbursement, or both.Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff,counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both.Guarantor’s Understanding With Respect To Waivers. Guarantor warrants and agrees that each of the waivers set forth above is made withGuarantor’s full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary topublic policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to theextent permitted by law or public policy.Subordination of Borrower’s Debts to Guarantor. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superiorto any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor herebyexpressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafterhave against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for thebenefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender andGuarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which itmay have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall beeffective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests any notes or creditagreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject tothis Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to filefinancing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate toperfect, preserve and enforce its rights under this Guaranty.Miscellaneous Provisions. The following miscellaneous provisions are a part of this Guaranty:Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to thematters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by theparty or parties sought to be charged or bound by the alteration or amendment.Arbitration Disclosures. 1.ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. 2.IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. 3.DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. 4.ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TOAPPEAL OR SEEK MODIFICATION OF ARBITRATORS RULINGS IS VERY LIMITED. 5.A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. 6.ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST THOSE CONCERNING THE AGREEMENT. 7.IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION.(a) Any claim or controversy (“Dispute”) between or among the parties and their employees, agents, affiliates, and assigns, including, but not limitedto, Disputes arising out of or relating to this agreement, this arbitration provision (“arbitration clause”), or any related agreements or instrumentsrelating hereto or delivered in connection herewith (“Related Agreements”), and including, but not limited to, a Dispute based on or arising from analleged tort, shall at the request of any party be resolved by binding arbitration in accordance with the applicable arbitration rules of the AmericanArbitration Association (the “Administrator”). The provisions of this arbitration clause shall survive any termination, amendment or expiration of thisagreement or Related Agreements. The provisions of this arbitration clause shall supersede any prior arbitration agreement between or among theparties.(b) The arbitration proceedings shall be conducted in a city mutually agreed by the parties. Absent such an agreement, arbitration will be conducted inSalt Lake City, Utah or such other place as may be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority tothe extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)’ award issued within 150 days of thefiling of the Dispute with the Administrator. The arbitrator(s) shall have the authority to impose sanctions on any party that fails to comply with timeperiods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. Thearbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this agreement, this arbitration clause, or Related Agreements,including any claim or controversy regarding the arbitrability of any Dispute. All limitations periods applicable to any Dispute or defense, whether bystatute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute orSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.defense is barred by a limitations period and, if so to summarily enter an award dismissing any Dispute or defense on that basis. The doctrines ofcompulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that a party must state as acounterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of theDispute. The arbitrator(s) may in the arbitrator(s)’ discretion and at the request of any party: (1) consolidate in a singleSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. COMMERCIAL GUARANTY Loan No: 9001 (Continued) Page 3 arbitration proceeding any other claim arising out of the same transaction involving another party to that transaction that is bound by an arbitrationclause with Lender, such as borrowers, guarantors, sureties, and owners of collateral; and (2) consolidate or administer multiple arbitration claims orcontroversies as a class action in accordance with Rule 23 of the Federal Rules of Civil Procedure.(c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitratorshall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by amajority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be apracticing attorney. The arbitrator(s) shall award to the prevailing party recovery of all costs and fees (including attorneys’ fees and costs, arbitrationadministration fees and costs, and arbitrator(s)’ fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of thearbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief, foreclosure, sequestration,attachment, replevin, garnishment, or the appointment of a receiver.(d) Judgement upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award isbinding upon the parties only if the amount does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds that limit, either party maydemand the right to a court trial. Such a demand must be filed with the Administrator within thirty (30) days following the date of the arbitration award;if such a demand is not made with that time period, the amount of the arbitration award shall be binding. The computation of the total amount of anarbitration award shall include amounts awarded for attorneys’ fees and costs, arbitration administration fees and costs, and arbitrator(s)’ fees.(e) No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any party to: (1) judicially or non-judiciallyforeclose against any real or personal property collateral or other security; (2) exercise self-help remedies, including but not limited to repossession andsetoff rights; or (3) obtain from a court having jurisdiction thereover any provisional or ancillary remedies including but not limited to injunctiverelief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. Such rights can be exercised at any time, before orafter initiation of an arbitration proceeding, except to the extent such action is contrary to the arbitration award. The exercise of such rights shall notconstitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise of such rights shall be aDispute to be resolved under the provisions of this arbitration clause. Any party may initiate arbitration with the Administrator. If any party desires toarbitrate a Dispute asserted against such party in a complaint, counterclaim, cross-claim, or third-party complaint thereto, or in an answer or other replyto any such pleading, such party must make an appropriate motion to the trial court seeking to compel arbitration, which motion must be filed with thecourt within 45 days of service of the pleading, or amendment thereto, setting forth such Dispute. If arbitration is compelled after commencement oflitigation of a Dispute, the party obtaining an order compelling arbitration shall commence arbitration and pay the Administrator’s filing fees and costswithin 45 days of entry of such order. Failure to do so shall constitute an agreement to proceed with litigation and waiver of the right to arbitrate. Inany arbitration commenced by a consumer regarding a consumer Dispute, Lender shall pay one half of the Administrator’s filing fee, up to $250.(f) Notwithstanding the applicability of any other law to this agreement, the arbitration clause, or Related Agreements between or among the parties,the Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall apply to the construction and interpretation of this arbitration clause. If any provision ofthis arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect.Attorneys’ Fees; Expenses. Guarantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable attorneys’fees and Lender’s legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to helpenforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s reasonableattorneys’ fees and legal expenses whether or not Lender’s salaried employee and whether or not there is a lawsuit, including reasonableattorneys’ 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. Guarantor also shall pay all court costs and such additional fees as may be directed by thecourt.Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define theprovisions of this Guaranty.Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, thelaws of the State of Utah without regard to its conflicts of law provisions.Choice of Venue. If there is a lawsuit, Guarantor agrees upon Lender’s request to submit to the jurisdiction of the courts of SALT LAKE County,State of Utah.Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had theopportunity to be advised by Guarantor’s attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor’s intentions and parolevidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims,damages, and costs (including Lender’s attorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties,representations and agreements of this paragraph.Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall bedeemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in thisGuaranty or when this Guaranty is executed by more than one Guarantor, the words “Borrower” and “Guarantor” respectively shall mean all andany one or more of them. The words “Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each ofthem. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest ofthis Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of thisGuaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limitedliability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers,directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance uponthe professed exercise of such powers shall be guaranteed under this Guaranty.Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty or required by law shall be given inwriting, and shall be effective when actually delivered in accordance with the law or with this Guaranty, 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 UnitedStates mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. Anyparty may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose ofthe notice is to change the party’s address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor’s currentaddress. Unless otherwise provided by applicable law, if there is more than one Guarantor, any notice given by Lender to any Guarantor isSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.deemed to be notice given to all Guarantors.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. COMMERCIAL GUARANTY Loan No: 9001 (Continued) Page 4 No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing andsigned 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. Awaiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strictcompliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lenderand Guarantor, shall constitute a waiver of any of Lender’s rights or of any of Guarantor’s obligations as to any future transactions. Whenever theconsent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuingconsent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion ofLender.Successors and Assigns. Subject to any limitations stated, in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be bindingupon and inure to the benefit of the parties, their successors and assigns.FINANCIAL STATEMENT. GUARANTOR COVENANTS AND AGREES WITH LENDER THAT, WHILE THIS AGREEMENT IS IN EFFECT,GUARANTOR WILL FURNISH LENDER WITH, UPON REQUEST, GUARANTOR’S PERSONAL FINANCIAL STATEMENT.TAX RETURNS. BORROWER AND GUARANTOR SHALL PROVIDE TO LENDER, UPON REQUEST, A COPY OF BORROWER’S ANDGUARANTOR’S FEDERAL TAX RETURN.FAILURE TO PROVIDE ACCEPTABLE FINANCIAL STATEMENTS AS REQUIRED. FURNISHING FINANCIAL INFORMATION:DURING THE TERM OF THE NOTE AND ANY EXTENSIONS OR RENEWALS THEREOF, BORROWER/GUARANTOR SHALL FURNISHAN ANNUAL FINANCIAL STATEMENT PREPARED IN A FORM ACCEPTABLE TO THE BANK, AS SOON AS PRACTICABLE BUT NOLATER THAN 120 DAYS AFTER BORROWER/GUARANTOR’S YEAR END AND SUCH INTERIM FINANCIAL STATEMENTS AND ALLOTHER INFORMATION AND MATERIAL AS BANK MAY FROM TIME TO TIME REQUEST. IF AN EVENT OF DEFAULT (AS DEFINEDBELOW AND IN THE NOTE) SHALL HAVE OCCURED AND BY CONTINUING FOR WHICH THE BANK DOES NOT ACCELERATE THEINDEBTEDNESS EVIDENCED BY THE NOTE, WHICH EVENT OF DEFAULT CONSISTS OF THE FAILURE OF BORROWER/GUARANTORTO PROVIDE FINANCIAL STATEMENTS AND OTHER INFORMATION AS REQUIRED BY THE TERMS OF THIS AGREEMENT, THEINTEREST RATE APPLICABLE TO THE NOTE, FOR A PERIOD BEGINNING THREE (3) DAYS AFTER WRITTEN NOTICE OF SUCHEVENT, OF DEFAULT IS GIVEN AND ENDING UPON THE CURING OF SUCH DEFAULT, SHALL AT BANK’S OPTION, BE INCREASED BYONE QUARTER OF ONE PERCENT (.25%) FOR THE FIRST 30-DAYS OF SAID EVENT OF DEFAULT AND BY AN ADDITIONAL ONEQUARTER OF ONE PERCENT (.25%) DURING EACH 30-DAY PERIOD THEREAFTER DURING WHICH SUCH EVENT OF DEFAULTCONTINUES. SUCH RATES SHALL APPLY TO THE ENTIRE OUTSTANDING PRINCIPAL BALANCE OF THE NOTE. UPON CURING SUCHEVENT OF DEFAULT, THE INTEREST RATE ON THE NOTE SHALL REVERT TO THE APPLICABLE RATE THEREUNDER EFFECTIVEAS OF THE DATE ON WHICH SAID EVENT OF DEFAULT IS CURED. BORROWER ACKNOWLEDGES THAT SUCH INCREASE INTERESTRATE IS INTENDED TO COMPENSATE BANK FOR THE POTENTIALLY HIGHER CREDIT RISK AND INCREASED ADMINISTRATIVECOSTS ASSOCIATED WITH BORROWER/GUARANTOR’S FAILURE TO FURNISH TIMELY FINANCIAL INFORMATION.Definitions. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to thecontrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singularshall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guarantyshall have the meanings attributed to such terms in the Uniform Commercial Code:Borrower. The word “Borrower” means EACO CORPORATION, a Florida Corporation and includes all co-signers and co-makers signing theNote and all their successors and assigns.Guarantor. The word “Guarantor” means everyone signing this Guaranty, including without limitation GLEN CEILEY, and in each case, anysigner’s successors and assigns.Guaranty. The word “Guaranty” means this guaranty from Guarantor to Lender.Indebtedness. The word “Indebtedness” means Borrower’s indebtedness to Lender as more particularly described in this Guaranty.Lender. The word “Lender” means ZIONS FIRST NATIONAL BANK, its successors and assigns.Note. The word “Note” means the promissory note dated March 28. 2008, in the original principal amount of $1,216,354.00 from Borrower toLender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissorynote or agreement.Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements anddocuments, whether now or hereafter existing, executed in connection with the Indebtedness.EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TOITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’SEXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATEDIN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMAL ACCEPTANCE BY LENDER ISNECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED MARCH 28, 2008. GUARANTOR:X /s/ Glen Ceiley GLEN CEILEY Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.10BUSINESS LOAN AGREEMENT Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials$5,875,000.00 11-09-2007 12-01-2017 75101054 CLS 52 / 810 568 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO Corporation, a Florida corporation1500 N. Lakeview AvenueAnaheim, CA 92807 Lender: COMMUNITY BANKREAL ESTATE GROUP790 EAST COLORADO BOULEVARDPASADENA, CA 91101(800) 788-9999 THIS BUSINESS LOAN AGREEMENT dated November 9, 2007, is made and executed between EACO Corporation, a Florida corporation(“Borrower”) and COMMUNITY BANK (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans fromLender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on anyexhibit or schedule attached to this Agreement (“Loan”). Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan,Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extendingof any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to theterms and conditions of this Agreement. This Agreement shall apply to any and all present and future loans, loan advances, extension of credit, financialaccommodations and other agreements and undertakings of every nature and kind that may be entered into by and between Borrower and Lender nowand in the future.TERM. This Agreement shall be effective as of November 9, 2007, and shall continue in full force and effect until such time as all of Borrower’s Loans infavor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until such time as theparties may agree in writing to terminate this Agreement.CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreementshall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lendersecurity interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance asrequired below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactoryto Lender and Lender’s counsel.Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizingthe execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions,authorizations, documents and instruments as Lender or its counsel, may require.Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specifiedin this Agreement or any Related Document.Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document orcertificate delivered to Lender under this Agreement are true and correct.No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement orunder any Related Document.REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of eachdisbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under andby virtue of the laws of the State of Florida. Borrower is duly authorized to transact business in all other states in which Borrower is doing business,having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borroweris, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect onits business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presentlyengaged or presently proposes to engage. Borrower maintains an office at 1500 N. Lakeview Avenue, Anaheim, CA 92807. Unless Borrower hasdesignated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning theCollateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change in Borrower’s name.Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with allregulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower andBorrower’s business activities.Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used byBorrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by allnecessary action by Borrower, do not require the consent or approval of any other person, regulatory authority, or governmental body, and do notconflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articles of incorporation or organization, orbylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable toBorrower or to Borrower’s properties. Borrower has the power and authority to enter into the Note and the Related Documents and to grant collateral assecurity for the Loan. Borrower has the further power and authority to own and to hold all of Borrower’s assets and properties, and to carry onBorrower’s business as presently conducted.Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition asof the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recentfinancial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered willSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and asaccepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’sproperties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. Allof Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at leastthe last five (5) years.Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that; (1) During the period ofBorrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of anyHazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that therehas been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release orthreatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or(c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower not any tenant, contractor,agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on,under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws,regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon theCollateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of theAgreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to createany responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are basedon Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waivesany future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws,and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses whichLender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation,manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of theAgreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration orsatisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure orotherwise.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 BUSINESS LOAN AGREEMENT(Continued) Page 2 Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) againstBorrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties,other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes,assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in theordinary course of business and for which adequate reserves have been provided.Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, orpermitted the filing or attachment of any Security interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’sLoan and Note, that would be prior or that may in any way be superior to Lender’s Security interests and rights in and to such Collateral.Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well asupon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.Commercial Purposes. Borrower intends to use the Loan proceeds solely for business or commercially related purposes.Employee Benefit Plans. Each employee benefit plan as to which Borrower may have any liability complies in all material respects with all applicablerequirements of law and regulations, and (1) no Reportable Event nor Prohibited Transaction (as defined in ERISA) has occurred with respect to anysuch plan, (2) Borrower has not withdrawn from any such plan or initiated steps to do so, (3) no steps have been taken to terminate any such plan or toappoint a trustee to administer such a plan, and (4) there are no unfunded liabilities other than those previously disclosed to Lender in writing.Investment Company Act. Borrower is not an “Investment company” or a company “controlled” by an “investment company”, within the meaning ofthe Investment Company Act of 1940, as amended.Public Utility Holding Company Act. Borrower is not a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a“holding company” or of a “subsidiary company” of a “holding company”, within the meaning of the Public Utility Holding Company Act of 1935, asamended.Regulations T and U. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose ofpurchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System).Information. All information previously furnished or which is now being furnished by Borrower to Lender for the purposes of or in connection withthis Agreement or any transaction contemplated by this Agreement is, and all information furnished by or on behalf of Borrower to Lender in the futurewill be, true and accurate in every material respect on the date as of which such information is dated or certified; and no such information is or will beincomplete by omitting to state any material fact the omission of which would cause the information to be misleading.Claims and Defenses. There are no defenses or counterclaims, offsets or other adverse claims, demands or actions of any kind, personal or otherwise,that Borrower, any Grantor, or any Guarantor could assert with respect to the Note, Loan, this Agreement, or the Related Documents.AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:Repayment. Repay the Loan in accordance with its terms and the terms of this Agreement.Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) allexisting and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor whichcould materially affect the financial condition of Borrower or the financial condition of any Guarantor, in addition, Borrower shall provide Lender withwritten notice of the occurrence of any Event of Default, the occurrence of any Reportable Event under, or the institution of steps by Borrower towithdraw from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have any liability.Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and auditBorrower’s books and records at all reasonable times.Financial Statements. Furnish Lender with the following:Additional Requirements. FINANCIAL INFORMATION: Borrower shall deliver to Lender, as soon as available, but not later than thirty(30) days after the applicable filing date for the tax reporting period ended, a signed copy of Federal tax returns and all supporting schedules forBorrower as well as for each Guarantor (Glen F. Ceiley and Bisco Industries, Inc. - (excluding Trust). Borrower shall deliver to Lender, annually,the individual Guarantors’ (Glen F. Ceiley - excluding Trust) certified personal financial statement, annually within 12 months of the prior year’sstatement.CORPORATE FINANCIAL STATEMENTS: Borrower shall deliver to Lender, annually, within 120 days of year end, the profit and LossStatements for EACO Corporation and Bisco industries, Inc.LEASING INFORMATION: Borrower shall deliver to Lender, annually, on or before April 30th of each year, rent rolls and operating statementsand/or such leasing information as Lender shall request, with respect to the property, in form and substance acceptable to lender.All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, andcertified by Borrower as being true and correct.Additional Information. Furnish such additional information and statements, as Lender may request from time to time.Financial Covenants and Ratios. Comply with the following covenants and ratios:Other Requirements. Debt Service Coverage Ratio - Borrower shall maintain a Debt Service Coverage Ratio for the Property of not less than1.25:1.00 to be measured annually beginning with the 12-month period ending December 31, 2007 and for each period thereafter for which aloan balance remains owing. The term “Debt Service Coverage Ratio” shall mean the Property’s net operating income plus expensereimbursements, if applicable, for the period divided by the total debt service for the same reporting period.Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made inaccordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct.Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’sproperties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, willdeliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will notSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsementproviding that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person, Inconnection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender withsuch lender’s loss payable or other endorsements as Lender may require.Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender mayreasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) theproperties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values;and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have anindependent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of suchappraisal shall be paid by Borrower.Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantorsnamed below, on Lender’s forms, and in the amounts and under the conditions set forth in those guaranties.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 BUSINESS LOAN AGREEMENT(Continued) Page 3 Names of Guarantors Amounts Glen F. Ceiley Unlimited Bisco Industries, Inc., an Illinois corporation Unlimited Glen F. Ceiley and Barbara A. Ceiley Revocable Trust Unlimited Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any otherparty and notify Lender immediately in writing of any default in connection with any other such agreements.Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing.Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes,governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on whichpenalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits.Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the RelatedDocuments, and in all other instruments and agreements between Borrower and Lender, and in all other loan agreements now or in the future existingbetween Borrower and any other party. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive andmanagement personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in areasonable and prudent manner.Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may berequested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or ahazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned,leased or used by Borrower.Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmentalauthorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, includingwithout limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withholdcompliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as,in Lender’s sole opinion, Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a suretybond, reasonably satisfactory to Lender, to protect Lender’s interest.Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s otherproperties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, andrecords. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computersoftware programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party topermit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’sexpense.Change of Location. Immediately notify Lender in writing of any additions to or changes in the location of Borrower’s businesses.Title to Assets and Property. Maintain good and marketable title to all of Borrower’s assets and properties.Notice of Default, Litigation and ERISA Matters. Forthwith upon learning of the occurrence of any of the following, Borrower shall provide Lenderwith written notice thereof, describing the same and the steps being taken by Borrower with respect thereto: (1) the occurrence of any Event of Default,or (2) the institution of, or any adverse determination in, any litigation, arbitration proceeding or governmental proceeding, or (3) the occurrence of aReportable Event under, or the institution of steps by Borrower to withdraw from, or the institution of any steps to terminate, any employee benefitplan as to which Borrower may have any liability.Other information. From time to time Borrower will provide Lender with such other information as Lender may reasonably request.Employee Benefit Plans. So long as this Agreement remains in effect, Borrower will maintain each employee benefit plan as to which Borrower mayhave any liability, in compliance with all applicable requirements of law and regulations.Compliance Certificates. Unless waived in writing by Lender, provide Lender within thirty (30) days after the end of each (This section is herebywaived by Lender and Borrower is notified.), with a certificate executed by Borrower’s chief financial officer, or other officer or person acceptable toLender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and furthercertifying that, as of the date of the certificate, no Event of Default exists under this Agreement.Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, asa result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupiedby Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and incompliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptlyand in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication fromany governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with anyenvironmental activity whether or not there is damage to the environment and/or other natural resources.Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments,financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loansand to perfect all Security Interests.LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower failsto comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due anyamounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not beobligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests,encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral.All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid byLender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable onSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.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 atthe Note’s maturity.NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior writtenconsent of Lender:Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by thisAgreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant asecurity interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts,except to Lender.Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) ceaseoperations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of theordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its stock), provided, however thatnotwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends,if Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on itsstock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income taxpayments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporationbecause of their ownership of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capitalstructure.Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create oracquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.Agreements. Borrower will not enter into any agreement containing any provisions which would be violated or breached by theperformance of Borrower’s obligations under this Agreement or in connection herewith.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 BUSINESS LOAN AGREEMENT(Continued) Page 4 CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any otheragreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if; (A) Borrower or any Guarantor is in default under theterms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or anyGuarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occursa material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan;or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender.DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:Payment Default. Borrower fails to make any payment when due under the Loan.Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any ofthe Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lenderand Borrower.Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in anyenvironmental agreement executed in connection with any Loan.Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or salesagreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s or any Grantor’s property orBorrower’s or any Grantor’s ability to repay the Loans 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 Borrower or on Borrower’s behalf, or made by Guarantor,under this Agreement or the Related Documents in connection with the obtaining of the Loan evidenced by the Note or any security document directlyor indirectly securing repayment of the Note is false or misleading in any material respect, either now or at the time made or furnished or becomes falseor misleading at any time thereafter.Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver forany part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateraldocument to create a valid and perfected security interest or lien) at any time and for any reason.Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossessionor any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishmentof any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith disputeby Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lenderwritten notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in anamount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.Execution; Attachment. Any execution or attachment is levied against the Collateral, and such execution or attachment is not set aside, discharged orstayed within thirty (30) days after the same is levied.Change in Zoning or Public Restriction. Any change in any zoning ordinance or regulation or any other public restriction is enacted, adopted orimplemented, that limits or defines the uses which may be made of the Collateral such that the present or intended use of the Collateral, as specified inthe Related Documents, would be in violation of such zoning ordinance or regulation or public restriction, as changed.Default Under Other Lien Documents. A default occurs under any other mortgage, deed of trust or security agreement covering all or any portion ofthe Collateral.Judgment. Unless adequately covered by insurance in the opinion of Lender, the entry of a final judgment for the payment of money involving morethan ten thousand dollars ($10,000.00) against Borrower and the failure by Borrower to discharge the same, or cause it to be discharged, or bonded offto Lender’s satisfaction, within thirty (30) days from the date of the order, decree or process under which or pursuant to which such judgment wasentered.Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies orbecomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death, Lender, at itsoption, may, but shall not be required to, permit the Guarantor’s estate to assume unconditionally the obligations arising under the guaranty in amanner satisfactory to Lender, and, in doing so, cure any Event of Default.Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance ofthe Loan is impaired.Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given anotice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after receiving writtennotice from Lender demanding cure of such default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days,immediately initiate steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continue and complete allreasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents,all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (includingany obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, allwithout notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “insolvency” subsection above, suchacceleration shall be automatic and not optional. ln addition, Lender shall have all the rights and remedies provided in the Related Documents or available atlaw, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercisedsingularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures orto take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following additional documents:Corporate Resolution. Borrower has provided or will provide Lender with a certified copy of resolutions properly adopted by Borrower’s Board ofDirectors, and certified by Borrower’s corporate secretary, assistant secretary, or other authorized officer, under which Borrower’s Board of Directorsauthorized one or more designated officers or employees to execute this Agreement, the Note and any and all Security Agreements directly orindirectly securing repayment of the same, and to consummate the borrowings and other transactions as contemplated under this Agreement, and toconsent to the remedies following any default by Borrower as provided in this Agreement and in any Security Agreements.Opinion of Counsel. When required by Lender, Borrower has provided or will provide Lender with an opinion of Borrower’s counsel certifying to andthat: (1) Borrower’s Note, any Security Agreements and this Agreement constitute valid and binding obligations on Borrower’s part that areenforceable in accordance with their respective terms; (2) Borrower is validly existing and in good standing; (3) Borrower has authority to enter intothis Agreement and to consummate the transactions contemplated under this Agreement; and (4) such other matters as may have been requested byLender or by Lender’s counsel.ADDITIONAL INFORMATION. Furnish lists of assets and liabilities, agings of receivables and payables,. inventory schedules, budgets, forecasts, taxreturns, and other reports with respect to Borrower’s financial condition and business operations as Lender may request from time to time.ADDITIONAL DISPOSITION OF TAXES, CHARGES AND LIENS. Borrower will not be required to pay and discharge any such assessment, tax, charge,levy, lien or claim so long as (a) the legality of the same shall be contested in good faith by appropriate proceedings, and (b) Borrower shall have establishedon its books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with generally accepted accountingpractices. Borrower, upon demand of Lender, will furnish to Lender evidence of payment of the assessments, taxes, charges, levies, liens and claims and willauthorize the appropriate governmental official to deliver to Lender at any time a written statement of any assessments, taxes, charges, levies, liens and claimsagainst Borrower’s properties, income, or profits.ADDITIONAL DEFINITIONS.Indebtedness. The word “Indebtedness” also means Borrower may be obligated as a guarantor, surety, or otherwise; whether recovery upon such indebtednessmay be or hereafter may become barred by any statute of limitations; and whether such indebtedness may be or hereafter may become otherwiseunenforceable.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 BUSINESS LOAN AGREEMENT(Continued) Page 5 Cash Flow. The words “Cash Flow” mean net income after taxes, and exclusive of extraordinary gains and income, plus depreciation and amortization.Debt. The word “DEBT” means all of Borrower’s liabilities excluding Subordinated Debt.Subordinated Debt. The words “Subordinated Debt” mean indebtedness and liabilities of Borrower which have been subordinated by written agreement toindebtedness owed by Borrower to Lender in form and substance acceptable to Lender.Working Capital. The words “Working Capital” mean Borrower’s current assets, excluding prepaid expenses, less Borrower’s current liabilities.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 thematters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the partyor parties sought to be charged or bound by the alteration or amendment.Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’slegal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement,and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether ornot there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automaticstay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees asmay be directed by the court.Borrower information. Borrower consents to the release of information on or about Borrower by Lender in accordance with any court order, law orregulation and in response to credit inquiries concerning Borrower.Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisionsof this Agreement.Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests inthe Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or morepurchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, andBorrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of saleof participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any suchparticipation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under theparticipation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaimthat it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender orsuch purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan.Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defensesthat Borrower may have against Lender.Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws ofthe State of California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California.Non-Liability of Lender. The relationship between Borrower and Lender created by this Agreement is strictly a debtor and creditor relationship andnot fiduciary in nature, nor is the relationship to be construed as creating any partnership or joint venture between Lender and Borrower. Borrower isexercising Borrower’s own judgment with respect to Borrower’s business, All information supplied to Lender is for Lender’s protection only and noother party is entitled to rely on such information. There is no duty for Lender to review, inspect, supervise or inform Borrower of any matter withrespect to Borrower’s business. Lender and Borrower intend that Lender may reasonably rely on all information supplied by Borrower to Lender,together with all representations and warranties given by Borrower to Lender, without investigation or confirmation by Lender and that anyinvestigation or failure to investigate will not diminish Lender’s right to so rely.Notice of Lender’s Breach. Borrower must notify Lender in writing of any breach of this Agreement or the Related Documents by Lender and anyother claim, cause of action or offset against Lender within thirty (30) days after the occurrence of such breach or after the accrual of such claim, causeof action or offset. Borrower waives any claim, cause of action or offset for which notice is not given in accordance with this paragraph. Lender isentitled to rely on any failure to give such notice.Indemnification of Lender. Borrower agrees to indemnify, to defend and to save and hold Lender harmless from any and all claims, suits, obligations,damages, losses, costs and expenses (including, without limitation. Lender’s attorneys’ fees), demands, liabilities, penalties, fines and forfeitures of anynature whatsoever that may be asserted against or incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in anymanner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this, as well as by; (1) the ownership, use,operation, construction, renovation, demolition, preservation, management, repair, condition, or maintenance of any part of the Collateral; (2) theexercise of any of Borrower’s rights collaterally assigned and pledged to Lender hereunder; (3) any failure of Borrower to perform any of its obligationshereunder; and/or (4) any failure of Borrower to comply with the environmental and ERISA obligations, representations and warranties set forth herein.The foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation andthe foregoing indemnity shall survive in the event that Lender elects to exercise any of the remedies as provided under this Agreement followingdefault hereunder. Borrower’s indemnity obligations under this section shall not in any way be affected by the presence or absence of coveringinsurance, or by the amount of such insurance or by the failure or refusal of any insurance carrier to perform any obligation on its part under anyinsurance policy or policies affecting the Collateral and/or Borrower’s business activities. Should any claim, action or proceeding be made or broughtagainst Lender by reason of any event as to which Borrower’s indemnification obligations apply, then, upon Lender’s demand, Borrower, at its solecost and expense, shall defend such claim, action or proceeding in Borrower’s name, if necessary, by the attorneys for Borrower’s insurance carrier (ifsuch claim, action or proceeding is covered by insurance), or otherwise by such attorneys as Lender shall approve. Lender may also engage its ownattorneys at its reasonable discretion to defend Borrower and to assist in its defense and Borrower agrees to pay the fees and disbursements of suchattorneys.Counterparts. This Agreement may be executed in multiple counterparts, each of which, when so executed, shall be deemed an original, but all suchcounterparts, taken together, shall constitute one and the same 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 signedSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.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 byLender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with thatprovision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or betweenLender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any futuretransactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall notconstitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in thesole 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 actuallyreceived by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, whendeposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of thisAgreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that thepurpose of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s currentaddress. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to benotice given to all Borrowers.Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance,that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance, If feasible, the offending provisionshall be considered modified so that it becomes legal, valid and enforceable, if the offending provision cannot be so modified, it shall be considereddeleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shallnot affect the legality, validity or enforceability of any other provision of this Agreement.Sole Discretion of Lender. Whenever Lender’s consent or approval is required under this Agreement, the decision as to whether or not to consent orapprove shall be in the sole and exclusive discretion of Lender and Lender’s decision shall be final and conclusive.Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including withoutlimitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries andaffiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan orother financial accommodation to any of Borrower’s subsidiaries or affiliates.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 BUSINESS LOAN AGREEMENT(Continued) Page 6 Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bindBorrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right toassign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of Lender.Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations,warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under thisAgreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warrantiesand covenants will survive the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain infull force and effect until such time as Borrower’s indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner providedabove, whichever is the last to occur.Time is of the Essence. Time is of the essence in the performance of this Agreement.DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to thecontrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shallinclude the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall havethe meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have themeanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line of credit ormultiple advance basis under the terms and conditions of this Agreement.Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time totime, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.Borrower. The word “Borrower” means EACO Corporation, a Florida corporation and includes all co-signers and co-makers signing the Note and alltheir successors and assigns.Collateral. The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, whethergranted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateralmortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust,conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security orlien interest whatsoever, whether created by law, contract, or otherwise.Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to theprotection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, andLiability 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, 42U.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 otherapplicable state or federal laws, rules, or regulations adopted pursuant thereto.ERISA. The word “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and including all regulationsand published interpretations of the act.Event of Default. The words “Event of Default” mean individually, collectively, and interchangeably any of the events of default set forth in thisAgreement in the default section of this Agreement.GAAP. The word “GAAP” means generally accepted accounting principles.Grantor. The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including withoutlimitation all Borrowers granting such a Security interest.Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan, and, in each case, Borrower’ssuccessors, assigns, heirs, personal representatives, executors and administrators of any guarantor, surety, or accommodation party.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 orinfectious 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 andinclude without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. Theterm “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 interesttogether with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the RelatedDocuments.Lender. The word “Lender” means COMMUNITY BANK, its successors and assigns.Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, andhowever evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or scheduleattached to this Agreement from time to time, and further including any and all subsequent amendments, additions, substitutions, renewals andrefinancings of any of Borrower’s Loans.Note. The word “Note” means the Note executed by EACO Corporation, a Florida corporation in the principal amount of $5,875,000.00 datedNovember 9, 2007, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note orcredit agreement.Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens fortaxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, orcarriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquant; (4) purchase money liens orpurchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtednessSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liensand security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens andsecurity interests, which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents,whether now or hereafter existing, executed in connection with the Loan.Security Agreement. The words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements,understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security interest.Security Interest. The words “Security Interest” mean, individually, collectively, and interchangeably, without limitation, any and all types ofcollateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge,crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or titleretention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law,contract, or otherwise.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 BUSINESS LOAN AGREEMENT(Continued) Page 7 BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITSTERMS. THIS BUSINESS LOAN AGREEMENT IS DATED NOVEMBER 9, 2007.BORROWER: EACO CORPORATION, A FLORIDA CORPORATIONBy: /s/ Glen F. Ceiley Gleh F. Ceiley, Authorized Officer of EACO Corporation, aFlorida corporationLENDER:COMMUNITY BANKBy: /s/ Authorized Signer Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.11PROMISSORY NOTE Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials$5,875,000.00 11-09-2007 12-01-2017 75101054 CLS 52 / 810 568 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 abovecontaining “****” has been omitted due to text length limitations. Borrower: EACO Corporation, a Florida corporation Lender: COMMUNITY BANK 1500 N. Lakeview Avenue REAL ESTATE GROUP Anaheim, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999 Principal Amount: $5,875,000.00 Interest Rate: 7.000% Date of Note: November 9, 2007PROMISE TO PAY. EACO Corporation, a Florida corporation (“Borrower”) promises to pay to COMMUNITY BANK (“Lender”), or order, in lawfulmoney of the United States of America, the principal amount of Five Million Eight Hundred Seventy-five Thousand & 00/100 Dollars ($5,875,000.00),together with interest at the rate of 7.000% on the unpaid principal balance from November 9, 2007, until paid in full. The interest rate may changeunder the terms and conditions of the “INTEREST AFTER DEFAULT” section.PAYMENT. Borrower will pay this loan in 119 regular payments of $39,657.89 each and one irregular last payment estimated at $5,114,917.84.Borrower’s first payment is due January 1, 2008, and all subsequent payments are due on the same day of each month after that. Borrower’s finalpayment will be due on December 1, 2017, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest.Unless otherwise agreed or required by applicable law, payments will be applied to any accrued unpaid interest; then to principal; then to late charges;then to any unpaid collection costs. Notwithstanding anything to the contrary contained in the immediately preceding sentence, all payments will beapplied as invoiced, so any payment received prior to the due date will result in an invoice the succeeding month that is calculated to include a partialinterest credit. Conversely, if a payment is received after the due date, the succeeding month’s invoice will reflect a higher accrued interest amount thanwould otherwise be due if the payment had been made and applied on the due date. The annual interest rate for this Note is computed on a 365/360 basis;that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by theactual number of days the principal balance is outstanding. Borrower will pay Lender at Lender’s address shown above or at such other place asLender may designate in writing.PREPAYMENT FEE; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of this Note, Borrower understands that Lender isentitled to a minimum interest charge of $500.00. Upon prepayment of this Note, Lender is entitled to the following prepayment fee: Upon prepaymentof this note. Lender is entitled to the following prepayment fee; Five percent (5.00%] of the principal balance prepaid from 11/09/2007 up to andincluding 11/30/2008; Four percent (4.00%) of the principal balance prepaid from 12/01/2008 up to and including 11/30/2009; Three percent(3.00%] of the principal balance prepaid from 12/01/2009 up to and including 11/30/2010; Two percent (2.00%] of the principal balance prepaid from12/01/2010 up to and including 11/30/2011; One percent [1.00%) of the principal balance prepaid from 12/01/2011 up to and including 11/30/2013; Noprepayment penalty will be assessed from 12/01/2013 up to and including maturity of the loan. Other than Borrower’s obligation to pay any minimuminterest charge and prepayment fee. Borrower may pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to byLender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. Rather, early payments will reducethe principal balance due and may result in Borrower’s making fewer payments. Borrower agrees not to send Lender payments marked “paid in full”, “withoutrecourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowerwill remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or otherpayment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitationsor as full satisfaction of a disputed amount must be mailed or delivered to: COMMUNITY BANK, Loan Operations Center, Post Office Box 54477 LosAngeles, CA 90054.LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or$25.00, whichever is greater.INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, If permitted under applicable law, immediately increase by 5.000percentage points.DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note:Payment Default. Borrower fails to make any payment when due under this Note.Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of therelated documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender andBorrower.Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or salesagreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s abilityto repay this Note or perform Borrower’s obligations under this Note or any of the related documents.Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in anyenvironmental agreement executed in connection with any loan.False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or therelated 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 timethereafter.Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver forany part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossessionor any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishmentof any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith disputeby Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lenderwritten notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in anamount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies orbecomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. In the eventof a death, Lender, at its option, may, but shall not be required to, permit the Guarantor’s estate to assume unconditionally the obligations arising underthe guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default.Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment orSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PROMISSORY NOTE Loan No: 75101054 (Continued) Page 2 DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorizedcharge with which Borrower pays is later dishonored.COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein:(A) a Deed of Trust dated November 9, 2007, to a trustee in favor of Lender on real property located in Los Angeles County, State of California. Thatagreement contains the following due on sale provision: Lender may, at Lender’s option, declare immediately due and payable all sums secured by theDeed of Trust upon the sale or transfer, without Lender’s prior written consent, of all or any part of the Real Property, or any interest in the RealProperty. A “sale or transfer” means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial orequitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leaseholdinterest with a term greater than three (3) years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trustholding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Borrower is a corporation,partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock,partnership interests or limited liability company interests, as the case may be, of such Borrower. However, this option shall not be exercised by Lenderif such exercise is prohibited by applicable law.(B) an Assignment of All Rents to Lender on real property located in Los Angeles County, State of California.INTEREST RATE REDUCTION. Borrower and Lender acknowledge and agree that Borrower now maintains or will maintain its primary bankingrelationship, including its primary deposit account relationship (“Primary Banking Relationship”), with Lender. As a result of such Primary BankingRelationship. Lender is willing to reduce the Interest Rate (as defined above) payable to Lender. So long as Borrower maintains its Primary BankingRelationship with Lender, the Interest Rate shall be reduced by One percent (1.00%) (the “Rate Reduction”) to Six percent (6.00%]. As a result of the RateReduction, principal and interest payments of Thirty Five Thousand Six Hundred Eighty Five and 04/100 Dollars ($35,685.04] shall be initially due andpayable in accordance with the terms of this Note. In the event Borrower ceases to maintain its Primary Banking Relationship with Lender (as determined byLender in its sole discretion), the Rate Reduction shall no longer be in effect and the full Interest Rate set forth above shall be thereafter payable, at Lender’soption, following a five (5) day written notice to the Borrower. The principal and interest payments due after such notice is given to Borrower shall thereafterbe that amount set forth above in the Payment section of this Note.SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors andassigns, and shall inure to the benefit of Lender and its successors and assigns.NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any inaccurateinformation about your account(s) to a consumer reporting agency. Your written notice describing the specific inaccuracy(ies) should be sent to us at thefollowing address: COMMUNITY BANK Loan Operations Center P.O. Box 54477 Los Angeles, CA 90054.GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing anyof its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extentallowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of thisNote, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall bereleased from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party orguarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary byLender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyoneother than the party with whom the modification is made. The obligations under this Note are joint and several.PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TOTHE TERMS OF THE NOTE.BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.BORROWER: EACO CORPORATION, A FLORIDA CORPORATIONBy: /s/ Glen F. Ceiley Glen F. Ceiley, Authorized Officer of EACOCorporation, a Florida corporation Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.12COMMERCIAL GUARANTY Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials CLS 52 / 810 568 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO Corporation, a Florida corporation1500 N. Lakeview AvenueAnaheim, CA 92807 Lender: COMMUNITY BANKREAL ESTATE GROUP790 EAST COLORADO BOULEVARDPASADENA, CA 91101(800) 788-9999Guarantor: Glen F. Ceiley304 Evening Star LaneNewport Beach, CA 92660 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionallyguarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower’sobligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce thisGuaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness or against anycollateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, ondemand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise performBorrower’s obligations under the Note and Related Documents. Under this Guaranty, Guarantor’s liability is unlimited and Guarantor’s obligations arecontinuing.INDEBTEDNESS. The word “Indebtedness” as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or moretimes, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys’ fees, arising from any and alldebts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively orinterchangeably with others, owes or will owe Lender. “Indebtedness” includes, without limitation, loans, advances, debts, overdraft indebtedness, credit cardindebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements orcommodity price protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, futureadvances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily orinvoluntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined;direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced bya negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reasonwhatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced orextinguished and then afterwards increased or reinstated.If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender’s rights under all guaranties shall becumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s liabilitywill be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.CONTINUING GUARANTY. THIS IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL ANDPUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING ORHEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESSWILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING ANDSUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TOTIME.DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice toGuarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocationshall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall have been performed in full. IfGuarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor’s written notice of revocation must be mailed to Lender, by certifiedmail, at Lender’s address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to newIndebtedness created after actual receipt by Lender of Guarantor’s written revocation. For this purpose and without limitation, the term “new Indebtedness”does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomesabsolute, liquidated, determined or due. For this purpose and without limitation, “new Indebtedness” does not include all or part of the Indebtedness that is:incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, andmodifications of the Indebtedness. This Guaranty shall bind Guarantor’s estate as to the Indebtedness created both before and after Guarantor’s death orincapacity, regardless of Lender’s actual notice of Guarantor’s death. Subject to the foregoing, Guarantor’s executor or administrator or other legalrepresentative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any otherguarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lenderreceives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. Guarantor’s obligations under thisGuaranty shall be in addition to any of Guarantor’s obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretoforeor hereafter given to Lender unless such other guaranties are modified or revoked in writing; and this Guarantor shall not, unless provided in this Guaranty,affect, invalidate, or supersede any such other guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness coveredby this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00),shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s heirs, successors and assigns so long asany of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this Guaranty hereby expressly agrees that recourse under this Guaranty may behad against both his or her separate property and community property.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demandand without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or moreadditional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;(B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any partof the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than theoriginal loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail ordecide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal withany one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when andwhat application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof,including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretionmay determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole orin part.GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of anykind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s requestand not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do notconflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation,court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber,hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantor’s assets, or any interest therein; (F) upon Lender’s request, Guarantor willprovide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all futurefinancial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor’s financialcondition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the dateof the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition;(H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending orthreatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means ofobtaining from Borrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed fromsuch means of any facts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that,absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course ofits relationship with Borrower.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 COMMERCIAL GUARANTY(Continued) Page 2 GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender to (A) make any presentment, protest,demand, or notice of any kind, including notice of change of any terms of repayment of the Indebtedness, default by Borrower or any other guarantor orsurety, any action or nonaction taken by Borrower, Lender, or any other guarantor or surety of Borrower, or the creation of new or additional Indebtedness;(B) proceed against any person, including Borrower, before proceeding against Guarantor; (C) proceed against any collateral for the Indebtedness, includingBorrower’s collateral, before proceeding against Guarantor; (D) apply any payments or proceeds received against the Indebtedness in any order; (E) givenotice of the terms, time, and place of any sale of the collateral pursuant to the Uniform Commercial Code or any other law governing such sale; (F) discloseany information about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or(G) pursue any remedy or course of action in Lender’s power whatsoever.Guarantor also waives any and all rights or defenses arising by reason of (H) any disability or other defense of Borrower, any other guarantor or surety or anyother person; (I) the cessation from any cause whatsoever, other than payment in full, of the Indebtedness; (J) the application of proceeds of the Indebtednessby Borrower for purposes other than the purposes understood and intended by Guarantor and Lender; (K) any act of omission or commission by Lender whichdirectly or indirectly results in or contributes to the discharge of Borrower or any other guarantor or surety, or the Indebtedness, or the loss or release of anycollateral by operation of law or otherwise; (L) any statute of limitations in any action under this Guaranty or on the Indebtedness; or (M) any modification orchange in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the time payment ofthe Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of this Guaranty on theIndebtedness incurred prior to such revocation.Guarantor waives all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may becomeavailable to Guarantor by reason of California Civil Code Sections 2787 to 2855, inclusive.Guarantor waives all rights and any defenses arising out of an election of remedies by Lender even though that the election of remedies, such as a non-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrowerby operation of Section 580d of the California Code of Civil Procedure or otherwise.Guarantor waives all rights and defenses that Guarantor may have because Borrower’s obligation is secured by real property. This means among other things:(N) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower. (O) If Lender forecloses onany real property collateral pledged by Borrower: (1) the amount of Borrower’s obligation may be reduced only by the price for which the collateral is sold atthe foreclosure sale, even if the collateral is worth more than the sale price. (2) Lender may collect from Guarantor even if Lender, by foreclosing on the realproperty collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights anddefenses Guarantor may have because Borrower’s obligation is secured by real property. These rights and defenses include, but are not limited to, any rightsand defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.Guarantor understands and agrees that the foregoing waivers are unconditional and irrevocable waivers of substantive rights and defenses to which Guarantormight otherwise be entitled under state and federal law. The rights and defenses waived include, without limitation, those provided by California laws ofsuretyship and guaranty, anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges that Guarantor has provided these waivers ofrights and defenses with the intention that they be fully relied upon by Lender. Guarantor further understands and agrees that this Guaranty is a separate andindependent contract between Guarantor and Lender, given for full and ample consideration, and is enforceable on its own terms. Until all of theIndebtedness is paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, orother person, and further, Guarantor waives any right to participate in any collateral for the Indebtedness now or hereafter held by Lender.Guarantor’s Understanding With Respect To Waivers. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor’s fullknowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If anysuch waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or publicpolicy.Subordination of Borrower’s Debts to Guarantor. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to anyclaim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expresslysubordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have againstBorrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors,by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lenderand shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower oragainst any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring toLender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts orobligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantoragrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to executedocuments and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.Miscellaneous Provisions. The following miscellaneous provisions are a part of this Guaranty:AMENDMENTS. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters setforth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought tobe charged or bound by the alteration or amendment.ATTORNEYS’ FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees andLender’s legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty,and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or notthere is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay orinjunction), appeals, and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may bedirected by the court.CAPTION HEADINGS. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions ofthis Guaranty.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GOVERNING LAW. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws ofthe State of California without regard to its conflicts of law provisions.INTEGRATION. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to beadvised by Guarantor’s attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor’s intentions and parol evidence is not required tointerpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender’sattorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.INTERPRETATION. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed tohave been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when thisGuaranty is executed by more than one Guarantor, the words “Borrower” and “Guarantor” respectively shall mean all and any one or more of them. The words“Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of thisGuaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a courtwill enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more ofBorrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powersof Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtednessmade or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.NOTICES. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effectivewhen actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnightcourier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown nearthe beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in thesection of this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal writtennotice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Guarantor agrees to keep Lenderinformed at all times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given byLender to any Guarantor is deemed to be notice given to all Guarantors.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 COMMERCIAL GUARANTY(Continued) Page 3 NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed byLender. 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 aprovision of this Guaranty shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any otherprovision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender’srights or of any of Guarantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of suchconsent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases suchconsent may be granted or withheld in the sole discretion of Lender.SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon andinure to the benefit of the parties, their successors and assigns.Nature Of Guaranty. Guarantor’s liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force. Guarantor intendsto guarantee at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of allindebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability of Guarantor in connection with anyremaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted.Definitions. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to thecontrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shallinclude the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have themeanings attributed to such terms in the Uniform Commercial Code:BORROWER. The word “Borrower” means EACO Corporation, a Florida corporation and includes all co-signers and co-makers signing the Note and alltheir successors and assigns.GUARANTOR. The word “Guarantor” means everyone signing this Guaranty, including without limitation Glen F. Ceiley, and in each case, any signer’ssuccessors and assigns.GUARANTY. The word “Guaranty” means this guaranty from Guarantor to Lender.INDEBTEDNESS. The word “Indebtedness” means Borrower’s indebtedness to Lender as more particularly described in this Guaranty.LENDER. The word “Lender” means COMMUNITY BANK, its successors and assigns.NOTE. The word “Note” means and includes without limitation all of Borrower’s promissory notes and/or credit agreements evidencing Borrower’s loanobligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions forpromissory notes or credit agreements.RELATED DOCUMENTS. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whethernow or hereafter existing, executed in connection with the Indebtedness.EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITSTERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTIONAND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNERSET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKETHIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED NOVEMBER 9, 2007.GUARANTOR: /s/ Glen F. CeileyGlen F. CeileySource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CERTIFICATE OF ACKNOWLEDGMENT STATE OF California ) ) SS COUNTY OF Orange ) On November 19, 2007 before me, Amy May Leo, Notary Public , (here insert name and title of the officer) personally appeared Glen F. Ceiley, personally known to me to be the person(s) whose name(s) is subscribed to the within instrument and acknowledged tome that he executed the same in his authorized capacity(ies), and that by his signature(s) on the instrument the person(s), or the entity upon behalf of whichthe person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature /s/ Amy May Leo Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.COMMERCIAL GUARANTY Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials CLS 52 / 810 568 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO Corporation, a Florida corporation Lender: COMMUNITY BANK 1500 N. Lakeview Avenue REAL ESTATE GROUP Anaheim, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999Guarantor: Bisco Industries, Inc., an Illinois corporation 1500 N. Lakeview Avenue Anaheim, CA 92807 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionallyguarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower’sobligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce thisGuaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness or against anycollateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, ondemand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise performBorrower’s obligations under the Note and Related Documents. Under this Guaranty, Guarantor’s liability is unlimited and Guarantor’s obligations arecontinuing.INDEBTEDNESS. The word “Indebtedness” as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or moretimes, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys’ fees, arising from any and alldebts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively orinterchangeably with others, owes or will owe Lender. “lndebtedness” includes, without limitation, loans, advances, debts, overdraft indebtedness, credit cardindebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements orcommodity price protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, futureadvances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily orinvoluntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined;direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced bya negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reasonwhatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced orextinguished and then afterwards increased or reinstated.If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender’s rights under all guaranties shall becumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s liabilitywill be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.CONTINUING GUARANTY. THIS IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL ANDPUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING ORHEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESSWILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING ANDSUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TOTIME.DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice toGuarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocationshall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall have been performed in full. IfGuarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor’s written notice of revocation must be mailed to Lender, by certifiedmail, at Lender’s address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to newIndebtedness created after actual receipt by Lender of Guarantor’s written revocation. For this purpose and without limitation, the term “new lndebtedness”does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomesabsolute, liquidated, determined or due. For this purpose and without limitation, “new Indebtedness” does not include all or part of the Indebtedness that is:incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, andmodifications of the Indebtedness. This Guaranty shall bind Guarantor’s estate as to the Indebtedness created both before and after Guarantor’s death orincapacity, regardless of Lender’s actual notice of Guarantor’s death. Subject to the foregoing, Guarantor’s executor or administrator or other legalrepresentative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any otherguarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lenderreceives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. Guarantor’s obligations under thisGuaranty shall be in addition to any of Guarantor’s obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretoforeor hereafter given to Lender unless such other guaranties are modified or revoked in writing; and this Guarantor shall not, unless provided in this Guaranty,affect, invalidate, or supersede any such other guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness coveredby this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00),shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s heirs, successors and assigns so long asany of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demandand without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or moreadditional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any partof the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than theoriginal loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail ordecide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal withany one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when andwhat application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof,including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretionmay determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole orin part.GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of anykind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s requestand not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do notconflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation,court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber,hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantor’s assets, or any interest therein; (F) upon Lender’s request, Guarantor willprovide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all futurefinancial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor’s financialcondition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the dateof the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition;(H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending orthreatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means ofobtaining from Borrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed fromsuch means of any facts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that,absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course ofits relationship with Borrower.GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender to (A) make any presentment, protest,demand, or notice of any kind, including notice of change of any terms of repayment of the Indebtedness, default by Borrower or anySource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 COMMERCIAL GUARANTY(Continued) Page 2 other guarantor or surety, any action or nonaction taken by Borrower, Lender, or any other guarantor or surety of Borrower, or the creation of new oradditional Indebtedness; (B) proceed against any person, including Borrower, before proceeding against Guarantor; (C) proceed against any collateral for theIndebtedness, including Borrower’s collateral, before proceeding against Guarantor; (D) apply any payments or proceeds received against the Indebtedness inany order; (E) give notice of the terms, time, and place of any sale of the collateral pursuant to the Uniform Commercial Code or any other law governingsuch sale; (F) disclose any information about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonactionof Lender; or (G) pursue any remedy or course of action in Lender’s power whatsoever.Guarantor also waives any and all rights or defenses arising by reason of (H) any disability or other defense of Borrower, any other guarantor or surety or anyother person; (I) the cessation from any cause whatsoever, other than payment in full, of the Indebtedness; (J) the application of proceeds of the Indebtednessby Borrower for purposes other than the purposes understood and intended by Guarantor and Lender; (K) any act of omission or commission by Lender whichdirectly or indirectly results in or contributes to the discharge of Borrower or any other guarantor or surety, or the Indebtedness, or the loss or release of anycollateral by operation of law or otherwise; (L) any statute of limitations in any action under this Guaranty or on the Indebtedness; or (M) any modification orchange in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the time payment ofthe Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of this Guaranty on theIndebtedness incurred prior to such revocation.Guarantor waives all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may becomeavailable to Guarantor by reason of California Civil Code Sections 2787 to 2855, inclusive.Guarantor waives all rights and any defenses arising out of an election of remedies by Lender even though that the election of remedies, such as a non-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrowerby operation of Section 580d of the California Code of Civil Procedure or otherwise.Guarantor waives all rights and defenses that Guarantor may have because Borrower’s obligation is secured by real property. This means among other things:(N) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower. (O) If Lender forecloses onany real property collateral pledged by Borrower: (1) the amount of Borrower’s obligation may be reduced only by the price for which the collateral is sold atthe foreclosure sale, even if the collateral is worth more than the sale price. (2) Lender may collect from Guarantor even if Lender, by foreclosing on the realproperty collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights anddefenses Guarantor may have because Borrower’s obligation is secured by real property. These rights and defenses include, but are not limited to, any rightsand defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.Guarantor understands and agrees that the foregoing waivers are unconditional and irrevocable waivers of substantive rights and defenses to which Guarantormight otherwise be entitled under state and federal law. The rights and defenses waived include, without limitation, those provided by California laws ofsuretyship and guaranty, anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges that Guarantor has provided these waivers ofrights and defenses with the intention that they be fully relied upon by Lender. Guarantor further understands and agrees that this Guaranty is a separate andindependent contract between Guarantor and Lender, given for full and ample consideration, and is enforceable on its own terms. Until all of theIndebtedness is paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, orother person, and further, Guarantor waives any right to participate in any collateral for the Indebtedness now or hereafter held by Lender.Guarantor’s Understanding With Respect To Waivers. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor’s fullknowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If anysuch waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or publicpolicy.Subordination of Borrower’s Debts to Guarantor. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to anyclaim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expresslysubordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have againstBorrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors,by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lenderand shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower oragainst any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring toLender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts orobligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantoragrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to executedocuments and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.Miscellaneous Provisions. The following miscellaneous provisions are a part of this Guaranty:AMENDMENTS. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters setforth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought tobe charged or bound by the alteration or amendment.ATTORNEYS’ FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees andLender’s legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty,and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or notthere is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay orinjunction), appeals, and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may bedirected by the court.CAPTION HEADINGS. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions ofthis Guaranty.GOVERNING LAW. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws ofSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the State of California without regard to its conflicts of law provisions.INTEGRATION. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to beadvised by Guarantor’s attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor’s intentions and parol evidence is not required tointerpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender’sattorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.INTERPRETATION. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed tohave been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when thisGuaranty is executed by more than one Guarantor, the words “Borrower” and “Guarantor” respectively shall mean all and any one or more of them. The words“Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of thisGuaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a courtwill enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more ofBorrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powersof Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtednessmade or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.NOTICES. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effectivewhen actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnightcourier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown nearthe beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in thesection of this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal writtennotice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Guarantor agrees to keep Lenderinformed at all times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given byLender to any Guarantor is deemed to be notice given to all Guarantors.NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed byLender, 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.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 COMMERCIAL GUARANTY(Continued) Page 3 A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance withthat provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute awaiver of any of Lender’s rights or of any of Guarantor’s obligations as to any future transactions. Whenever the consent of Lender is required under thisGuaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent isrequired and in all cases such consent may be granted or withheld in the sole discretion of Lender.SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon andinure to the benefit of the parties, their successors and assigns.Nature Of Guaranty. Guarantor’s liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force. Guarantor intendsto guarantee at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of allindebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability of Guarantor in connection with anyremaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted.Definitions. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to thecontrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shallinclude the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have themeanings attributed to such terms in the Uniform Commercial Code:BORROWER. The word “Borrower” means EACO Corporation, a Florida corporation and includes all co-signers and co-makers signing the Note and alltheir successors and assigns.GUARANTOR. The word “Guarantor” means everyone signing this Guaranty, including without limitation Bisco Industries, Inc., an Illinois corporation, andin each case, any signer’s successors and assigns.GUARANTY. The word “Guaranty” means this guaranty from Guarantor to Lender.INDEBTEDNESS. The word “Indebtedness” means Borrower’s indebtedness to Lender as more particularly described in this Guaranty.LENDER. The word “Lender” means COMMUNITY BANK, its successors and assigns.NOTE. The word “Note” means and includes without limitation all of Borrower’s promissory notes and/or credit agreements evidencing Borrower’s loanobligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions forpromissory notes or credit agreements.RELATED DOCUMENTS. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whethernow or hereafter existing, executed in connection with the Indebtedness.EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITSTERMS. IN ADDITION. EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTIONAND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNERSET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKETHIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED NOVEMBER 9, 2007. GUARANTOR:BISCO INDUSTRIES, INC., AN ILLINOIS CORPORATIONBy: /s/ Glen F. Ceiley Glen F. Ceiley, Authorized Officer of Bisco Industries, Inc., an Illinoiscorporation CERTIFICATE OF ACKNOWLEDGMENT STATE OF California ) )SS COUNTY OF Orange ) On November 19, 2007 before me, Amy May Leo, Notary Public , (here insert name and title of the officer) personally appeared Glen F. Ceiley, personally known to me to be the person(s) whose name(s) is subscribed to the within instrument and acknowledged tome that he executed the same in his authorized capacity(ies), and that by his signature(s) on the instrument the person(s), or the entity upon behalf of whichthe person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature /s/ Amy May Leo Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.COMMERCIAL GUARANTY Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials CLS 52 / 810 568 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 abovecontaining “***” has been omitted due to text length limitations. Borrower: EACO Corporation, a Florida corporation Lender: COMMUNITY BANK 1500 N. Lakeview Avenue REAL ESTATE GROUP Anaheim, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999Guarantor: Glen F. Ceiley and Barbara A. Ceiley Revocable Trust 304 Evening Star Lane Newport Beach, CA 92660 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionallyguarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower’sobligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce thisGuaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness or against anycollateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, ondemand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise performBorrower’s obligations under the Note and Related Documents. Under this Guaranty, Guarantor’s liability is unlimited and Guarantor’s obligations arecontinuing.INDEBTEDNESS. The word “lndebtedness” as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or moretimes, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys’ fees, arising from any and alldebts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively orinterchangeably with others, owes or will owe Lender. “indebtedness” includes, without limitation, loans, advances, debts, overdraft indebtedness, credit cardindebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements orcommodity price protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, futureadvances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily orinvoluntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined;direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced bya negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reasonwhatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced orextinguished and then afterwards increased or reinstated.If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender’s rights under all guaranties shall becumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s liabilitywill be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.CONTINUING GUARANTY. THIS IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL ANDPUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING ORHEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESSWILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING ANDSUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TOTIME.DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice toGuarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocationshall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall have been performed in full. IfGuarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor’s written notice of revocation must be mailed to Lender, by certifiedmail, at Lender’s address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to newIndebtedness created after actual receipt by Lender of Guarantor’s written revocation. For this purpose and without limitation, the term “new Indebtedness”does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomesabsolute, liquidated, determined or due. For this purpose and without limitation, “new Indebtedness” does not include all or part of the Indebtedness that is:incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, andmodifications of the Indebtedness. This Guaranty shall bind Guarantor’s estate as to the Indebtedness created both before and after Guarantor’s death orincapacity, regardless of Lender’s actual notice of Guarantor’s death. Subject to the foregoing, Guarantor’s executor or administrator or other legalrepresentative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any otherguarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lenderreceives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. Guarantor’s obligations under thisGuaranty shall be in addition to any of Guarantor’s obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretoforeor hereafter given to Lender unless such other guaranties are modified or revoked in writing; and this Guarantor shall not, unless provided in this Guaranty,affect, invalidate, or supersede any such other guaranty. It is anticipated that fluctuations may occur in .the aggregate amount of the Indebtedness coveredby this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00),shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s heirs, successors and assigns so long asany of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00).GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demandand without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or moreSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B)to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part ofthe Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than theoriginal loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail ordecide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal withany one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when andwhat application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof,including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretionmay determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole orin part.GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of anykind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s requestand not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do notconflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation,court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber,hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantor’s assets, or any interest therein; (F) upon Lender’s request, Guarantor willprovide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all futurefinancial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor’s financialcondition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the dateof the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition;(H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending orthreatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means ofobtaining from Borrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed fromsuch means of any facts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that,absent a request for information, ‘Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course ofits relationship with Borrower.GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender to (A) make any presentment,Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 COMMERCIAL GUARANTY(Continued) Page 2 protest, demand, or notice of any kind, including notice of change of any terms of repayment of the Indebtedness, default by Borrower or any other guarantoror surety, any action or nonaction taken by Borrower, Lender, or any other guarantor or surety of Borrower, or the creation of new or additional Indebtedness;(B) proceed against any person, including Borrower, before proceeding against Guarantor; (C) proceed against any collateral for the Indebtedness, includingBorrower’s collateral, before proceeding against Guarantor; (D) apply any payments or proceeds received against the Indebtedness in any order; (E) givenotice of the terms, time, and place of any sale of the collateral pursuant to the Uniform Commercial Code or any other law governing such sale; (F) discloseany information about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or(G) pursue any remedy or course of action in Lender’s power whatsoever.Guarantor also waives any and all rights or defenses arising by reason of (H) any disability or other defense of Borrower, any other guarantor or surety or anyother person; (I) the cessation from any cause whatsoever, other than payment in full, of the Indebtedness; (J) the application of proceeds of the Indebtednessby Borrower for purposes other than the purposes understood and intended by Guarantor and Lender; (K) any act of omission or commission by Lender whichdirectly or indirectly results in or contributes to the discharge of Borrower or any other guarantor or surety, or the Indebtedness, or the loss or release of anycollateral by operation of law or otherwise; (L) any statute of limitations in any action under this Guaranty or on the Indebtedness; or (M) any modification orchange in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the time payment ofthe Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of this Guaranty on theIndebtedness incurred prior to such revocation.Guarantor waives all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may becomeavailable to Guarantor by reason of California Civil Code Sections 2787 to 2855, inclusive.Guarantor waives all rights and any defenses arising out of an election of remedies by Lender even though that the election of remedies, such as a non-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrowerby operation of Section 580d of the California Code of Civil Procedure or otherwise.Guarantor waives all rights and defenses that Guarantor may have because Borrower’s obligation is secured by real property. This means among other things;(N) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower. (O) If Lender forecloses onany real property collateral pledged by Borrower; (1) the amount of Borrower’s obligation may be reduced only by the price for which the collateral is sold atthe foreclosure sale, even if the collateral is worth more than the sale price. (2) Lender may collect from Guarantor even if Lender, by foreclosing on the realproperty collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights anddefenses Guarantor may have because Borrower’s obligation is secured by real property. These rights and defenses include, but are not limited to, any rightsand defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.Guarantor understands and agrees that the foregoing waivers are unconditional and irrevocable waivers of substantive rights and defenses to which Guarantormight otherwise be entitled under state and federal law. The rights end defenses waived include, without limitation, those provided by California laws ofsuretyship and guaranty, anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges that Guarantor has provided these waivers ofrights and defenses with the intention that they be fully relied upon by Lender. Guarantor further understands and agrees that this Guaranty is a separate andindependent contract between Guarantor and Lender, given for full and ample consideration, and is enforceable on its own terms. Until all of theIndebtedness is paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, orother person, and further, Guarantor waives any right to participate in any collateral for the Indebtedness now or hereafter held by Lender.Guarantor’s Understanding With Respect To Waivers. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor’s fullknowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If anysuch waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or publicpolicy.Subordination of Borrower’s Debts to Guarantor. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to anyclaim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expresslysubordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have againstBorrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors,by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lenderand shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower oragainst any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment Shall be effective only for the purpose of assuring toLender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts orobligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantoragrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to executedocuments and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.Miscellaneous Provisions. The following miscellaneous provisions are a part of this Guaranty;AMENDMENTS. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters setforth in this Guaranty. No alteration of or amendment to this Guaranty shell be effective unless given in writing and signed by the party or parties sought tobe charged or bound by the alteration or amendment.ATTORNEYS’ FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees andLender’s legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty,and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or notthere is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay orinjunction), appeals, and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may bedirected by the court.CAPTION HEADINGS. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions ofthis Guaranty.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GOVERNING LAW. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws ofthe State of California without regard to its conflicts of law provisions.INTEGRATION. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to beadvised by Guarantor’s attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor’s intentions and parol evidence is not required tointerpret the terms of this Guaranty. Guarantor hereby indemnities and holds Lender harmless from all losses, claims, damages, and costs (including Lender’sattorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.INTERPRETATION. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed tohave been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when thisGuaranty is executed by more than one Guarantor, the words “Borrower” and “Guarantor” respectively shall mean all and any one or more of them. The words“Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them, If a court finds that any provision of thisGuaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a courtwill enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable, If any one or more ofBorrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powersof Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtednessmade or created in reliance upon the professed exercise of such powers shell be guaranteed under this Guaranty.NOTICES. Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effectivewhen actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnightcourier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown nearthe beginning of this Guaranty. All revocation notices by Guarantor shall be in writing end shall be effective upon delivery to Lender as provided in thesection of this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal writtennotice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Guarantor agrees to keep Lenderinformed at all times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given byLender to any Guarantor is deemed to be notice given to all Guarantors.NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing andSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Loan No: 75101054 COMMERCIAL GUARANTY(Continued) Page 3 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 byLender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provisionor any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of anyof Lender’s rights or of any of Guarantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, thegranting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in allcases such consent may be granted or withheld in the sole discretion of Lender.SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon andinure to the benefit of the parties, their successors and assigns.Nature Of Guaranty. Guarantor’s liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force. Guarantor intendsto guarantee at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of allindebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability of Guarantor in connection with anyremaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted.Definitions. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to thecontrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shallinclude the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have themeanings attributed to such terms in the Uniform Commercial Code:BORROWER. The word “Borrower” means EACO Corporation, a Florida corporation and includes all co-signers and co-makers signing the Note and alltheir successors and assigns.GUARANTOR. The word “Guarantor” means everyone signing this Guaranty, including without limitation Glen F. Ceiley and Barbara A. Ceiley RevocableTrust, and in each case, any signer’s successors and assigns.GUARANTY. The word “Guaranty” means this guaranty from Guarantor to Lender.INDEBTEDNESS. The word “Indebtedness” means Borrower’s indebtedness to Lender as more particularly described in this Guaranty.LENDER. The word “Lender” means COMMUNITY BANK, its successors and assigns.NOTE. The word “Note” means and includes without limitation all of Borrower’s promissory notes and/or credit agreements evidencing Borrower’s loanobligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions forpromissory notes or credit agreements.RELATED DOCUMENTS. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whethernow or hereafter existing, executed in connection with the Indebtedness.EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITSTERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTIONAND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNERSET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKETHIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED NOVEMBER 9, 2007.Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. GUARANTOR: GLEN F. CEILEY AND BARBARA A. CEILEY REVOCABLE TRUST By: /s/ Glen F. Ceiley By: /s/ Barbara A. Ceiley Glen F. Ceiley, Trustee of Glen F. Ceiley and BarbaraA. Ceiley Revocable Trust Barbara A. Ceiley, Trustee of Glen F. Ceiley andBarbara A. Ceiley Revocable Trust CERTIFICATE OF ACKNOWLEDGMENT STATE OF California ) )SSCOUNTY OF Orange )On November 19, 2007 before me, Amy May Leo, Notary Public , (here insert name and title of the officer) personally appeared Glen F. Ceiley and Barbara A. Ceiley, personally known to me to be the person(s) whose name(s) is subscribed to the within instrumentand acknowledged to me that he executed the same in his authorized capacity(ies), and that by his signature(s) on the instrument the person(s), or the entityupon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature /s/ Amy May Leo Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21.1LIST OF SUBSIDIARIES Subsidiary Jurisdiction of IncorporationBisco Industries, Inc. IllinoisBisco Industries, Ltd. CanadaSource: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in Registration Statements (File Nos. 033-62101 and 333-98327) on Forms S-8 of EACO Corporation of ourreport dated November 29, 2011, relating to our audits of the consolidated financial statements and the financial statement schedule, which appear in thisAnnual Report on Form 10-K of EACO Corporation for the year ended August 31, 2011./s/ Squar, Milner, Peterson, Miranda & Williamson, LLPNewport Beach, CaliforniaNovember 29, 2011Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 31.1CERTIFICATION PURSUANT TO EXCHANGE ACTRULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Glen Ceiley, certify that:1. I have reviewed this annual report on Form 10-K of EACO Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under mysupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committeeof the registrant’s Board of Directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: November 29, 2011 /S/ GLEN CEILEYGlen Ceiley, Chief Executive Officer(principal executive officer and principal financial officer)Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. §1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the annual report of EACO Corporation (the “Company”) on Form 10-K for the fiscal year ended August 31, 2011, as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Glen Ceiley, Chief Executive Officer of the Company, certify, pursuant to18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: November 29, 2011 /S/ GLEN CEILEYGlen Ceiley, Chief Executive Officer(principal executive officer andprincipal financial officer)Source: EACO CORP, 10-K, November 29, 2011Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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