EACO Corporation
Annual Report 2013

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KEACO CORP - EACOFiled: November 29, 2013 (period: August 31, 2013)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 x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2013 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ 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. Employer Identification No.) 1500 North Lakeview AvenueAnaheim, California 92807(Address of Principal Executive Offices) Registrant's telephone number, including area code: (714) 876-2490 Securities registered pursuant to Section 12(b) of the Act:None Securities 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 x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO x Indicate 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 Actof 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. YES x NO o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter periodthat the registrant was required to submit and post such files). YES x 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 becontained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. o Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer oAccelerated filer oNon-accelerated filer oSmaller reporting company xx Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO x The aggregate market value of the registrant’s common stock as of the last business day of the registrant’s most recently completed secondfiscal quarter (based upon the closing sale price of the common stock on that date) held by non-affiliates of the registrant was approximately$250,000. Source: EACO CORP, 10-K, November 29, 2013Powered 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 November 27, 2013, 4,861,590 shares of the registrant’s common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE No documents required to be listed hereunder are incorporated by reference in this report on Form 10-K. Source: EACO CORP, 10-K, November 29, 2013Powered 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 Information This 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 orexpressions. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses,profits and capital needs. Forward-looking statements are based on our current expectations, estimates and forecasts of future events andresults and involve a number of risks and uncertainties that could cause actual results to differ materially including, among other things, thefollowing: failure of facts to conform to management estimates and assumptions; economic conditions, including the recent recession andeconomic uncertainties; our ability to maintain an effective system of internal controls over financial reporting; potential losses from trading insecurities; our ability to retain key personnel and relationships with suppliers; the willingness of Community Bank or other lenders to extendfinancing commitments and the availability of capital resources; and other risks identified from time to time in our reports and otherdocuments 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 ofsuch factors to be an exhaustive statement of all risks or uncertainties. No forward-looking statements can be guaranteed and actual results may vary materially. We undertake no obligation to update any forward-looking statement except as required by law, but investors are advised to consult any further disclosures by us in our filings with the SEC,especially on Forms 10-K, 10-Q and 8-K, in which we discuss in more detail various important factors that could cause actual results to differfrom expected or historical results. Source: EACO CORP, 10-K, November 29, 2013Powered 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 Business3ITEM 1A. Risk Factors5ITEM 1B. Unresolved Staff Comments9ITEM 2. Properties9ITEM 3. Legal Proceedings9ITEM 4. Mine Safety Disclosures10 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities10ITEM 6. Selected Financial Data10ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations11ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk15ITEM 8. Financial Statements and Supplementary Data15ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure15ITEM 9A. Controls and Procedures15ITEM 9B. Other Information16 PART III ITEM 10. Directors, Executive Officers and Corporate Governance16ITEM 11. Executive Compensation18ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters19ITEM 13. Certain Relationships and Related Transactions and Director Independence20ITEM 14. Principal Accounting Fees and Services20 PART IV ITEM 15. Exhibits and Financial Statement Schedules21 2Source: EACO CORP, 10-K, November 29, 2013Powered 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 EACO Corporation (“EACO”) is a holding company, the primary asset of which is its wholly-owned subsidiary, BiscoIndustries, Inc. (“Bisco”). Bisco is a distributor of electronic components and fasteners with 45 sales offices and sixdistribution centers located throughout the United States and Canada. Bisco supplies parts used in the manufactureof products in a broad range of industries, including the aerospace, circuit board, communication, computer,fabrication, instrumentation, industrial equipment and marine industries. Organization and Merger with Bisco Industries, Inc. From its inception through June 2005, EACO operated restaurants in the State of Florida. On June 29, 2005, EACO soldall of its operating restaurants. From June 2005 until the acquisition of Bisco, EACO’s operations principally consistedof managing five real estate properties held for leasing located in Florida and California. On March 24, 2010, EACOcompleted the acquisition of Bisco, a company under the common control of Glen Ceiley, EACO’s Chairman of theBoard, Chief Executive Officer and majority shareholder. EACO was incorporated in Florida in September 1985. Bisco commenced operations in Illinois in 1973 and wasincorporated in 1974. Bisco’s principal executive offices are located at 1500 N. Lakeview Avenue, Anaheim, California92807, which also serves as the principal executive offices of EACO. EACO’s website address iswww.eacocorp.com and Bisco’s website address is www.biscoind.com. The inclusion of these website addresses inthis annual report does not include or incorporate by reference into this annual report any information on oraccessible through the websites. EACO, Bisco and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited, are collectively referred toherein as the “Company”, “we”, “us” and “our.” Operations Products and Services Bisco currently stocks over 87,000 items from more than 260 manufacturers, and is an authorized distributor forover 120 of these manufacturers. Bisco’s products include electronic components such as spacers and standoffs,card guides and ejectors, component holders and fuses, circuit board connectors, and cable components, as well asa large variety of fasteners and hardware. The breadth of Bisco’s products and extensive inventory provide a one-stop shopping experience for many customers. Bisco also provides customized services and solutions for a wide range of production needs, including specialpackaging, 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 meet their specific needs. Divisions Bisco Industries As “Bisco Industries,” Bisco sells the full spectrum of products that it offers to all markets, but primarily sells tooriginal equipment manufacturers (“OEMs”). While historically, the substantial majority of Bisco’s revenues have beenderived from the Bisco division, Bisco has also established additional divisions that specialize in specific industriesand products. Bisco believes that the focus by industry and/or product enhances Bisco’s ability to provide superiorservice and devise tailored solutions for its customers. 3Source: EACO CORP, 10-K, November 29, 2013Powered 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. National-Precision The National-Precision division primarily sells electronic hardware and commercial fasteners to OEMs in theaerospace, fabrication and industrial equipment industries. National-Precision seeks to be the leading globaldistributor of mil-spec and commercial fasteners, hardware and distribution services used in production. Fast-Cor The 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 of products that Bisco offers but primarily focuses on selling to otherdistributors, not manufacturers. Customers and Sales Bisco’s customers operate in a wide variety of industries and range from large, global companies to small localbusinesses. Bisco strives to provide exceptional service to all customers, including smaller businesses, andcontinues to focus on growing its share of that market. As of August 31, 2013, Bisco had more than 11,700 activecustomers; however, no single customer accounted for more than 10% of Bisco’s revenues for the year endedAugust 31, 2013. For the fiscal years ended August 31, 2013 and 2012, Bisco’s top 20 customers represented in theaggregate approximately 11% and 12%, respectively, of Bisco’s distribution sales. Bisco generally sells its products through its sales representatives in its 45 sales offices located in the United Statesand Canada. Customers can also place orders through Bisco’s website. Bisco currently maintains six distributioncenters located in Anaheim and San Jose, California; Dallas, Texas; Chicago, Illinois; Boston, Massachusetts andToronto, Canada. Each of Bisco’s selling facilities and distribution centers are linked to Bisco’s central computersystem, which provides Bisco’s salespersons with online, real-time data regarding inventory levels throughout Biscoand facilitates control of purchasing, shipping and billing. Bisco generally ships products to customers from one of itssix distribution centers, based on the geographic proximity and the availability of the ordered products. Bisco sells its products primarily in the United States and Canada. Bisco’s international sales represented 7% of itsdistribution sales for each of the fiscal years ended August 31, 2013 and 2012, respectively. Sales to customers inCanada accounted for approximately 56% and 52% of such international sales in each of those years, respectively. Suppliers As of August 31, 2013, Bisco offered the products of over 260 manufacturers and is an authorized distributor formore than 120 manufacturers. The authorized distributor agreements with most manufacturers are typicallycancelable by either party at any time or on short notice. While Bisco doesn’t manufacture its products, it doesprovide kitting and packaging services for certain of its customers. Although Bisco sells more products of certainbrands, Bisco believes that most of the products it sells are available from other sources at competitive prices. Nosingle supplier accounted for more than 10% of Bisco’s purchases in fiscal 2013. Real Estate Held for Leasing At August 31, 2013, EACO owned a restaurant property located in Orange Park, Florida (the “Orange Park Property”)and an income producing real estate property held for investment in Sylmar, California (the “Sylmar Property”). InJanuary 2013, the Company sold its restaurant property located in Deland, Florida (the “Deland Property”) for$1,100,000. In April 2013, the Company sold its restaurant property located in Brooksville, Florida (the “BrooksvilleProperty”) for $1,730,000. Subsequent to year end, the Company sold the Orange Park Property for $1,138,500 inOctober 2013. 4Source: EACO CORP, 10-K, November 29, 2013Powered 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. Employees As of August 31, 2013, the Company had 424 employees, all of which were full time and of which 328 were in salesand marketing and 96 were in management, administration and finance. Item 1A. Risk Factors Our business is subject to a number of risks, some of which are discussed below. Other risks are presented elsewherein this report and in our other filings with the SEC, including our subsequent reports on Forms 10-Q and 8-K. If anyof the risks actually occur, our business, financial condition, or results of operations could be seriously harmed. In thatevent, 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 operatingresults. As a result of the economic downturn and continuing economic uncertainties, our operating results, and the economicstrength of our customers and suppliers, are increasingly difficult to predict. Our Distribution Operations sales areaffected by many factors, including, among others, general economic conditions, interest rates, inflation, liquidity inthe 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 hascaused some of our customers to experience a slowdown that has had adverse effects on our sales and operatingresults. Changes and uncertainties in the economy also increase the risk of uncollectible accounts receivable. Thepricing we receive from suppliers may also be impacted by general economic conditions. Continued and futurechanges and uncertainties in the economic climate in the United States and elsewhere could have a similar negativeimpact on the rate and amounts of purchases by our current and potential customers, create price inflation for ourproducts, or otherwise have a negative impact on our expenses, gross margins and revenues, and could hinder ourgrowth. If we fail to maintain an effective system of internal controls over financial reporting or experienceadditional material weaknesses in our system of internal controls, we may not be able to report ourfinancial results accurately or timely or detect fraud, which could have a material adverse effect onthe market price of our common stock and our business. We have from time to time had material weaknesses in our internal controls over financial reporting due todeficiencies in the process related to the preparation of our financial statements, segregation of duties, sufficientcontrol in the area of financial reporting oversight and review, and appropriate personnel to ensure the completeand proper application of accounting principles generally accepted in the United States of America (“GAAP”) as itrelates to certain routine accounting transactions. Although we believe we have addressed these materialweaknesses, we may experience material weaknesses in the future and may fail to maintain a system of internalcontrols over financial reporting that complies with the reporting requirements applicable to public companies in theUnited States. Our failure to address any deficiencies or weaknesses in our internal control over financial reportingor to properly maintain an effective system of internal control over financial reporting could impact our ability toprevent fraud or to issue our financial statements in a timely manner that presents fairly (in accordance with GAAP)our financial condition and results of operations. The existence of any such deficiencies and/or weaknesses, even ifcured, may also lead to the loss of investor confidence in the reliability of our financial statements, could harm ourbusiness and negatively impact the trading price of our common stock. Such deficiencies or material weaknessesmay also subject us to lawsuits, investigations and other penalties. 5Source: EACO CORP, 10-K, November 29, 2013Powered 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 incurred significant losses in the past from trading in securities, and we may incur suchlosses in the future, which may also cause us to be in violation of covenants under our loanagreements. Bisco has historically funded its operations from cash generated from its operations and/or by trading in marketabledomestic equity securities. Bisco’s investment strategy includes taking both long and short positions, as well asutilizing options to maximize return. This strategy can lead, and has led, to significant losses based on marketconditions and trends. We may incur losses in future periods from such trading activities, which could materially andadversely affect our liquidity and financial condition. In addition, unanticipated losses from our trading activities may cause Bisco to be in violation of certain covenantsunder its loan agreements with Community Bank. As of August 31, 2013 and 2012, Bisco had outstanding $6,479,000and $7,450,000, respectively, under its revolving credit agreement, which loan is secured by substantially all ofBisco’s assets and is guaranteed by Mr. Ceiley, our Chairman and CEO. The agreement contains covenants whichrequire that, on a quarterly basis, Bisco’s losses from trading in securities not exceed its pre-tax operating income.We cannot assure you that unanticipated losses from our trading activities will not cause us to violate the covenant inthe future or that the bank will grant a waiver for any such default or that it will not exercise its remedies, which couldinclude the acceleration of the obligation’s maturity date and foreclosure on Bisco’s assets, with respect to any suchnoncompliance, 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, couldmaterially and adversely affect our business. Our information systems have been in place for many years, and are subject to system failures as well as problemscaused by human error, which could have a material adverse effect on our business. Many of our systems consist ofa number of legacy or internally developed applications, which can be more difficult to upgrade to commerciallyavailable software. It may be time consuming and costly for us to retrieve data that is necessary for management toevaluate our systems of control and information flow. In the future, management may decide to convert ourinformation systems to a single enterprise solution. Such a conversion, while it would enhance the accessibility andreliability of our data, could be expensive 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 informationsystems or material difficulties in upgrading these information systems could have material adverse effects on ourbusiness and our timely compliance with our reporting obligations. 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 managementand other personnel, including Glen Ceiley, our Chairman and CEO, as well as other executive officers and seniormanagement. The loss of service of one or more of our key management members could have a material adverseeffect on our business. We do not have long-term supply agreements or guaranteed price or delivery arrangements with themajority of our suppliers. In most cases, we have no guaranteed price or delivery arrangements with our suppliers. Consequently, we mayexperience inventory shortages on certain products. Furthermore, our industry occasionally experiences significantproduct supply shortages and customer order backlogs due to the inability of certain manufacturers to supplyproducts as needed. We cannot assure you that suppliers will maintain an adequate supply of products to fulfill ourorders on a timely basis, at a recoverable cost, or at all, or that we will be able to obtain particular products onfavorable terms or at all. Additionally, we cannot assure you that product lines currently offered by suppliers willcontinue to be available to us. A decline in the supply or continued availability of the products of our suppliers, or asignificant increase in the price of those products, could reduce our sales and negatively affect our operatingresults. 6Source: EACO CORP, 10-K, November 29, 2013Powered 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. 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, areterminable with little or no notice and without any penalty. Suppliers that currently sell their products through us coulddecide to sell, or increase their sales of, their products directly or through other distributors or channels. Anytermination, interruption or adverse modification of our relationship with a key supplier or a significant number ofother suppliers 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, aswell as with many of our suppliers. A failure to maintain and enhance our competitive position could adversely affectour business and prospects. Furthermore, our efforts to compete in the marketplace could cause deterioration ofgross 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 strategy of expanding into new geographic areas could be costly. One of our primary growth strategies for our Distribution Operations segment is to grow our business through theopening of sales offices in new geographic markets. Based on our analysis of demographics in the United States,Canada and Mexico, we currently estimate there is potential market opportunity in North America to supportadditional 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 localmarket’s ability to support a sales office may change because of a change due to competition, or local economicconditions. 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 effectiveway to attract new customers has been opening new sales offices. Our current business strategy focuses onopening a specified number of new sales offices each year, and quickly growing each new sales office. Although wehave opened two new offices during the year ended August 31, 2013, we may not be able to continue to open orgrow new offices at our projected rates or hire the qualified sales personnel necessary to make such new officessuccessful. Failure to do so could negatively impact our long-term growth and market share. Opening sales offices in new markets presents increased risks that may prevent us from beingprofitable in these new locations, and/or may adversely affect our operating results. Our new sales offices do not typically achieve operating results comparable to our existing offices until after severalyears of operation. The added expenses relating to payroll, occupancy and transportation costs can impact ourability to leverage earnings. In addition, offices in new geographic areas face additional challenges to achievingprofitability. In new markets, we have less familiarity with local customer preferences and customers in thesemarkets are less familiar with our name and capabilities. Entry into new markets may also bring us into competitionwith new, unfamiliar competitors. These challenges associated with opening new offices in new markets may have anadverse effect on our business and operating results. We may not be able to identify new products and products lines, or obtain new product on favorableterms and prices or at all. Our success depends in part on our ability to develop product expertise and identify future products and productlines that complement existing products and product lines and that respond to our customers’ needs. We may not beable to compete effectively unless our product selection keeps up with trends in the markets in which we compete. 7Source: EACO CORP, 10-K, November 29, 2013Powered 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. 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 salesemployees, who understand and appreciate our strategy and culture and are able to adequately represent us to ourcustomers. Qualified individuals of the requisite caliber and number needed to fill these positions may be in shortsupply in some areas, and the turnover rate in the industry is high. If we are unable to hire and retain personnelcapable of consistently providing a high level of customer service, as demonstrated by their enthusiasm for ourculture and product knowledge, our sales could be materially adversely affected. Additionally, competition forqualified employees could require us to pay higher wages to attract a sufficient number of employees. An inability torecruit and retain a sufficient number of qualified individuals in the future may also delay the planned openings ofnew 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 ofconditions, both specific to each customer and generally affecting each customer’s industry, may cause customersto reduce, cancel or delay orders that were either previously made or anticipated, go bankrupt or fail, or default ontheir payments. Significant or numerous cancellations, reductions, delays in orders by customers, losses ofcustomers, and/or customer 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 ourcost of goods and distribution and occupancy expenses, which would result in lower operatingmargins. Costs of raw materials used in our products and energy costs have been rising during the last several years, whichhas resulted in increased production costs for our suppliers. These suppliers typically look to pass their increasedcosts along to us through price increases. The shipping costs for our distribution operation have risen as well andmay continue to rise. While we typically try to pass increased supplier prices and shipping costs through to ourcustomers or to modify our activities to mitigate the impact, we may not be successful. Failure to fully pass theseincreased prices and costs through to our customers or to modify our activities to mitigate the impact would have anadverse effect on our operating margins. The Company’s Chairman and CEO holds almost all of our voting stock and can control the election ofdirectors and significant corporate actions. Glen Ceiley, our Chairman and CEO, owns approximately 99% of our outstanding voting stock. Mr. Ceiley is able toexert significant influence over the outcome of almost all corporate matters, including significant corporatetransactions requiring a shareholder vote, such as a merger or a sale of the Company or our assets. Thisconcentration of ownership and influence in management and board decision-making could also harm the price ofour common stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of ourcommon stock (whether by making a tender offer or otherwise) or otherwise attempting to obtain control of theCompany. 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, 2013, the number of shares held by non-affiliates of Mr. Ceiley or Bisco is less than 65,000 shares. IfMr. Ceiley sells or seeks to sell a substantial number of his shares of our common stock in the future, the marketprice of our common stock could decline. The perception among investors that these sales may occur could producethe same effect. 8Source: EACO CORP, 10-K, November 29, 2013Powered 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. Inclement weather and other disruptions to the transportation network could impact our distributionsystem. Our ability to provide efficient shipment of products to our customers is an integral component of our overallbusiness strategy. Disruptions at distribution centers or shipping ports may affect our ability to both maintain coreproducts in inventory and deliver products to our customers on a timely basis, which may in turn adversely affect ourresults of operations. In addition, severe weather conditions could adversely impact demand for our products inparticularly hard 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 asignificant advertising expense for us because we generally mail fliers to current and potential customers throughthe U.S. Postal Service. Any future increases in postal rates will increase our mailing expenses and could have amaterial 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 thecapital markets, both of which are subject to general economic, financial, competitive, legislative, regulatory andother factors that are beyond our control. We may need to satisfy our cash needs through external financing.However, external financing may not be available on acceptable terms or at all. Item 1B. Unresolved Staff Comments None. Item 2. Properties We have 45 sales offices and six distribution centers located throughout the United States and in Canada. Ourcorporate headquarters and one of our primary distribution centers are located in Anaheim, California inapproximately 40,000 square feet of office and warehouse space. We lease all of our properties, consisting ofoffice and warehouse space, under leases generally having a term of three years. For additional informationregarding our obligations under property leases, see Note 3 of the Notes to Consolidated Financial Statements,included in Part IV, Item 15 of this report. We also own and lease the following properties: Locations Description Orange Park, FL(1) Restaurant land and building. Leased to restaurant operator at August 31,2013.Sylmar, CA(2) Two properties leased to industrial tenants. (1) Property was subject to mortgage securing promissory note issued to GE Capital Franchise Finance Corporation(“GE Capital”). In October 2013, we sold the Orange Park Property for $1,138,500 and paid off the mortgage.(2) Property subject to mortgage securing promissory note issued to Community Bank. Item 3. Legal Proceedings From time to time, the Company may be named in claims arising in the ordinary course of business. Currently, we arenot a party to any legal proceedings that, in the opinion of our management, would reasonably be expected to havea material adverse effect on our business or financial condition. 9Source: EACO CORP, 10-K, November 29, 2013Powered 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 4. Mine Safety Disclosures Not applicable. PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities Market Information and Holders The Company's common stock is quoted on the OTCQB operated by the OTC Markets Group Inc., and previously onthe OTC Bulletin Board, under the trading symbol "EACO"; however, there is no established public trading market forthe Company’s common stock. As of November 1, 2013, there were 1,131 shareholders of record of the Company’scommon stock, which excludes individuals holding shares in street names. The closing sale price of the Company'scommon stock on October 15, 2013, the most recent date on which a sale of our shares occurred, was $3.48 pershare. The quarterly high and low sales information of the Company's common stock as quoted on such over-the-countermarkets are set forth below. As of August 31, 2013, the Company had no options outstanding under any equity compensation plans. TheCompany did not grant or issue any unregistered shares during the year ended August 31, 2013. The Company didnot repurchase any of its own common stock during the year ended August 31, 2013. Dividend Policy The Company has never paid cash dividends on its common stock and does not expect to pay any cash dividendson its common stock in the foreseeable future. The Company presently intends to retain all available funds foroperations and expansion of the business. Item 6. Selected Financial Data The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, asamended (the “Exchange Act”) and is not required to provide the information required under this item. 10 High Low Year Ended August 31, 2012 Quarter ended November 30, 2011 $2.00 $0.25 Quarter ended February 28, 2012 2.20 1.85 Quarter ended May 31, 2012 2.01 2.00 Quarter ended August 31, 2012 2.95 2.30 Year Ended August 31, 2013 Quarter ended November 30, 2012 2.95 2.35 Quarter ended February 28, 2013 2.56 2.34 Quarter ended May 31, 2013 2.89 2.50 Quarter ended August 31, 2013 3.56 2.89 Source: EACO CORP, 10-K, November 29, 2013Powered 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 7. Management’s Discussion and Analysis of Financial Condition and Results Of Operations Overview From the inception of the Company through June 2005, EACO’s business consisted of operating restaurants in theState of Florida. On June 29, 2005, EACO sold all of its operating restaurants and other assets used in the restaurantoperations. All the remaining activity from the restaurant operations is presented as discontinued operations in theaccompanying consolidated financial statements. From June 2005 until the acquisition of Bisco in March 2010, ouroperations principally consisted of managing five real estate properties held for leasing in Florida and California.After the acquisition of Bisco and prior to the fiscal year ended August 31, 2013 (“fiscal 2013”), the Company had tworeportable business segments: the Distribution segment, which consisted of the operations of Bisco and itssubsidiary, and the Real Estate Rental segment, which consisted of managing the rental properties in Florida andCalifornia. For fiscal 2013, due to the sale by the Company of several of its rental properties, the Real Estate Rentalsegment represented less than 1% of the Company’s revenues. Accordingly, the Company no longer reports itsfinancial results under two separate segments. The applicable financial results of the Real Estate Rental segmenthave been consolidated with the financial results of the Distribution segment for all periods presented in this report. Critical Accounting Policies Long-Lived Assets Long-lived assets (principally real estate, equipment and leasehold improvements) are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. For purposes of the impairment review, real estate properties are reviewed on an asset-by-assetbasis. Recoverability of real estate property assets is measured by a comparison of the carrying amount of eachoperating property and related assets to future net cash flows expected to be generated by such assets. Formeasuring recoverability of operating assets, long-lived assets are grouped with other assets to the lowest level forwhich identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Revenue Recognition The Company’s shipping terms are FOB shipping point. As such, management generally recognizes distributionoperations revenue at the time of product shipment. Revenue is considered to be realized or realizable and earnedwhen there is persuasive evidence of a sales arrangement in the form of an executed contract or purchase order,the product has been shipped (and installed when applicable), the sales price is fixed or determinable, andcollectability is reasonably assured. Impairment of Long Lived Assets The Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review,assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of thecarrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. Ifsuch assets are considered impaired, the impairment to be recognized is measured by the amount by which thecarrying value of the assets exceeds their estimated fair value. During the years ended August 31, 2013 and 2012,the Company did not record an impairment charge on its rental property assets. 11Source: EACO CORP, 10-K, November 29, 2013Powered 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. Liabilities of Discontinued Operations Prior to June 2005, EACO self-insured workers’ compensation claims losses up to certain limits. The liability forworkers’ compensation represents an estimate of the present value of the ultimate cost of uninsured losses whichare unpaid as of the balance sheet dates. The estimate is frequently reviewed and adjustments to the Company’sestimated claim liability, if any, are reflected in discontinued operations. At each fiscal year end, the Companyobtains an actuarial report which estimates its overall exposure based on historical claims and an evaluation offuture claims. An actuarial evaluation was obtained by the Company as of August 31, 2013 and 2012. The Companypursues recovery of certain claims from an insurance carrier. Recoveries, if any, are recognized when realization isreasonably assured. Deferred Tax Assets A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will eitherexpire before the Company is able to realize their benefit, or when future deductibility is uncertain. The Companyrecords net deferred tax assets to the extent management believes these assets will more likely than not berealized. In making such determination, the Company considers all available positive and negative evidence,including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planningstrategies and recent financial performance. Forming a conclusion that a valuation allowance is not required isdifficult when there is negative evidence such as cumulative losses and/or significant decreases in operations. As aresult of the Company’s disposal of significant business operations in June 2005, management concluded that avaluation allowance should be recorded against certain federal and state tax credits. The utilization of these creditsrequires sufficient taxable income after consideration of net operating loss utilization. Results of Operations Comparison of the Fiscal Years Ended August 31, 2013 and 2012 Revenues and Gross Margin(dollars in thousands) Revenues consist primarily of sales of component parts and fasteners, but also include, to a lesser extent, kittingcharges and special order fees, as well as freight charged to customers. The increase in revenues in fiscal 2013compared to the year ended August 31, 2012 (“fiscal 2012”) was largely due to increased unit sales, resultingprimarily from increases in the salesperson headcount and the number of Sales Focus Teams (“SFT”). The Companyuses 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 two new sales officesin Tennessee and Ohio, which also generally leads to increases in sales. Selling, General and Administrative Expense (dollars in thousands) Selling, general and administrative expense (“SG&A”) consists primarily of payroll and related expenses for thesales and administrative staff, professional fees (including accounting, legal and technology costs and expenses),and sales and marketing costs for the Company. SG&A expense in fiscal 2013 increased from fiscal 2012 due largelyto increased headcount in sales employees and to a lesser extent to the opening of two new offices. As apercentage of distribution sales, SG&A increased as the Company increased the size of its sales staff with newhires, because those new hires generally do not contribute as much revenue during their first twelve months ofemployment as veteran sales staff. 12 Fiscal Year Ended August 31, $ % 2013 2012 Change Change Revenues $120,432 $114,634 $5,798 5.1%Cost of revenues 86,600 82,664 (3,936) (4.8)%Gross profit $33,832 $31,970 $1,862 Gross margin 28.1% 27.9% 0.2% Fiscal Year Ended August 31, % 2013 2012 $ Change Change Selling, general and administrative expense $30,132 $27,648 $2,484 9.0%Percent of sales 25.0% 24.1% 0.9%Source: EACO CORP, 10-K, November 29, 2013Powered 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) Other income (expense) includes income or losses on investments in short-term marketable equity securities ofother publicly-held domestic corporations. The Company’s investment strategy consists of both long and shortpositions, as well as utilizing options to improve return. During fiscal 2012, the Company recognized $494,000 in netrealized and unrealized gains, which gains were primarily due to long positions the Company was holding during atime of a general market increase. The Company experienced net realized and unrealized gains from tradingsecurities of $15,000 during fiscal 2013, due mainly to holding short positions during the year at a time of a generalmarket increase. For fiscal 2013, the other income (expense) also included the gain realized from the sale of the Brooksville Propertyand the Deland Property in January 2013 and April 2013, respectively, resulting in a total gain of $730,000. In addition, the Company saw a decrease in its interest expense in fiscal 2013 compared to fiscal 2012 due to thepay off of the Brooksville mortgage as part of the Brooksville Property sale and a decrease in the amountsoutstanding under the Company’s line of credit due to the cash generated in operations during fiscal 2013. Income Tax Provision (dollars in thousands) The provision for income taxes decreased by $370,000 in fiscal 2013 as compared to fiscal 2012, which wasprimarily due to the Company’s income from operations being $622,000 lower in fiscal 2013 than in fiscal 2012. TheCompany’s gain on the sale of the Brooksville Property and Deland Property will be offset against the Company’scapital loss carry-forwards, resulting in a lower effective tax rate in fiscal 2013 than in fiscal 2012. Liquidity and Capital Resources The Company has historically been funded from positive cash flow from its operations. In addition, the Company hasa 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, 2013 and 2012 was 0.26%and 0.44%, respectively) plus 1.75% or the bank’s reference rate (3.25% at August 31, 2013 and 2012). Borrowingsare secured by substantially all assets of the Company and are guaranteed by the Company’s Chief ExecutiveOfficer and Chairman of the Board, Glen F. Ceiley. The credit agreement, as amended in March 2013, expires in March2015. The amount outstanding under this line of credit as of August 31, 2013 and 2012 was $6,479,000 and$7,450,000, respectively. Availability under the line of credit was $3,521,000 and $2,550,000 at August 31, 2013 and2012, respectively. The Company also had a term loan with Community Bank that was due and paid in full in March2013. The loan accrued interest at the bank’s reference rate and was secured by substantially all assets of theCompany and guaranteed by the Company’s Chief Executive Officer and Chairman of the Board, Glen F. Ceiley. Thebalance due under the term loan was $0 and $299,000 at August 31, 2013 and 2012, respectively. 13 Fiscal Year Ended August 31, $ % Other income (expense): 2013 2012 Change Change Realized gain on sales of marketable trading securities $10 $287 $(277) (96.5)%Unrealized gain on marketable trading securities 5 207 (202) (97.6) Gain on sale of assets 730 — 730 100.0 Interest expense, net (584) (717) 133 18.5 Other income (expense), net $161 $(223) $384 Other income (expense), net as a percent of sales 0.1% (0.2)% 0.3% Fiscal Year Ended August 31, $ % 2013 2012 Change Change Income tax provision $1,309 $1,679 $(370) (22.0)%Effective tax rate 33.9% 41.0% (7.1)%Source: EACO CORP, 10-K, November 29, 2013Powered 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 had one mortgage of $362,000 related to its Orange Park Property with GE Capital at August 31, 2013,which was paid off in October 2013 in connection with the sale of the Orange Park Property. Cash Flows from Operating Activities During the year ended August 31, 2013, the Company generated $680,000 in net cash from its operating activities.This was due mainly to income before depreciation in fiscal 2013. This was offset in part by increases in inventory asa result of the Company’s increase in sales in fiscal 2013 as compared to fiscal 2012. During the year ended August 31, 2012, the Company generated $2,889,000 in net cash from its operating activities.This was due mainly to net income in fiscal 2012 and an increase in accounts payable in fiscal 2012 resulting fromextending credit terms and checks held at the end of the period and from the use of the Company’s deferred taxasset. These were offset in part by increases in inventory and accounts receivable as a result of the Company’sincrease in sales in fiscal 2012. Cash Flows from Investing Activities Net cash flow provided by investing activities was $891,000 for the year ended August 31, 2013. This was primarilydue to the Company’s disposition of the Brooksville Property and Deland Property in fiscal 2013, resulting in net cashof $579,000 and $650,000, respectively, plus $350,000 of the sale price of the Deland Property paid with apromissory note. This increase was offset in part by the Company’s purchase of property and equipment, whichconsisted primarily of computer equipment and leasehold improvements, and the Company’s purchase of a numberof securities at the end of fiscal 2013. Net cash flow provided by investing activities was $700,000 for the year ended August 31, 2012. This was primarilydue to the Company’s disposition of trading securities near the end of fiscal 2012. This was offset by the Company’spurchase of property and equipment, which consisted primarily of computer equipment and leasehold improvements. Cash Flows from Financing Activities Cash used in financing activities for the year ended August 31, 2013 was $2,974,000 mainly due to the Company’snet payments during the year on its revolving credit facility. Additionally, the Company repaid the mortgage related tothe Brooksville Property as part of the sale of that property in fiscal 2013. Cash used in financing activities for the year ended August 31, 2012 was $2,313,000 mainly due to the Company’s netpayments during the year on its revolving credit facility and mortgages related to its real estate holdings. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future effect onthe financial position, revenues, results of operations, liquidity or capital expenditures. Contractual Financial Obligations In addition to using cash flow from operations, the Company finances its operations through borrowings frombanks. These financial obligations are recorded in accordance with accounting rules applicable to the underlyingtransactions, with the result that debt agreements and obligations under capital leases are recorded as liabilities inthe accompanying balance sheets while obligations under operating leases are disclosed in the Notes to theaccompanying consolidated financial statements. 14Source: EACO CORP, 10-K, November 29, 2013Powered 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 7A. Quantitative and Qualitative Disclosures About Market Risk The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required toprovide the information required under this item. Item 8. Financial Statements And Supplementary Data The 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 Disclosure None. Item 9A. Controls and Procedures (a) Evaluation of disclosure controls and procedures. As required by Rule 13a-15(e) and 15d-15(e) underthe Exchange Act, as of the end of the period covered by this report the Company carried out an evaluation of theeffectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation wascarried out under the supervision and with the participation of the Company’s Chief Executive Officer, who alsoserves as the Company’s principal financial officer. Based upon that evaluation, the Company’s Chief ExecutiveOfficer has concluded that the Company’s controls and procedures were effective as of August 31, 2013. (b) Management’s annual report on internal control over financial reporting. Management isresponsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is intendedto provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles. The Company’s management, with the participation of its Chief Executive Officer, assessed the effectiveness of theCompany’s internal control over financial reporting as of August 31, 2013. In making this assessment, managementused the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in itsreport 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, 2013. Due to its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may becomeinadequate because of changes in conditions, and/or that the degree of compliance with the policies or proceduresmay deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, eventhose systems determined to be effective can provide only reasonable assurance with respect to financialstatement preparation and presentation. The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act. As such, this annualreport does not include an attestation report of our independent registered public accounting firm regarding internalcontrol over financial reporting. (c) Changes in internal control over financial reporting. There was no change in our internal control overfinancial reporting that occurred during the fourth quarter of the year ended August 31, 2013 that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting. 15Source: EACO CORP, 10-K, November 29, 2013Powered 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 9B. Other Information Effective August 7, 2013, the Company entered into a Purchase Agreement to sell the Orange Park Property toWINLEE Property, Inc. The agreement was amended on August 24, 2013 and September 26, 2013 and, as amended,provides for the sale of the Orange Park Property for a price of $1,138,500, subject to certain financing, inspectionand other contingencies. The transaction closed on October 17, 2013, and the Company paid off the mortgage of$362,000 held by GE Capital and paid commissions to the Company’s broker of $82,500 from the net proceeds. PART III Item 10. Directors, Executive Officers and Corporate Governance Set forth below is certain information, as of November 1, 2013, regarding our directors and executive officers,including information regarding the experience, qualifications, attributes or skills of each director that led the Boardof Directors to conclude that the person should serve on the Board. Directors and Executive Officers Glen F. Ceiley currently serves as Chairman of the Board and Chief Executive Officer of the Company. StephenCatanzaro, Jay Conzen and William L. Means also currently serve as directors of the Company. Each director servesa one-year term, or until such director’s successor has been elected and qualified. Each officer holds office at thediscretion of the Company’s Board, or until the officer’s successor has been elected and qualified. Glen F. Ceiley, 67, has served as EACO’s Chief Executive Officer and Chairman of the Board since 1999. Mr. Ceileyis also the Chief Executive Officer and Chairman of the Board of Bisco, and has held those positions since hefounded Bisco in 1973. He also served as President of Bisco prior to June 2010. In addition, Mr. Ceiley is a formerdirector 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 39years of experience in that industry, Mr. Ceiley is uniquely qualified to provide insights into and guidance on theindustry and growth and development of the Company. Stephen Catanzaro, 60, has served as the Chief Financial Officer of Allied Business Schools, Inc., a company thatprovides home study courses and distance education, since April 2004. Prior to that, Mr. Catanzaro was the ChiefFinancial Officer of V&M Restoration, Inc., a building restoration company, from September 2002 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 to the Board valuable business and strategic insights obtained through his work in a variety ofindustries, as well as experience as a certified public accountant which is invaluable to his service in the AuditCommittee. Jay Conzen, 67, has served as the President of Old Fashioned Kitchen, Inc., a national food distributor, since April2003 and as a Director since 2011. Prior to that, from October 1992 to April 2003, Mr. Conzen was the principal of JayConzen Investments, an investment advisor. Mr. Conzen also served as a consultant to EACO from August 1999 untilJanuary 2001 and from October 2001 to April 2003. Mr. Conzen has served as a director of the Company since 1998.Having served as an executive officer of several companies, Mr. Conzen offers to the Board a wealth ofmanagement and leadership experience as well as an understanding of issues faced by businesses. He also servedas a certified public accountant for a number of years. William L. Means, 70, served as the Vice President of Information Technology of Bisco from 2001 until his retirementin June 2010. Prior to that, from 1997 to 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 an M.B.A. degree from San Jose StateUniversity. Mr. Means provides extensive industry expertise to the Board, as well as a deep and broad understandingof the Company and its operations resulting from his years of service as an officer of Bisco. 16Source: EACO CORP, 10-K, November 29, 2013Powered 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. Donald S. Wagner, 51, has served as the President of Bisco since June 2010 and as its Chief Operating Officersince November 2007. Prior to his promotion to President, Mr. Wagner also held the title of Executive Vice Presidentof Bisco from November 2007. Mr. Wagner has worked at Bisco since 1994 in a number of other capacities, includingas 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, 44, has served as the Controller of EACO since March 2010 and as the Controller of Bisco sinceDecember 2004. Prior to joining Bisco, Mr. Bains worked as the Controller of several service companies and as anaccountant in a number of public accounting firms. He is a Certified Public Accountant and holds a B.S. degree inAccounting from Loyola Marymount University. Zach Ceiley, 33, has served as the Vice President of Sales and Marketing of Bisco since September 2012. Prior tosuch promotion, Mr. Ceiley was the Northern Regional Manager of Bisco from September 2010. Since he joined Biscoin February 2003, Mr. Ceiley has served the Company in a number of other capacities in the sales department,including as Cell Manager and Area Manager. Mr. Ceiley has a B.S. degree in Communication from the University ofColorado.Zach Ceiley, the Vice President of Sales and Marketing of Bisco, is the son of Glen Ceiley, EACO’s Chairman of theBoard, Chief Executive Officer and majority shareholder and Bisco’s Chief Executive Officer and Chairman of theBoard. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires certain officers of the Company and its directors, and persons whobeneficially own more than ten percent of any registered class of the Company’s equity securities, to file reports ofownership in such securities and changes in ownership in such securities with the SEC. Specific due dates for thesereports have been established, and we are required to report any failure to file by such dates. For the year endedAugust 31, 2013, Form 4 filings for Mr. Ceiley for the following sales of shares held in the Bisco Industries, Inc. ProfitSharing and Savings Plan were not filed within two business days of such sales: (i) sale of 1,250 shares onNovember 12, 2012 and (ii) sale of 401 shares on February 14, 2013. Based solely on a review of the reports and written representations provided to the Company by the abovereferenced persons, the Company believes that, with respect to the year ended August 31, 2013, except as indicatedin the foregoing sentence, all filing requirements applicable to its reporting officers, directors and greater than tenpercent beneficial owners were timely satisfied. Code of Ethical Conduct The Company has adopted a code of ethics applicable to the Company’s senior executive and financial officers. Youmay receive, without charge, a copy of the Financial Code of Ethical Conduct by contacting our Corporate Secretaryat 1500 N. Lakeview Avenue, Anaheim, California 92807. Audit Committee The Audit Committee’s basic functions are to assist the Board in discharging its fiduciary responsibilities to theshareholders and the investment community in the preservation of the integrity of the financial information publishedby the Company, to maintain free and open means of communication between the Company’s directors, independentauditors and financial management, and to ensure the independence of the independent auditors. The Board hasadopted a written charter for the Audit Committee which is attached as Annex A to the Company’s Proxy Statementfor the 2013 Annual Meeting of Shareholders, as filed with the SEC on April 8, 2013. The Audit Committee charter isnot available on the Company’s website. Currently, the members of the Audit Committee are Messrs. Catanzaro,Conzen (Chairman) and Means. As indicated in Item 13 below, the Board has determined that both Messrs.Catanzaro and Conzen are independent as defined by the NASDAQ Stock Market’s Marketplace Rules. The Boardhas identified Mr. Conzen as the member of the Audit Committee who qualifies as an “audit committee financialexpert” under applicable SEC rules and regulations governing the composition of the Audit Committee. 17Source: EACO CORP, 10-K, November 29, 2013Powered 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 Compensation The Executive Compensation Committee (the “Committee”) is responsible for establishing the salary and annualbonuses paid to executive officers of EACO and administering EACO’s equity incentive plans, if any, includinggranting stock options to officers and employees of EACO. The Committee has not adopted a formal charter. Thecurrent members of the Committee are Messrs. Glen Ceiley and William Means. The officers of EACO are Mr. Ceiley, the Chief Executive Officer, and Mr. Michael Bains, the Controller. Due to thenature of EACO’s operations and related financial results, no additional salary or other compensation for theirservice as officers of EACO was determined to be necessary and no such compensation was provided to Mr. Ceileyor Mr. Bains during fiscal 2013 and fiscal 2012. However, both of them receive compensation from Bisco for theirservices to Bisco. All compensation for the named executive officers for fiscal 2013 and fiscal 2012 were paid by Bisco. Thecompensation of named executive officers who serve as officers of Bisco are determined by Bisco’s Chairman ofthe Board, Glen Ceiley. Bisco currently does not pay bonuses or other incentive compensation to the namedexecutive officers. Summary Compensation The following table sets forth information regarding compensation earned from the Company (including from Bisco,our wholly-owned subsidiary) during fiscal 2013 and fiscal 2012 by (i) our Chief Executive Officer, (ii) our Controllerand (iii) two other most highly compensated executive officers who were employed by the Company (includingBisco) as of August 31, 2013 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. (1)Zachary Ceiley was promoted to the position of Vice President of Sales and Marketing of Bisco in September2012 and was not a named executive officer prior to such promotion. Accordingly, only compensation informationwith respect to fiscal 2013 is provided. 18Name and Principal All Other Position Fiscal Year Salary Compensation Total Glen F. Ceiley, 2013 $334,783 $— $334,783 Chief Executive Officer and 2012 334,783 — 334,783 Chairman of the Board of EACO and Bisco Donald Wagner, 2013 216,202 — 216,202 President of Bisco 2012 209,431 — 209,431 Zachary Ceiley, Vice President 2013 142,422 — 142,422 of Sales and Marketing of Bisco (1) Michael Bains, Controller of EACO and Bisco 2013 153,948 — 153,948 2012 155,348 — 155,348 Source: EACO CORP, 10-K, November 29, 2013Powered 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 Equity Awards at Fiscal Year-End The Company did not grant any equity awards during fiscal 2013 to any named executive officer and no outstandingequity awards were held by the named executive officers at August 31, 2013. Director Compensation The Company pays $10,000 per year in cash to each director not employed by EACO or its subsidiary ascompensation for his services. In addition, directors who do not receive a salary from EACO or its subsidiary receivea fee of $500 for each Board meeting attended. No fees are awarded to directors for attendance at meetings of theAudit 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, 2013.(See the above “Summary Compensation” for information regarding Mr. Ceiley). (1)Consists of fees paid to Mr. Means for IT consulting services.. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters Security Ownership of Certain Beneficial Owners and Management The table below presents certain information regarding beneficial ownership of the Company’s common stock (theCompany’s only voting security) as of November 1, 2013 (i) by each shareholder known to the Company to own,more than five percent (5%) of the outstanding common stock, (ii) by each named executive officer and director ofthe Company, and (iii) by all directors and executive officers of the Company as a group. Under the rules of the SEC,the determinations of “beneficial ownership” of the Company’s common stock are based upon Rule 13d-3 under theExchange Act. Under Rule 13d-3, shares will be deemed to be “beneficially owned” when a person has, either solelyor 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 suchbeneficial ownership is determined. Shares of the Company’s common stock that a beneficial owner has the right toacquire within 60 days are deemed to be outstanding for the purpose of computing the percentage ownership ofsuch owner but are not deemed outstanding for the purpose of computing the percentage ownership of any otherperson. * Less than 1% 19 Fees Earned or All Other Director Paid in Cash Compensation Total Stephen Catanzaro $12,000 $— $12,000 Jay Conzen 12,000 — 12,000 William Means 12,000 2,600(1) 14,600 Shares of Name and Address of Common Stock Percent of Beneficial Owner (1) Beneficially Owned Class(2) Stephen Catanzaro 765 * Glen F. Ceiley(3) 4,830,560 98.6%Jay Conzen — — William L. Means 322 * Donald Wagner — — Zachary Ceiley 140 * Michael Bains — — All executive officers and directors as a group (7 persons)(3) 4,831,787 98.6%Source: EACO CORP, 10-K, November 29, 2013Powered 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. (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, 2013. (3)Includes (i) 4,775,895 shares held directly by Mr. Ceiley; (ii) 6,000 shares held by Mr. Ceiley’s wife;(iii) 6,398 shares held by the Bisco Industries Profit Sharing and Savings Plan (the “Bisco Plan”); (iv) 2,267 sharesheld in his IRA; and (v) 40,000 shares issuable upon conversion of the 36,000 shares of Series A CumulativeConvertible Preferred Stock (not including any dividends accrued but not yet paid) held by Mr. Ceiley. Mr. Ceileyhas the sole power to vote and dispose of the shares of common stock he owns individually and the sharesowned by the Bisco Plan. Mr. Ceiley is the Chief Executive Officer and the sole director of Bisco. Mr. Ceileydisclaims beneficial ownership of the shares held by the Bisco Plan except to the extent of his pecuniary interesttherein. Item 13. Certain Relationships and Related Transactions and Director Independence Certain Relationships and Related Transactions Since September 1, 2011, except as described below or under Item 11 (Executive Compensation), there has notbeen, nor is there any proposed transaction, where we (or any of our subsidiaries) were or will be a party in whichthe amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of theCompany’s total assets at year 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 voting securities, or any member of the immediatefamily 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 CEO and majority shareholder, GlenCeiley. During the years ended August 31, 2013 and 2012, the Company paid approximately $592,000 and $548,000,respectively, in rent with respect to these leases. Director Independence The Company’s Board consists of the following directors: Stephen Catanzaro, Glen Ceiley, Jay Conzen and William L.Means. The Board has determined that three of its four directors, Stephen Catanzaro, Jay Conzen and William L.Means, are independent as defined by the NASDAQ Stock Market’s Marketplace Rules. In addition to such rules, theBoard considered transactions and relationships between each director (and his immediate family) and theCompany to determine whether any such relationships or transactions were inconsistent with a determination thatthe director is independent. As a result, the Board determined that Mr. Ceiley is not independent, as he is anemployee of Bisco and member of Bisco’s steering committee. Bisco’s steering committee handles the day to dayoperations of the Company, and Mr. Ceiley has been intimately involved with decision-making that directly affects thefinancial statements of the Company. Currently, the members of the Audit Committee are Messrs. Catanzaro, Conzen (Chairman) and Means. Item 14. Principal Accounting Fees and Services Audit Committee Pre-Approval Policies and Procedures The Audit Committee is required to pre-approve all auditing services and permissible non-audit services, includingrelated fees and terms, to be performed for the Company by its independent auditor, subject to the de minimusexceptions for non-audit services described under the Exchange Act, which are approved by the Audit Committeeprior to the completion of the audit. The Audit Committee also considers whether the provision by its independentaccounting firm of any non-audit related services is compatible with maintaining the independence of such firm. Forfiscal 2013 and fiscal 2012, the Audit Committee pre-approved all services performed for the Company by theauditor. 20Source: EACO CORP, 10-K, November 29, 2013Powered 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. Audit Fees The aggregate fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP (“Squar Milner”), the Company’sindependent accounting firm for the years ended August 31, 2013 and 2012 for professional services rendered forthe audit of such financial statements and for the reviews of the unaudited financial statements included in theCompany’s quarterly reports on Form 10-Q for the quarters ended during the years ended August 31, 2013 and 2012were $170,000 and $165,000, respectively. Audit-Related Fees The Company was not billed any audit-related fees by Squar Milner for the years ended August 31, 2013 and 2012. Tax Fees The Company was not billed any fees by Squar Milner for the years ended August 31, 2013 and 2012 for professionalservices rendered for tax compliance, tax advice or tax planning. All Other Fees The Company was not billed any fees by Squar Milner for the years ended August 31, 2013 and 2012 for productsand services provided to the Company, other than for the services described above. PART IV Item 15. Exhibits, Financial Statement Schedules (a) The financial statements listed below and commencing on the pages indicated are incorporated herein byreference and filed as part of this report on Form 10-K. Report of Independent Registered Public Accounting FirmF-1 Consolidated Balance sheets as of August 31, 2013 and 2012F-2 Consolidated Statements of Operations for the years ended August 31, 2013 and 2012F-3 Consolidated Statements of Comprehensive Income for the years ended August 31, 2013 and 2012F-4 Consolidated Statements of Shareholders’ Equity for the years ended August 31, 2013 and 2012F-5 Consolidated Statements of Cash Flows for the years ended August 31, 2013 and 2012F-6 Notes to the Consolidated Financial StatementsF-7 Schedule II – Valuation and Qualifying Accounts (b) The exhibits listed in the accompanying “Exhibit Index” immediately following the financial statements are filedherewith or incorporated by reference as indicated. 21Source: EACO CORP, 10-K, November 29, 2013Powered 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. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EACO Corporation November 29, 2013/s/ Glen Ceiley By: Glen Ceiley Its: Chairman of the Board and Chief Executive Officer (principal executive officer andprincipal financial officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the followingpersons on behalf of the Registrant in the capacities and on the date indicated. Signature Title Date /s/ Glen F. Ceiley Chairman of the Board and Chief Executive Officer 11/29/13Glen F. Ceiley (principal executive officer andprincipal financial officer) /s/ Michael Bains Controller (principal accounting officer) 11/29/13Michael Bains /s/ Steve Catanzaro Director 11/29/13Steve Catanzaro /s/ Jay Conzen Director 11/29/13Jay Conzen /s/ William Means Director 11/29/13William Means 22Source: EACO CORP, 10-K, November 29, 2013Powered 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 CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting FirmF-1Consolidated Balance Sheets as of August 31, 2013 and 2012F-2Consolidated Statements of Operations for the years ended August 31, 2013 and 2012F-3Consolidated Statements of Comprehensive Income for the years ended August 31, 2013 and 2012F-4Consolidated Statements of Shareholders’ Equity for the years ended August 31, 2013 and 2012F-5Consolidated Statements of Cash Flows for the years ended August 31, 2013 and 2012F-6Notes to the Consolidated Financial StatementsF-7 23Source: EACO CORP, 10-K, November 29, 2013Powered 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 FIRM The Board of Directors and ShareholdersEACO CorporationAnaheim, California We have audited the accompanying consolidated balance sheets of EACO Corporation and Subsidiaries (the“Company”) as of August 31, 2013 and 2012 and the related consolidated statements of operations, comprehensiveincome, shareholders' equity, and cash flows for the years then ended. These financial statements are theresponsibility of the Company's management. Our responsibility is to express an opinion on these financialstatements 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 that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. The Company is not required to have, nor werewe engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration ofinternal control over financial reporting as a basis for designing audit procedures that were appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internalcontrol over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of EACO Corporation and Subsidiaries as of August 31, 2013 and 2012 and the results of theiroperations and their cash flows for the years then ended, in conformity with U.S. generally accepted accountingprinciples. /s/ Squar, Milner, Peterson, Miranda and Williamson, LLP Newport Beach, CaliforniaNovember 29, 2013 F-1Source: EACO CORP, 10-K, November 29, 2013Powered 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 and per share information) See accompanying notes to consolidated financial statements. F-2 August 31, August 31, 2013 2012 ASSETS Current Assets: Cash and cash equivalents $1,507 $2,568 Trade accounts receivable, net 14,438 13,972 Inventory, net 14,272 12,189 Marketable securities, trading 1,395 197 Prepaid expenses and other current assets 598 464 Assets held for sale 460 1,860 Deferred tax asset, current 21 290 Total current assets 32,691 31,540 Non-current Assets: Restricted cash 548 548 Real estate properties held for leasing, net 7,283 7,914 Equipment and leasehold improvements, net 1,396 1,106 Deferred tax asset 1,712 2,111 Other assets, principally deferred charges, net of accumulated amortization 850 1,110 Total assets $44,480 $44,329 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Trade accounts payable $9,315 $9,519 Accrued expenses and other current liabilities 2,880 2,482 Liabilities of discontinued operations – short-term 146 146 Liabilities of assets held for sale 362 1,575 Current portion of long-term debt 172 463 Total current liabilities 12,875 14,815 Non-current Liabilities: Liabilities of discontinued operations – long-term 2,410 2,567 Deposit liability 87 147 Long-term debt 11,397 12,537 Total liabilities 26,769 29,436 Shareholders’ Equity: Convertible preferred stock, $0.01 par value per share; authorized 10,000,000 shares; 36,000 shares outstanding at August 31, 2013 and 2012 (liquidation value $900) 1 1 Common stock, $0.01 par value per share; authorized 8,000,000 shares; 4,861,590 shares outstanding at August 31, 2013 and 2012 49 49 Additional paid-in capital 12,378 12,378 Accumulated other comprehensive income 820 478 Retained earnings 4,463 1,987 Total shareholders’ equity 17,711 14,893 Total liabilities and shareholders’ equity $44,480 $44,329 Source: EACO CORP, 10-K, November 29, 2013Powered 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) See accompanying notes to consolidated financial statements. F-3 Year Ended Year Ended August August 31, 2013 31, 2012 Revenues $120,432 $114,634 Cost of revenues 86,600 82,664 Gross margin 33,832 31,970 Operating expenses: Selling, general and administrative expenses 30,132 27,648 Total operating expenses 30,132 27,648 Income from operations 3,700 4,322 Other non-operating income (expense): Income on sale of trading securities 10 287 Unrealized gain on trading securities 5 207 Gain on sale of assets 730 – Interest expense, net (584) (717) Income before income taxes 3,861 4,099 Provision for income taxes 1,309 1,679 Net income 2,552 2,420 Cumulative preferred stock dividend (76) (76) Net income available to common shareholders $2,476 $2,344 Basic and diluted net income per share: $0.51 $0.48 Basic and diluted weighted average common shares outstanding 4,861,590 4,861,590 Source: EACO CORP, 10-K, November 29, 2013Powered 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 Comprehensive Income(in thousands) See accompanying notes to consolidated financial statements. F-4 Year Ended Year Ended August 31, 2013 August 31, 2012 Net income $2,552 $2,420 Other comprehensive income (loss), net of tax: Foreign translation gain (loss) 342 (76) Total comprehensive income $2,894 $2,344 Source: EACO CORP, 10-K, November 29, 2013Powered 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, 2013 and 2012(in thousands, except share information) See accompanying notes to consolidated financial statements. F-5 ConvertiblePreferred Stock Common Stock AdditionalPaid-in AccumulatedOtherComprehensive AccumulatedEarnings TotalShareholder Shares Amount Shares Amount Capital Income (Deficit) Equity Balance, August 31, 2011 36,000 1 4,861,590 49 12,378 554 (376) 12,606 Preferred dividends (57) (57) Net income 2,420 2,420 Comprehensive income: Foreign translation loss (76) (76) Comprehensive income 2,344 Balance, August 31, 2012 36,000 $1 4,861,590 $49 $12,378 $478 $1,987 $14,893 Preferred dividends (76) (76) Net income 2,552 2,552 Comprehensive income: Foreign translation gain 342 342 Comprehensive income 2,894 Balance, August 31, 2013 36,000 $1 4,861,590 $49 $12,378 $820 $4,463 $17,711 Source: EACO CORP, 10-K, November 29, 2013Powered 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) See accompanying notes to consolidated financial statements. F-6 Year Ended Year Ended August 31, August 31, 2013 2012 Operating activities: Net income $2,552 $2,420 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 616 807 Bad debt expense 137 200 Change in inventory reserve (48) 204 Gain on sale of assets (730) — Net gain on trading securities (15) (494) (Increase) decrease in: Trade accounts receivable (602) (1,824) Inventory (2,035) (1,004) Prepaid expenses and other assets (93) (124) Deferred tax asset 667 1,284 Increase (decrease) in: Trade accounts payable 50 1,405 Accrued expenses and other current liabilities 398 157 Deposit liability (60) — Liabilities of discontinued operations (157) (142) Net cash provided by operating activities 680 2,889 Investing activities: Purchase of property and equipment (756) (573) (Purchase) sale of trading securities (1,183) 1,189 Proceeds from sale of assets 2,830 — Change in restricted cash — 84 Net cash provided by investing activities 891 700 Financing activities: Net payments on revolving credit facility (971) (1,050) Bank overdraft (254) (427) Payment of preferred dividend (76) (57) Payments on long-term debt (1,673) (779) Net cash used in financing activities (2,974) (2,313) Effect of foreign currency exchange rate changes on cash and cash equivalents 342 (76) Net (decrease) increase in cash and cash equivalents (1,061) 1,200 Cash and cash equivalents - beginning of period 2,568 1,368 Cash and cash equivalents - end of period $1,507 $2,568 Supplemental disclosures of cash flow information: Cash paid for interest $815 $742 Cash paid for taxes $276 $451 Supplemental disclosures of noncash investing and financing activities: Note receivable issued in connection with sale of real estate properties $350 $— Source: EACO CORP, 10-K, November 29, 2013Powered 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, 2013 and 2012 Note 1. Organization and Basis of Presentation EACO Corporation (“EACO”) is a holding company, the primary asset of which is its wholly-owned subsidiary, BiscoIndustries, Inc. (“Bisco”). Bisco is a distributor of electronic components and fasteners with 45 sales offices and sixdistribution centers located throughout the United States and Canada. Bisco supplies parts used in the manufactureof products in a broad range of industries, including the aerospace, circuit board, communication, computer,fabrication, instrumentation, industrial equipment and marine industries. Organization and Merger with Bisco Industries, Inc. EACO was incorporated in the State of Florida in September 1985. From the inception of EACO through June 2005,EACO’s business consisted of operating restaurants in the State of Florida. On June 29, 2005, EACO sold all of itsoperating restaurants (the “Asset Sale”) including sixteen restaurant businesses, premises, equipment and otherassets used in restaurant operations. The only remaining activity of the restaurant operations relates to theworkers’ compensation claim liability, which is presented as liabilities of discontinued operations on the Company’sbalance sheets. After the Asset Sale and prior to the acquisition of Bisco (described below), EACO’s operationsprincipally consisted of managing five real estate properties held for leasing located in Florida and California. OnMarch 24, 2010, EACO completed the acquisition of Bisco Industries, Inc. (“Bisco”), a company under the commoncontrol of EACO’s majority shareholder (Glen Ceiley). Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the UnitedStates of America (“GAAP”) requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. These estimatesinclude allowance for doubtful trade accounts receivable, slow moving and obsolete inventory reserves,recoverability of the carrying value and estimated useful lives of long-lived assets, workers’ compensation liabilityand the valuation allowance against deferred tax assets. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, its wholly-ownedsubsidiary, Bisco Industries, Inc., and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited (which arecollectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions andbalances have been eliminated in consolidation. Note 2. Significant Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less whenpurchased to be cash equivalents. Restricted Cash The State of Florida Division of Workers’ Compensation (the “Division”) requires self-insured companies to pledgecollateral in favor of the Division in an amount sufficient to cover the projected outstanding liability. In compliance withthis requirement, the Company pledged three irrevocable letters of credit totaling $2,855,000 as of August 31, 2012.In November 2012, the Division lowered the required collateral required by the Company to $2,713,000. These lettersare secured by certificates of deposits, totaling $548,000 at August 31, 2013 and 2012, and the Sylmar Property. F-7Source: EACO CORP, 10-K, November 29, 2013Powered 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. Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtfulaccounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in theCompany’s accounts receivable and reviewing historical data to estimate the collectability on items not yetspecifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible.Recoveries of trade accounts receivable previously written off are recorded when received. A trade accountreceivable is considered past due if any portion of the receivable balance is outstanding for more than 30 days. TheCompany does not charge interest on past due balances. The allowance for doubtful accounts was $183,000 and$273,000 at August 31, 2013 and 2012, respectively. Inventories Inventories consist primarily of electronic fasteners and components, and are stated at the lower of cost orestimated market value. Cost is determined using the average cost method. Inventories are presented net of areserve for slow moving or obsolete items of $924,000 and $972,000 at August 31, 2013 and 2012, respectively. Thereserve is based upon management’s review of inventories on-hand over their expected future utilization and lengthof time held by the Company. Real Estate Properties Held for Leasing Real estate properties held for leasing are stated at cost, net of accumulated depreciation. Maintenance, repairsand betterments which do not enhance the value or increase the life of the assets are expensed as incurred.Depreciation is provided for financial reporting purposes principally on the straight-line method over the followingestimated useful lives: buildings and improvements - 25 years; land improvements - 25 years; and equipment – 3 to 8years. Leasehold improvements are amortized over the estimated useful life of the asset or remaining lease term,whichever is less. The Company classifies real estate properties as assets held for sale when the following conditions are present: a)management, having the authority to approve the action, commits to a plan to sell the asset, b) the asset is availablefor immediate sale in its present condition, c) an active program to complete the plan of sale has been initiated, d)the sale of the asset is probable, e) the assets is being marketed for sale at a price that is reasonable in relation toits current fair value and f) it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. Equipment and Leasehold Improvements Equipment and leasehold improvements not used in conjunction with real estate properties are stated at cost net ofaccumulated amortization. Depreciation on equipment is calculated on the straight-line method over the estimateduseful lives of the assets, ranging from five to seven years. Leasehold improvements are amortized over theestimated 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 arecapitalized. At the time of retirement or disposition of property and equipment, the cost and accumulateddepreciation or amortization are removed from the accounts and any gains or losses are reflected in earnings. Long-Lived Assets Long-lived assets (principally real estate, equipment and leasehold improvements) are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. For purposes of the impairment review, real estate properties are reviewed on an asset-by-assetbasis. Recoverability of real estate property assets is measured by a comparison of the carrying amount of eachoperating property and related assets to future net cash flows expected to be generated by such assets. Formeasuring recoverability of remaining assets, long-lived assets are grouped with other assets to the lowest level forwhich 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 thecarrying amount of the assets exceeds their estimated fair values. F-8Source: EACO CORP, 10-K, November 29, 2013Powered 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. Marketable Securities, Trading The Company invests in marketable trading securities which include long and short positions in equity securities.Short positions represent securities sold, not yet purchased. Short sales result in obligations to purchase securitiesat a later date. These securities are stated at fair value, which is determined using the quoted closing or latest bid prices at eachreporting date. Realized gains and losses on investment transactions are determined by the average cost methodand are recognized as incurred in the statements of operations. Net unrealized gains and losses are reported in thestatements of operations and represent the change in the market value of investment holdings during the period. AtAugust 31, 2013 and 2012, marketable securities consisted of equity securities (including stock options) of publicly-held domestic companies. As of August 31, 2013 and 2012, the Company had no outstanding short sale positions. The Company recognized unrealized gains on trading securities of $5,000 and $207,000 for the years ended August31, 2013 and 2012, respectively. The Company recognized realized gains on trading securities of $10,000 and$287,000 for the years ended August 31, 2013 and 2012, respectively. Revenue Recognition Management generally recognizes revenue at the time of product shipment, as the Company’s shipping terms areFOB shipping point. Revenue is considered to be realized or realizable and earned when there is persuasiveevidence of a sales arrangement in the form of an executed contract or purchase order, the product has beenshipped, the sales price is fixed or determinable, and collectability is reasonably assured. The Company leases its real estate properties to tenants under operating leases with terms exceeding oneyear. Some of these leases contain scheduled rent increases. We record rent revenue for leases which containscheduled rent increases on a straight-line basis over the term of the lease. Revenues recognized in connection withits real estate held for leasing were immaterial to the overall financial statements. Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statementand tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likelythan 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, taxplanning initiatives and compliance responsibilities. The development of these reserves requires judgments abouttax issues, potential outcomes and timing. Although the outcome of these tax audits is uncertain, in management’sopinion adequate provisions for income taxes have been made for potential liabilities emanating from thesereviews. If actual outcomes differ materially from these estimates, they could have a material impact on our resultsof operations. Freight and Shipping/Handling Shipping and handling expenses are included in cost of goods sold, and were approximately $2,257,000 and$2,157,000 for the years ended August 31, 2013 and 2012, respectively. F-9Source: EACO CORP, 10-K, November 29, 2013Powered 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. Leases Certain of the Company’s leases for its sales offices and distribution centers provide for minimum annual paymentsthat adjust over the life of the lease. The aggregate minimum annual payments are expensed on the straight-linebasis 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 leasepayments exceed the straight-line rent expense. Earnings Per Common Share Basic earnings per common share for the years ended August 31, 2013 and 2012 were computed based on theweighted average number of common shares outstanding. Diluted earnings per share for those periods have beencomputed based on the weighted average number of common shares outstanding, giving effect to all potentiallydilutive common shares that were outstanding during the respective periods. Potentially dilutive common sharesrepresent 40,000 common shares issuable upon conversion of 36,000 shares of convertible preferred stock, whichwere outstanding at August 31, 2013 and 2012. Such securities are excluded from the weighted average sharesoutstanding used to calculate diluted earnings per common share for the years ended August 31, 2013 and 2012 astheir inclusion would be anti-dilutive since the conversion price was greater than the average market price of theCompany’s common stock during these periods. Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for the Company’sCanadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. Revenue and expenses aretranslated at the weighted-average exchange rates for the years ended August 31, 2013 and 2012. The resultingtranslation adjustments are charged or credited directly to accumulated other comprehensive income or loss. Theaverage exchange rates for the years ended August 31, 2013 and August 31, 2012 were $0.95 and $1.01,respectively. Concentrations Financial instruments that subject the Company to credit risk include cash balances in excess of federal depositoryinsurance limits and accounts receivable. Cash accounts maintained by the Company at U.S. and Canadian financialinstitutions are insured by the Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation,respectively. A significant portion of the Company’s cash was held by its Canadian subsidiary. The Company has notexperienced any losses in such accounts. Net sales to customers outside the United States and related trade accounts receivable were approximately 7%and 5% of total sales and trade accounts receivable, respectively, at August 31, 2013, and 7% and 4%, respectively,at August 31, 2012. No single customer accounted for more than 10% of total revenues for either of the years endedAugust 31, 2013 or 2012, respectively. Total assets held outside the United States comprised 6% and 7% as of August 31, 2013 and 2012. Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities The Company’s financial instruments other than its marketable securities include cash and cash equivalents, tradeaccounts receivable, prepaid expenses, security deposits, trade accounts payable, line of credit, accrued expensesand long-term debt. Management believes that the fair value of these financial instruments approximate theircarrying amounts based on current market indicators, such as prevailing interest rates. The Company’s marketablesecurities are measured at fair value on a recurring basis (see Note 14). During the years ended August 31, 2013 and 2012, the Company did not have any nonfinancial assets or liabilitiesthat were measured at estimated fair value on a recurring or nonrecurring basis. F-10Source: EACO CORP, 10-K, November 29, 2013Powered 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. Reclassifications The Company reclassified certain prior year financial statement components to conform to the current yearpresentation. For the year ended August 31, 2013, the Company no longer reported the real estate held for leasingsegment separately, as the results were immaterial to the overall financial statement presentation. Note 3. Real Estate Properties Held for Leasing Real estate properties held for leasing are as follows: The two properties are located in Sylmar, California and consist of two industrial properties with 65,000 total squarefeet. For the years ended August 31, 2013 and 2012, depreciation expense relating to these properties was$173,000 and $311,000, respectively. On January 2013, the Company sold its Deland Property for $1,100,000. The Company received $750,000 in cash anda two year note receivable at 7% interest payable in 24 installments on the remaining $350,000. The sale of thisproperty resulted in a net gain of approximately $490,000. The total outstanding balance of the note receivable atAugust 31, 2013 of $267,000 has been included on the accompanying consolidated balance sheets as other currentassets and other assets of $175,000 and $92,000, respectively. The associated land, buildings and improvementsand related liabilities were classified as assets held for sale and liabilities of assets held for sale on theaccompanying consolidated balance sheets as of August 31, 2012. In April 2013, the Company sold its Brooksville Property for $1,730,000. The sale of this property resulted in a netgain of approximately $240,000. The associated land, buildings and improvements and related liabilities wereclassified as assets held for sale and liabilities of assets held for sale on the accompanying consolidated balancesheets as of August 31, 2012. In October 2013, the Company sold its Orange Park Property for $1,138,500. As such, the associated land, buildingsand improvements and related liabilities were reclassified as assets held for sale and liabilities of assets held forsale, respectively, on the accompanying consolidated balance sheets as of August 31, 2013 and August 31, 2012. Additionally, the gross profit from rental operations relating to the Deland, Brooksville and Orange Park propertieswere classified as selling, general and administrative expenses in the accompanying consolidated statements ofoperations, as such amounts were considered immaterial for separate presentation as discontinued operations. F-11 August 31, 2013 August 31,2012 Land $4,623,000 4,781,000 Buildings & improvements 3,862,000 4,212,000 Equipment 12,000 615,000 Total 8,497,000 9,608,000 Accumulated depreciation (1,214,000) (1,694,000) Book value $7,283,000 7,914,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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 in effect at August31, 2013: Note 4. Equipment and Leasehold Improvements Equipment and leasehold improvements are summarized as follows: For the years ended August 31, 2013 and 2012, depreciation expense was $443,000.Note 5. Line of Credit 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 90day LIBOR at August 31, 2013 and 2012 was 0.26% and 0.43%, respectively) plus 1.75% and/or the bank’s referencerate (3.25% at August 31, 2013 and 2012). Borrowings are secured by substantially all assets of the Company andare guaranteed by the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder Glen F.Ceiley. The agreement, as amended in March 2013, expires in March 2015. The amount outstanding under this line ofcredit as of August 31, 2013 and 2012 was $6,479,000 and $7,450,000, respectively. Availability under the line ofcredit was $3,521,000 and $2,550,000 at August 31, 2013 and 2012, respectively. F-12 Total Years ending August 31, 2014 $639,000 2015 367,000 2016 378,000 2017 389,000 2018 401,000 Thereafter 101,000 $2,275,000 August 31, 2013 August 31, 2012 Machinery and equipment $4,584,000 $4,293,000 Furniture and equipment 793,000 687,000 Vehicles 138,000 121,000 Leasehold improvements 1,463,000 1,164,000 6,978,000 6,265,000 Less accumulated depreciation and amortization (5,582,000) (5,159,000) $1,396,000 $1,106,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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 Debt Long-term debt is summarized as follows: The scheduled payments for the above loans are as follows at August 31, 2013: Additionally, the Company had certain long–term debt relating to real estate held for sale, summarized as follows: F-13 August 31, August 31, 2013 2012 Note payable to Community Bank, secured by the Company’s Sylmar property, monthly principal and interest payment totaling $39,700, interest at 6.0%, due December 2017 5,035,000 5,252,000 Line of credit payable to Community Bank 6,479,000 7,450,000 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, 2012), due March 2013 — 298,000 Note payable to BMW Bank of North America, secured by automobile, monthly principal and interest payments totaling $901, interest at 0.9%, due June 2018 55,000 — 11,569,000 13,000,000 Less current portion (172,000) (463,000) $11,397,000 $12,537,000 Year Ending August 31, 2014 $172,000 2015 6,668,000 2016 201,000 2017 213,000 2018 4,315,000 $11,569,000 August 31, August 31, 2013 2012 Note payable to GE Capital Franchise Finance Corporation (“GE Capital”), secured by real estate, monthly principal and interest payments totaling $10,400, interest at thirty-day LIBOR rate +3.75% (minimum interest rate of 7.3%), due December 2016 $362,000 $462,000 Note payable to Zions Bank, secured by real estate, monthly principal and interest payment totaling $8,402, interest at 6.7%, paid off in full in January 2013. $- $1,113,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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 was in compliance with all related covenants at August 31, 2013. On November 18, 2013, the Company renegotiated the note payable to Community Bank, secured by the Company’sSylmar property. Effective October 1, 2013 the Company’s interest rate on that loan was lowered to 3.75% from 6%.The rate is fixed and will remain in force for the duration of the Company’s note which is due in March 2017.Note 7. Shareholders’ Equity Earnings Per Common Share The following is a reconciliation of the numerators and denominators used in the basic and diluted computations ofearnings per common share: Preferred Stock The Company's Board of Directors is authorized to establish the various rights and preferences for the Company'spreferred stock, including voting, conversion, dividend and liquidation rights and preferences, at the time shares ofpreferred stock are issued. In September 2004, the Company sold 36,000 shares of its Series A CumulativeConvertible Non-Voting Preferred Stock (the “Preferred Stock”) to the Company’s CEO, with an 8.5% dividend rate ata price of $25 per share for a total cash purchase price of $900,000. Holders of the Preferred Stock have the rightat any time to convert the Preferred Stock and accrued but unpaid dividends into shares of the Company’s commonstock at the conversion price of $22.50 per share. In the event of a liquidation or dissolution of the Company,holders of the Preferred Stock are entitled to be paid out of the assets of the Company available for distribution toshareholders $25 per share plus all unpaid dividends before any payments are made to the holders of commonstock.Note 8. Profit Sharing Plan The Company has a defined contribution 401(k) profit sharing plan for all eligible employees. Employees are eligibleto contribute to the 401(k) plan after six months of employment. Under this plan, employees may contribute up to15% of their compensation. The Company has the discretion to match 50% of the employee contributions up to 4% ofemployees’ 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 $184,000 and $161,000 for theyears ended August 31, 2013 and 2012, respectively. F-14 For the Year Ended For the Year Ended August 31, 2013 August 31, 2012 (In thousands, except per share information) EPS– basic and diluted: Net income $2,552 $2,420 Less: undeclared cumulative preferred stock dividends (76) (76) Net income available to common shareholders for basic and diluted EPScomputation 2,476 2,344 Weighted average common shares outstanding for basic and diluted EPScomputation 4,861,590 4,861,590 Earnings per common share – basic and diluted $0.51 $0.48 Source: EACO CORP, 10-K, November 29, 2013Powered 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 Operations When the Company was active in the restaurant business, the Company self-insured losses for workers’compensation claims up to certain limits. The Company exited the restaurant business in 2005. The liability forworkers’ compensation represents an estimate of the present value of the ultimate cost of uninsured losses whichare unpaid as of the balance sheet dates. This liability is presented as liabilities of discontinued operations in theaccompanying balance sheets. The estimate is continually reviewed and adjustments to the Company’s estimatedclaim liability, if any, are reflected in discontinued operations. On a periodic basis, the Company obtains an actuarialreport which estimates its overall exposure based on historical claims and an evaluation of future claims. Anactuarial evaluation was last obtained by the Company as of August 31, 2013. As of August 31, 2013 and 2012, theestimated claim liability was $2,556,000 and $2,713,000, respectively. Note 10. Income Taxes The following summarizes the Company’s provision for income taxes on income from continuing operations: Income taxes for the years ended August 31, 2013 and 2012 differ from the amounts computed by applying thefederal statutory corporate rate of 34% to the pre-tax income from continuing operations. The differences arereconciled as follows: F-15 For the Year EndedAugust 31, 2013 For the Year EndedAugust 31, 2012 Current: Federal $467,000 $62,000 State 269,000 363,000 Foreign (94,000) — 642,000 425,000 Deferred: Federal 1,113,000 1,237,000 State (446,000) 29,000 Foreign — (12,000) 667,000 1,254,000 $1,309,000 $1,679,000 For the Year Ended For the Year Ended August 31, 2013 August 31, 2012 Current: Expected income tax at statutory rate $1,335,000 $1,393,000 Increase (decrease) in taxes due to: State tax, net of federal benefit 197,000 194,000 Permanent differences 24,000 22,000 Change in deferred tax asset valuation allowance (2,392,000) (261,000) Other, net 2,145,000 331,000 Income tax expense $1,309,000 $1,679,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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, 2013 and 2012 are summarized below: At August 31, 2013, the Company has state net operating loss carryforwards (“NOLs”) of approximately $4.25 million,which will begin to expire in 2017. The Company also had federal and state capital loss carryforwards ofapproximately $3.48 million 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 NOLs and other taxattributes may be subject to substantial limitations if certain ownership changes occur during a three-year testingperiod (as defined). Management has determined that the merger with Bisco does not limit the Company’s utilizationof its NOLs or credit carryovers. The Company records net deferred tax assets to the extent management believes these assets will more likely thannot be realized. In making such determination, the Company considers all available positive and negative evidence,including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planningstrategies and recent financial performance. Management reviewed the positive and negative evidence available at August 31, 2013 and 2012 and determinedthat the capital loss carryforwards, unrealized losses on investments and certain of EACO’s state NOLs did not meetthe more likely than not threshold required to be recognized. As such a valuation allowance was retained on thesedeferred tax assets. The Company applies Accounting Standards Codification 740, Tax Provisions (“ASC 740”) for the accounting foruncertainty in income taxes recognized in a company’s financial statements. ASC 740 prescribes a recognitionthreshold 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 taxbenefit as a result of the implementation. The Company has no liability for unrecognized tax benefit related to taxpositions for the years ended August 31, 2013 or 2012. F-16 August 31, August 31, 2013 2012 Deferred tax assets: Net operating loss $432,000 $1,584,000 Capital losses 1,344,000 3,351,000 Allowance for doubtful accounts 49,000 89,000 Accrued expenses 186,000 190,000 Accrued worker’s compensation 987,000 1,048,000 Related party interest accrual — — Inventory reserve 618,000 602,000 Unrealized losses (gain) on investment (37,000) (4,000) Excess of tax over book depreciation 562,000 305,000 Other 267,000 263,000 Total deferred tax assets 4,368,000 7,428,000 Valuation allowance (1,495,000) (3,887,000) 2,873,000 3,541,000 Deferred tax liabilities: Deferred gains (1,140,000) (1,140,000) Total deferred tax liabilities (1,140,000) (1,140,000) Net deferred tax assets $1,733,000 $2,401,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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 taxexpense. As of August 31, 2013, the Company has not recognized liabilities for penalty and interest as the Companydoes 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 2009, 2010,2011 and 2012 are subject to examination by the taxing authorities. With few exceptions, the Company is no longersubject to U.S. federal, state, local or foreign examinations by taxing authorities for years before 2009.Note 11. Commitments and Contingencies Legal Matters From time to time, we may be subject to legal proceedings and claims which arise in the normal course of ourbusiness. Any such matters and disputes could be costly and time consuming, subject us to damages or equitableremedies, and divert our management and key personnel from our business operations. We currently are not a partyto any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate,would have a material adverse effect on our consolidated results of operations, financial position or cash flows Lease Obligations The Company leases its facilities under operating lease agreements (three of which are with its majorityshareholder), which expire on various dates through September 2016 and require minimum rental payments rangingfrom $1,000 to $32,000 per month. Certain of the leases contain options for renewal under varying terms. Minimum future rental payments under operating leases are as follows: Rental expense for all operating leases for the years ended August 31, 2013 and 2012 was approximately$1,758,000 and $1,628,000, respectively.Note 12. Related Party Transactions The Company leases three buildings under operating lease agreements from its CEO and majority stockholder.During the years ended August 31, 2013 and 2012, the Company incurred approximately $592,000 and $548,000,respectively, of expense related to these leases.Note 13. Fair Value of Financial Instruments Management estimates the fair value of its assets or liabilities measured at fair value based on the three levels ofthe fair-value hierarchy are described as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the Company, Level 1inputs include price and marketable securities that are actively traded. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly. At this time, the Company holds noLevel 2 financial instruments. Level 3: Unobservable inputs. F-17Years ending August 31: 2014 $1,430,000 2015 1,153,000 2016 683,000 2017 220,000 2018 180,000 Thereafter 15,000 $3,681,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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 ofAugust 31, 2013 and 2012: Note 14. Subsequent Events Management has evaluated events subsequent to August 31, 2013, through the date that these consolidated financialstatements are being filed with the Securities and Exchange Commission, for transactions and other events whichmay require adjustment of and/or disclosure in such financial statements. F-18 Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total August 31, 2013 Marketable securities $1,395,000 - - $1,395,000 August 31, 2012 Marketable securities $197,000 - - $197,000 Source: EACO CORP, 10-K, November 29, 2013Powered 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 INDEXNumber Exhibit3.1 Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.01 to the Company'sRegistration 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. (Exhibit3.03 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporatedherein by reference.)3.3 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit3.04 to the Company's Registration Statement on Form S-1, Registration No. 33-17620, is incorporatedherein by reference.)3.4 Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to the Company'sregistration statement on Form 8-A, filed with the SEC on March 19, 1997, is incorporated herein byreference.)3.5 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit3.08 to the Company's Annual Report on Form 10-K filed with the SEC on March 31, 1998, isincorporated herein by reference.)3.6 Amendment to Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.08 tothe Company's Annual Report on Form 10-K filed with the SEC on March 15, 2000, is incorporatedherein by reference.)3.7 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit3.09 to the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2004 isincorporated herein by reference.)3.8 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc., changingthe name of the corporation to EACO Corporation. (Exhibit 3.10 to the Company’s Quarterly Report onForm 10-Q filed with the SEC on September 3, 2004, is incorporated herein by reference.)3.9 Articles of Amendment Designating the Preferences of Series A Cumulative Convertible Preferred Stock$0.10 Par Value of EACO Corporation (Exhibit 3.1 to the Company's current report on Form 8-K filedwith the SEC on September 8, 2004, is incorporated herein by reference.)3.10 Certificate of Amendment to Amended and Restated Bylaws effective December 21, 2009 (Exhibit 3.10to the Company’s transition report on Form 10-K filed with the SEC on December 23, 2009 isincorporated herein by reference.)3.11 Articles of Amendment to Articles of Amendment Designating the Preferences of Series A CumulativeConvertible Preferred Stock, as filed with the Secretary of State of the State of Florida on December22, 2009 (Exhibit 3.11 to the Company’s transition report on Form 10-K filed with the SEC on December23, 2009 is incorporated herein by reference.)10.1 Amended and Restated Mortgage, Assignment of Rents and Leases, Security Agreement and FixtureFiling dated October 9, 2002 between the Company and GE Capital Franchise Corporation (Exhibit 10.1to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26, 2012, isincorporated herein by reference.)10.2 Form of Consolidated, Amended and Restated Promissory Note between the Company and GE CapitalFranchise Finance Corporation. (Exhibit 10.02 to the Company’s Quarterly Report on Form 10-Q filedwith the SEC on November 14, 2002, Registration No. 33-1887, is incorporated herein by reference.)10.3 Loan Agreement dated October 9, 2002 between the Company and GE Capital Franchise FinanceCorporation (Exhibit 10.3 to the Company’s Annual Report on Form 10-K, filed with the SEC onNovember 26, 2012, is incorporated herein by reference.)10.4 Environmental Indemnity Agreement dated October 9, 2002 between the Company and GE CapitalFranchise Finance Corporation (Exhibit 10.4 to the Company’s Annual Report on Form 10-K, filed withthe SEC on November 26, 2012, is incorporated herein by reference.)10.5 Administrative Services Agreement dated March 3, 2006 by and between EACO Corporation and BiscoIndustries, Inc. (Exhibit 10.9 to the Company’s Transition Report on Form 10-K, filed with the SEC onDecember 23, 2009, is incorporated herein by reference.)10.6 Business Loan Agreement dated March 28, 2008 by and between EACO Corporation and Zions FirstNational Bank (Exhibit 10.7 to the Company’s Annual Report on Form 10-K, filed with the SEC onNovember 29, 2011, is incorporated herein by reference.) F-19Source: EACO CORP, 10-K, November 29, 2013Powered 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 Exhibit10.7 Promissory Note dated March 28, 2008 in the principal amount of $1,216,354 executed by EACO infavor of Zions First National Bank (Exhibit 10.8 to the Company’s Annual Report on Form 10-K, filed withthe SEC on November 29, 2011, is incorporated herein by reference.)10.8 Commercial Guaranty dated March 28, 2008 executed by Glen Ceiley in favor of Zions First NationalBank (Exhibit 10.9 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 29,2011, is incorporated herein by reference.)10.9 Business Loan Agreement dated November 9, 2007 by and between EACO Corporation andCommunity Bank (Exhibit 10.10 to the Company’s Annual Report on Form 10-K, filed with the SEC onNovember 29, 2011, is incorporated herein by reference.)10.10 Promissory Note dated November 9, 2007 in the principal amount of $5,875,000 executed by EACO infavor of Community Bank (Exhibit 10.11 to the Company’s Annual Report on Form 10-K, filed with theSEC on November 29, 2011, is incorporated herein by reference.)10.11 Commercial Guaranties dated November 9, 2007 executed in favor of Community Bank by each ofGlen F. Ceiley, Bisco Industries, Inc. and the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust(Exhibit 10.12 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 29, 2011,is incorporated herein by reference.)10.12 Commercial Contract effective September 26, 2012, as amended through October 2, 2012, by andbetween EACO Corporation and Ka Bun Chan, relating to the sale of the real property located inBrooksville, Florida (Exhibit 10.12 to the Company’s Annual Report on Form 10-K, filed with the SEC onNovember 26, 2012, is incorporated herein by reference.)10.13 Business Loan Agreement dated June 1, 2007 by and between Bisco Industries, Inc. and CommunityBank (Exhibit 10.13 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26,2012, is incorporated herein by reference.)10.14 Promissory Note dated November 15, 2000 executed by Bisco Industries, Inc. in favor of CommunityBank (Exhibit 10.14 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26,2012, is incorporated herein by reference.)10.15 Change in Terms Agreements by and between Bisco Industries, Inc. and Community Bank dated May 1,2001; July 1, 2001; September 1, 2001; October 19, 2001; April 30, 2002; June 17, 2002; August 28, 2002;September 16, 2002; October 28, 2002; January 24, 2003; March 27, 2003; June 1, 2003; October 1,2003; December 1, 2003; February 1, 2004; May 1, 2004; June 23, 2004; August 1, 2004; February 1,2005; April 1, 2005; April 1, 2006; March 28, 2007; June 1, 2007; July 13, 2007; March 27, 2008; May 15,2008; March 3, 2009; March 23, 2010; April 16, 2010; October 1, 2010; January 3, 2011; March 1, 2011;May 10, 2012; and September 18, 2012 (Exhibit 10.15 to the Company’s Annual Report on Form 10-K,filed with the SEC on November 26, 2012, is incorporated herein by reference.)10.16 Commercial Security Agreement dated August 1, 2004 by Bisco Industries, Inc. in favor of CommunityBank (Exhibit 10.16 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26,2012, is incorporated herein by reference.)10.17 Commercial Security Agreement dated March 23, 2010 by Bisco Industries, Inc. in favor of CommunityBank (Exhibit 10.17 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26,2012, is incorporated herein by reference.)10.18 Commercial Security Agreement dated March 23, 2010 by Bisco Industries, Inc. in favor of CommunityBank.10.19 Promissory Note dated March 10, 2011 in the principal amount of $1,000,000 executed by BiscoIndustries, Inc. in favor of Community Bank (Exhibit 10.18 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26, 2012, is incorporated herein by reference.)10.20 Commercial Guaranty dated May 1, 2004 executed by Glen F. Ceiley in favor of Community Bank(Exhibit 10.19 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26, 2012,is incorporated herein by reference.)10.21 Commercial Guaranty dated May 15, 2008 executed by the Glen F. Ceiley and Barbara A. CeileyRevocable Trust in favor of Community Bank (Exhibit 10.20 to the Company’s Annual Report on Form10-K, filed with the SEC on November 26, 2012, is incorporated herein by reference.)10.22 Commercial Guaranty dated March 23, 2010 executed by EACO Corporation in favor of CommunityBank (Exhibit 10.21 to the Company’s Annual Report on Form 10-K, filed with the SEC on November 26,2012, is incorporated herein by reference.) F-20Source: EACO CORP, 10-K, November 29, 2013Powered 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 Exhibit10.23 Commercial Lease dated May 1, 2001, as amended through August 30, 2011, by and between GlenCeiley and Bisco Industries (Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed with theSEC on November 26, 2012, is incorporated herein by reference.)10.24 Purchase Agreement effective January 10, 2013 by and between EACO Corporation and Chens FamilyInvestments, LLC or assigns, relating to the sale of the real property located in Deland, Florida (Exhibit10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on April 15, 2013, isincorporated herein by reference.)10.25 Promissory Note dated January 25, 2013 executed by Hao & Han, LLC in favor of EACO Corporationand the related Personal Guaranty Agreements by Rui Zhu Zheng and Min Chen, relating to the realproperty located in Deland, Florida (Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filedwith the SEC on April 15, 2013, is incorporated herein by reference.)10.26 Mortgage and Security Agreement dated January 25, 2013 executed by Hao & Han, LLC in favor ofEACO Corporation, relating to te real property located in Deland Florida (Exhibit 10.3 to the Company’sQuarterly Report on Form 10-Q, filed with the SEC on April 15, 2013, is incorporated herein byreference.)10.27 Change in Terms Agreement by and between Bisco Industries, Inc. and Community Bank dated March26, 2013, relating to the line of credit (Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q,filed with the SEC on July 15, 2013, is incorporated herein by reference.)10.28 Amendments, effective January 8, 2013, March 7, 2013 and March 12, 2013, to Commercial Contractdated September 26, 2012 by and between EACO Corporation and Ka Bun Chan relating to the sale ofthe real property located in Brooksville, Florida.10.29 Purchase Agreement effective August 5, 2013, as amended through September 9, 2013, by andbetween EACO Corporation and WINLEE Property, Inc., relating to the sale of the real property locatedin Orange Park, Florida.10.30 Change in Terms Agreement by and between EACO Corporation and Community Bank dated November12, 2013, modifying the Promissory Note dated November 9, 2007 relating to the real property inSylmar, California.10.31 Commercial Guaranty dated November 12, 2013 executed by Glen F. Ceiley in favor of CommunityBank.10.32 Commercial Guaranty dated November 12, 2013 executed by the Glen F. Ceiley and Barbara A. CeileyRevocable Trust in favor of Community Bank in favor of Community Bank.10.33 Commercial Guaranty dated November 12, 2013 executed by Bisco Industries, Inc. in favor ofCommunity Bank.21.1 Subsidiaries of the Company (Exhibit 21.1 to the Company’s Annual Report on Form 10-K, filed with theSEC on November 29, 2011, is incorporated herein by reference.)31.1 Certification of Chief Executive Officer (principal executive officer and principal financial officer)pursuant to Securities and Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant toSection 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 2002.101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Extension Calculation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase Document F-21 Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.18 COMMERCIAL SECURITY AGREEMENT Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials$10,000,000.00 03-23-2010 10-01-2010 155354101 CLS 07 / 240 600714 765 References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “•••” has been omitteddue to text length limitations. Borrower:BISCO INDUSTRIES, INC. Lender:COMMUNITY BANK 1500 NORTH LAKEVIEW AVENUE ANAHEIM BRANCH ANAHEIM, CA 92807 1750 S. STATE COLLEGE BLVD. ANAHEIM, CA 92806Grantor:EACO CORPORATION (800) 788-9999 1500 N. LAKEVIEW AVENUE ANAHEIM, CA 92807 THIS COMMERCIAL SECURITY AGREEMENT dated March 23, 2010, is made and executed among EACO CORPORATION ("Grantor");BISCO INDUSTRIES, INC. ("Borrower”); and COMMUNITY BANK ("Lender”). GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure theIndebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rightswhich Lender may have by law. COLLATERAL DESCRIPTION. The word "Collateral” as used in this Agreement means the following described property, whether now owned orhereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment ofthe Indebtedness and performance of all other obligations under the Note and this Agreement: All Inventory, Chattel Paper, Accounts, Equipment, Instruments and General Intangibles; whether any of the foregoing is owned now oracquired later; all accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral describedherein, whether added now or later; all products and produce of any of the property; all accounts, general intangibles, instruments, rents,monies, payments, and all other rights, arising out of a sale, lease, or other disposition of any of the property; all proceeds (includinginsurance proceeds) from the sale, destruction, loss, or other disposition of any of the property, and sums due from a third party who hasdamaged or destroyed the collateral or from that party's insurer, whether due to judgment, settlement or other process; all records and datarelating to any of the property, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all ofdebtor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or dataon electronic media In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, andwherever located: (A) All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whetheradded now or later. (B) All products and produce of any of the property described in this Collateral section. (C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or otherdisposition of any of the property described in this Collateral section. (D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateralsection, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlementor other process. (E) All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm,microfiche, or electronic media, together with all of Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain,and process any such records or data on electronic media. BORROWER’S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this Agreement or by applicable law, (A) Borrower agreesthat Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement; (B) Borrower assumes the responsibility forbeing and keeping informed about the Collateral; and (C) Borrower waives any defenses that may arise because of any action or inaction of Lender, includingwithout limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remainSource: EACO CORP, 10-K, November 29, 2013Powered 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.liable under the Note no matter what action Lender takes or fails to take under this Agreement. GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this Agreement is executed at Borrower's request and not at therequest of Lender; (B) Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender; (C) Grantor hasestablished adequate means of obtaining from Borrower on a continuing basis information about Borrower's financial condition; and (D) Lender has made norepresentation to Grantor about Borrower or Borrower's creditworthiness. GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower orGrantor, or any other party to the Indebtedness or the Collateral. Lender may do any of the following with respect to any obligation of any Borrower, withoutfirst obtaining the consent of Grantor: (A) grant any extension of time for any payment, (B) grant any renewal, (C) permit any modification of payment termsor other terms, or (D) exchange or release any Collateral or other security. No such act or failure to act shall affect Lender's rights against Grantor or theCollateral. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking,savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future.However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, tothe extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. Source: EACO CORP, 10-K, November 29, 2013Powered 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 SECURITY AGREEMENT Loan No: 155354101(Continued)Page 2 GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantorrepresents and promises to Lender that: Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender's security interest in theCollateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor willnote Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing SecurityAgreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of timeBorrower may not be indebted to Lender. Notices to Lender. Grantor will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designatefrom time to time) prior to any (1) change in Grantor's name; (2) change in Grantor's assumed business name(s); (3) change in the management of theCorporation Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in Grantor's state of organization;(7) conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to anyagreements between Grantor and Lender. No change in Grantor's name or state of organization will take effect until after Lender has received notice. No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and itscertificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement. Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the UniformCommercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulationsconcerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacityto contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender,the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise heldsubject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with orfor the account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lender's prior written consent, compromise, settle, adjust,or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreementshall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing. Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral (or to the extent the Collateralconsists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantor's address shown above or at suchother locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of realproperties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or ispurchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other propertieswhere Collateral is or may be located. Removal of the Collateral. Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not remove the Collateralfrom its existing location without Lender's prior written consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shallnot take or permit any action which would require application for certificates of title for the vehicles outside the State of Florida, without Lender's priorwritten consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral. Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwiseprovided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default underthis Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinarycourse of business. A sale in the ordinary course of Grantor's business does not include a transfer in partial or total satisfaction of a debt or any bulk sale.Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, otherthan the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in rightto the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason)shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent byLender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender. Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens andencumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than thosewhich reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lender's rights in theCollateral against the claims and demands of all other persons. Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair andcondition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered ormaterial furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral. Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect theCollateral wherever located. Source: EACO CORP, 10-K, November 29, 2013Powered 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.Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon thisAgreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any suchpayment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long asLender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen(15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate toprovide for the discharge of the lien plus any interest, costs, reasonable attorneys' fees or other charges that could accrue as a result of foreclosure or saleof the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against theCollateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees tofurnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantormay withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligationto pay and so long as Lender's interest in the Collateral is not jeopardized. Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmentalauthorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulationsrelating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity.Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals,so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized. Source: EACO CORP, 10-K, November 29, 2013Powered 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 SECURITY AGREEMENT Loan No: 155354101(Continued)Page 3 Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lienon the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release orthreatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigatingthe Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in theevent Grantor becomes liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lenderagainst any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survivethe payment of the Indebtedness and the satisfaction of this Agreement. Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liabilitycoverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonablyacceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lenderfrom time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled ordiminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer’s liability for failure to givesuch a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by anyact, omission or default of Grantor or any other person. In connection with all policies covering assets in which Lender holds or is offered a securityinterest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain ormaintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate,including if Lender so chooses "single interest insurance," which will cover only Lender's interest in the Collateral. Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or lossis covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insuranceon the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of thedamaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable costof repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to payall of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt andwhich Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness. Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be createdby monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date,amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shallupon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearingaccount which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold thereserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. Theresponsibility for the payment of premiums shall remain Grantor's sole responsibility. Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information asLender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the propertyinsured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expirationdate of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory toLender determine, as applicable, the cash value or replacement cost of the Collateral. Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender ssecurity interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender'ssecurity interest in the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unlessLender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is adefault. Lender may file a copy of this Agreement as a financing statement. If Grantor changes Grantor's name or address, or the name or address of anyperson granting a security interest under this Agreement changes, Grantor will promptly notify the Lender of such change. GRANTOR’S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect toaccounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner notinconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateralwhere possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. Until otherwise notified by Lender,Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights tocollect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness. If Lender at any time haspossession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody andpreservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deemappropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lendershall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any securityinterest given to secure the Indebtedness. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor failsto comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due anySource: EACO CORP, 10-K, November 29, 2013Powered 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.amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor’s behalf may (but shall not be obligatedto) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances andother claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expendituresincurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date ofrepayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to thebalance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicableinsurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. TheAgreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled uponDefault. Source: EACO CORP, 10-K, November 29, 2013Powered 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 SECURITY AGREEMENT Loan No: 155354101(Continued)Page 4 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 Indebtedness. Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement orin any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement betweenLender and Borrower or Grantor. Default in Favor of Third Parties. Borrower, any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase orsales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's, any guarantor's or Grantor'sproperty or ability to perform their respective obligations under this Agreement or any of the Related Documents. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or Grantor or on Borrower's or Grantor's behalfunder this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes falseor misleading at any time thereafter. Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateraldocument to create a valid and perfected security interest or lien) at any time and for any reason. Insolvency. The dissolution or termination of Borrower's or Grantor's existence as a going business, the insolvency of Borrower or Grantor, theappointment of a receiver for any part of Borrower's or Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or thecommencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or Grantor. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession orany other method, by any creditor of Borrower or Grantor or by any governmental agency against any collateral securing the Indebtedness. This includesa garnishment of any of Borrower's or Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply ifthere is a good faith dispute by Borrower or Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeitureproceeding and if Borrower or Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a suretybond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for thedispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomesincompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. Adverse Change. A material adverse change occurs in Borrower's or Grantor's financial condition, or Lender believes the prospect of payment orperformance of the Indebtedness is impaired. Insecurity. Lender in good faith believes itself insecure. Cure Provisions. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provisionof this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Borrower demanding cure ofsuch 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. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights ofa secured party under the Florida Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rightsand remedies: Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Borrower would be required to pay,immediately due and payable, without notice of any kind to Borrower or Grantor. Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and otherdocuments relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated byLender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral containsother goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makesreasonable efforts to return them to Grantor after repossession. Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name orthat of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a typecustomarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of anypublic sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to anySource: EACO CORP, 10-K, November 29, 2013Powered 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.person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirementsof reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to thedisposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shallbecome a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure untilrepaid. Appoint Receiver. In the event of a suit being instituted to foreclose this Agreement, Lender shall be entitled to apply at any time pending such foreclosuresuit to the court having jurisdiction thereof for the appointment of a receiver of any or all of the Collateral, and of all rents, incomes, profits, issues andrevenues thereof, from whatsoever source. The parties agree that the court shall forthwith appoint such receiver with the usual powers and duties ofreceivers in like cases. Such appointment shall be made by the court as a matter of strict right to Lender and without notice to Grantor, and withoutreference to the adequacy or inadequacy of the value of the Collateral, or to Grantor's solvency or any other party defendant to such suit. Grantor herebyspecifically waives the right to object to the appointment of a receiver and agrees that such appointment shall be made as an admitted equity and as amatter of absolute right to Lender, and consents to the appointment of any officer or employee of Lender as receiver. Lender shall have the right to have areceiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateralpreceding foreclosure or sale, and to collect the Rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against theIndebtedness. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not theapparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as areceiver. Source: EACO CORP, 10-K, November 29, 2013Powered 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 SECURITY AGREEMENT Loan No: 155354101(Continued)Page 5 Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from theCollateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive thepayments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in suchorder of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattelpaper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on theCollateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the nameof Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes,checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitatecollection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender. Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Borrower for any deficiency remaining onthe Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Borrower shall be liablefor a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper. Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code,as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law,in equity, or otherwise. Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, theRelated Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue anyremedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under thisAgreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies. POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful attorney-in-fact, irrevocably, with full power of substitution to do thefollowing; (a) to demand, collect, receive, receipt for, sue and recover all sums of money or other property which may now or hereafter become due, owing orpayable from the Collateral; (b) to execute, sign and endorse any and all claims, instruments, receipts, checks, drafts or warrants issued in payment for theCollateral; (c) to settle or compromise any and all claims arising under the Collateral, and, in the place and stead of Grantor, to execute and deliver its releaseand settlement for the claim; and (d) to file any claim or claims or to take any action or institute or take part in any proceedings, either in its own name or inthe name of Grantor, or otherwise, which in the discretion of Lender may seem to be necessary or advisable. This power is given as security for theindebtedness, and the authority hereby conferred is and shall be irrevocable and shall remain in full force and effect until renounced by Lender. ADDITIONAL DEFINITION OF INDEBTEDNESS. The word "Indebtedness" includes all other obligations, debts and liabilities, plus interest thereon,of Grantor, or any one or more of them, to Lender, as well as all claims by Lender against Grantor, or any one or more of them, whether existing now or later;whether they are voluntary or involuntary, due or not due, direct o indirect, absolute or contingent, liquidated or unliquidated; whether Grantor may be liableindividually or jointly with others; whether Grantor may be obligated as guarantor, surety, accommodation party or otherwise; whether recovery upon suchindebtedness may be or hereafter may become barred by any statute of limitations; and whether such indebtedness may be or hereafter may become otherwiseunenforceable. ADDITIONAL MAINTENANCE AND INSPECTION OF COLLATERAL-GRANTOR. Grantor shall immediately notify Lender of all casesinvolving the return, rejection, repossession, loss or damage of or to any Collateral; of any request for credit or adjustment or of any other dispute arising withrespect to the Collateral; and generally of all happenings and events affecting the Collateral or the value or the amount of the Collateral. NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force.Guarantor intends to guarantee at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration orotherwise, of all indebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability of Guarantor inconnection with any remaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted. COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and insofar as the Collateral consists of accounts and generalintangibles, Grantor shall deliver to Lender schedules of such Collateral, including such information as Lender may require, including without limitationnames and addresses of account debtors and agings of accounts and general intangibles. Insofar as the Collateral consists of inventory and equipment,Grantor shall deliver to Lender, as often as Lender shall require, such lists, descriptions, and designations of such Collateral as Lender may require toidentify the nature, extent, and location of such Collateral. Such information shall be submitted for Grantor and each of its subsidiaries or related companies. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement: Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the mattersset forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or partiessought to be charged or bound by the alteration or amendment. Arbitration. Borrower and Grantor and Lender agree that all disputes, claims and controversies between them whether individual, joint, orclass in nature, arising from this Agreement or otherwise, including without limitation contract and tort disputes, shall be arbitratedpursuant to the Rules of the American Arbitration Association in effect at the time the claim is filed, upon request of either party. No act toSource: EACO CORP, 10-K, November 29, 2013Powered 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.take or dispose of any Collateral shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement.This includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed oftrust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property, includingtaking or disposing of such property with or without judicial process pursuant to Article 9 of the Uniform Commercial Code. Any disputes,claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning any Collateral, includingany claim to rescind, reform, or otherwise modify any agreement relating to the Collateral, shall also be arbitrated, provided however thatno arbitrator shall have the right or the power to enjoin or restrain any act of any party. Judgment upon any award rendered by anyarbitrator may be entered in any court having jurisdiction. Nothing in this Agreement shall preclude any party from seeking equitable relieffrom a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise beapplicable in an action brought by a party shall be applicable In any arbitration proceeding, and the commencement of an arbitrationproceeding shall be deemed the commencement of an action for these purposes. The Federal Arbitration Act shall apply to the construction,interpretation, and enforcement of this arbitration provision. Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's 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 Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legalexpenses whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modifyor vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs andsuch additional fees as may be directed by the court. Source: EACO CORP, 10-K, November 29, 2013Powered 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 SECURITY AGREEMENT Loan No: 155354101(Continued)Page 6 Agreement. Grantor. The word "Grantor" means EACO CORPORATION. Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Indebtedness. Guaranty. The word "Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical 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. The term"Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and 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. Note. The word "Note" means the Note executed by BISCO INDUSTRIES, INC. in the principal amount of $8,000,000.00 dated November 15, 2000,together with all renewals of, extensions of, modifications of, refinancings of, and substitutions for the note or credit agreement. Property. The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" sectionof this 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 and documents,whether now or hereafter existing, executed in connection with the Indebtedness. BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITYAGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED MARCH 23, 2010. GRANTOR: EACO CORPORATION By:/s/ GLEN F. CEILEY GLEN F. CEILEY, Authorized Officer of EACO CORPORATION BORROWER: BISCO INDUSTRIES, INC. By:/s/ GLEN F. CEILEY GLEN F. CEILEY, Chairman and CEO of BISCO INDUSTRIES, INC. Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.28 Extension Addendum to Contract The following date and/or time period(s) of the Residential Sale and Purchase Contract, Residential Contract for Sale and Purchase, Vacant Land Contract, orCommercial Contract dated Sep 26, 2012 between EACOCorporation (“Seller”) and Ka Bun Chan (“Buyer”) concerning the Properly located at 13235 Cortez Blvd.,Brooksville, FL 34613 is hereby extended. (check whichever apply) Closing Date. Seller and Buyer agree to extend the Closing Date until on or before 3/15/13 ¨Financing Period. Seller and Buyer agree to extend the Commitment Period, Loan Commitment Date. Financing Period, or Loan Approval Date for anadditional _______________ days or until _____________________. ¨Inspection Period. Seller and Buyer agree to extend the Inspection Period for an additional _____________ days or until__________________________________________. ¨Title Cure Period. Seller and Buyer agree to extend the Curative Period or Cure Period for an additional _____________ days or until__________________________________________. ¨Short Sale Approval Deadline. Seller and Buyer agree to extend the Approval Deadline for an additional _____________ days or until__________________________________________. ¨Feasibility Study Period. Seller and Buyer agree to extend the Feasibility Study Period for an additional _____________ days or until__________________________________________. ¨Due Diligence Period. Seller and Buyer agree to extend the Due Diligence Period for an additional _____________ days or until__________________________________________. This extension will be on the same terms and conditions as stated in the original contract except: Monthly rent will increase to $19,255 plus $2,005 in CAM charges for a total of $21,260 monthly for the months of January, February and half of March2013. All other non-conflicting terms of the contract remain in full force and effect. /s/ Michael Bains 1/8/13 /s/ Ka Bun Chan 1/4/13 Seller Date Buyer Date Seller Date Buyer Date EA-2 Rev. 1/12 © 2012 Florida Realtors® All Rights Reserved Source: EACO CORP, 10-K, November 29, 2013Powered 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. Addendum to ContractFLORIDA ASSOCIATION OF REALTORS® Addendum No. 4 to the Contract dated September 26, 2012 between EACO Corporation (Seller) andKa Bun Chan (Buyer) concerning the property described as: 13235 Cortez Blvd., Brooksville, FL 34613 (the “Contract”). Buyer and Seller make the following terms and conditions part of the Contract: Buyer and Seller agree to reduce the purchase price to $1,730,000. Buyer and Seller agree to extend the closing date to on or before April 15, 2013, but not prior to April 5, 2013. Carlino Commercial Group, Inc. agrees to reduce their commission from $54,750 to $10,750. Date: Broker:Jeff Carlino Date:03/06/13 Buyer:/s/ Ka Bun Chan Date:3/7/13 Seller:/s/ Michael Bains Date: Seller: This form is available for use by the entire real estate industry and is not intended to identify the user as a Realtor. Realtor is a registeredcollective membership mark that may be used only by real estate licensees who are members of the National Association of Realtors and whosubscribe to its Code of Ethics. The copyright laws of the United States (17 U.S. Code) forbid the unauthorized reproduction of blank forms by any means including facsimile orcomputerized forms. ACSP-2aRev. 6/94©1994 Florida Association of Realtors®All Rights Reserved Source: EACO CORP, 10-K, November 29, 2013Powered 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. FIRST AMENDMENT TO LEASE THIS FIRST AMENDMENT TO LEASE (the “First Amendment”) is made and entered into this 7th day of March , 2013 by EACOCORPORATION (’‘Landlord”), a Florida corporation, and INTERNATIONAL BUFFET (“Tenant”). RECITALS: A. Landlord and Tenant previously entered into that certain Lease (the “Lease”) with an effective date of January 9, 2008 for the lease of that certainPremises located at 13235 Cortez Boulevard, Brooksville, Florida. B. Landlord and Tenant agree that conditions have occurred such, that the parties desire to modify the Lease as more specifically set forth herein. NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledgedby the parties hereto, Landlord and Tenant hereby covenant and agree as follows: 1. The recitals set forth above are true and accurate and are incorporated herein by this reference. Capitalized terms not otherwise defined hereinshall have the same meaning as in the Lease. 2. The parties acknowledge and agree that Tenant paid a Security Deposit in the amount of Thirty-Three Thousand and 00/100 Dollars ($33,000.00)to Landlord in accordance with Paragraph 5 of the Lease. Tenant hereby authorizes Landlord to retain such Security Deposit and waives any and all rights tothe return of such Security Deposit. 3. Tenant hereby agrees that it will pay Landlord the sum of Eighteen Thousand and 00/100 Dollars ($18,000.00) on or before April 1, 2013, whichsum shall be paid in addition to Tenant’s monthly Rent payment for that month. 4. The parties acknowledge and agree that in the event Tenant fails to purchase the Premises from Landlord pursuant to that certain CommercialContract dated September 26, 2012 between Landlord as seller and Tenant as purchaser, as amended, the provisions set forth in Paragraphs 2 and 3 of thisFirst Amendment shall be void. 5. This First Amendment may be executed in separate counterparts, each of which when taken together shall constitute one and the sameinstrument. This First Amendment may be executed and delivered by facsimile or electronic mail, and execution delivery by facsimile or electronic mail shallbe deemed binding upon the parties so executing and delivering. Except as specifically modified by this First Amendment, all of the terms and conditions ofthe Lease shall remain in full force and effect. In the event of a conflict between any term or provision of the Lease and this First Amendment, the terms andprovisions of this First Amendment shall control. 1Source: EACO CORP, 10-K, November 29, 2013Powered 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. IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of the date first above written in a manner 50 as to be binding. Signed, scaled and delivered in the presence of: LANDORD: EACO CORPORATION, a FloridaCorporation./s/ Marta L. Araujo By:/s/ Michael Bains Print:MICHAEL BAINSMARTA L. ARAUJO Title:ControllerPrint Name /s/ Antonio Gonzalez ANTONIO GONZALEZ Print Name Signed, sealed and delivered in the TENANT:presence of; INTERNATIONAL BUFFET /s/ Yiping Wang By:/s/ Ka Bun Chan Print:KA BUN CHANYIPING WANG Title:OWNERPrint Name Print Name 2Source: EACO CORP, 10-K, November 29, 2013Powered 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. Addendum to ContractFLORIDA ASSOCIATION OF REALTORS® Addendum No. 5 to the Contract dated 09/26/2012 between EACO Corporation (Seller) andKa Bun Chan (Buyer) concerning the property described as: 13235 Cortez Blvd. Brooksville, FL 34613 (the “Contract”). Buyer and Seller make the following terms and conditions part of the Contract: The Buyer and the Seller agree to change the buyer to International East Buffet Inc. Date:3/12/13 Buyer:/s/ Ka Bun Chan Date:3/12/13 Buyer:/s/ Michael Bains Date: Seller: Date: Seller: This form is available for use by the entire real estate industry and is not intended to identify the user as a Realtor. Realtor is a registeredcollective membership mark that may be used only by real estate licensees who are members of the National Association of Realtors and whosubscribe to its Code of Ethics. The copyright laws of the United States (17 U.S. Code) forbid the unauthorized reproduction of blank forms by any means including facsimile orcomputerized forms. ACSP-2aRev. 6/94©1994 Florida Association of Realtors®All Rights Reserved Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.29 Marcus & MillichapReal Estate Investment ServicesPURCHASE AGREEMENT THIS DOCUMENT IS MORE THAN A RECEIPT FOR MONEY. IT IS INTENDED TO BE A LEGALLY BINDING AGREEMENT. READ ITCAREFULLY. Marcus & Millichap Real Estate Investment Services of Florida, Inc. (“Agent”), is agent for the Seller. This Real Estate Contract is entered into by andbetween EACO Corporation (hereinafter referred to as “Seller”) and WINLEE Property, Inc. (hereafter referred to as “Buyer”). Within one (1) business day ofthe Effective Date, Buyer shall deposit with Gary Silberman, PA located at 2665 S. Bayshore Dr. Ste 725 Coconut Grove, F1 33133 (Escrow Agent), U.S.,cash, cashier’s check or wire transfer funds in the amount of Fifty Thousand Dollars ($ 50,000) within 3 days of executed contract as Earnest Money Deposit(hereinafter referred to as the “Deposit”). The Deposit is to be applied to the purchase price of that certain real property (referred to as the “Property”) located inthe City of Orange Park, County of Clay, State of Florida, and more particularly described as follows: 475 Blanding Blvd. Orange Park, Florida / Parcel #18-04-26-020264-122-00 TERMS AND CONDITIONS Seller agrees to sell the Property, and Buyer agrees to purchase the Property, on the following terms and conditions: 1)PURCHASE PRICE: The purchase price for the Property is One Million One Hundred Fifty Six Thousand dollars ($ 1,156,000.00). The PurchasePrice, less the amount of the Deposit paid by Buyer, and subject to appropriate adjustments and prorations as hereinafter provided, shall be paid asfollows: 2)DOWN PAYMENT: A) Buyer shall make a cash down payment of dollars ($ ) no later than: 3)DEPOSIT: The Deposit $50,000 (Fifty Thousand Dollars) (together with any additional deposit which may be made under Paragraph 9 hereof) shall beheld as earnest money and shall be applied as part payment of the Purchase Price at closing or as otherwise provided herein. It is agreed between allparties hereto that Agent may hold the Deposit until Closing, or until this Agreement in terminated prior thereto because of the default of either party or byvoluntary agreement; and if any dispute should arise between Buyer and Seller as to the final disposition of said Deposit, Agent may institute a suit todetermine who is entitled to said Deposit, and the cost of said action, including reasonable attorney’s fees incurred by Agent shall be paid out of saidDeposit. If this Agreement is voided by Buyer for any reason permitted under this Agreement, Agent shall refund the Deposit to Buyer, and no partyhereto shall have any further rights to said Deposit. 4)TITLE: Seller shall cause an examination of title to the Property to be made, and a title insurance commitment to be issued by Gary Silberman, PAlocated at 2665 S. Bayshore Dr. Ste 725 Coconut Grove, Fl 33133 (the “Title Company”) on the Property. At Buyer’s option and expense. Buyer maycause an accurate survey to be made of the Property by a Florida registered land surveyor of Buyer’s choice. Within Ten (10) calendar days after theEffective Date of this Agreement, Buyer shall deliver a copy of the title commitment to Seller, together with a copy of any survey Buyer shall haveprepared, accompanied by a letter to Seller in which Buyer shall either approve in writing the exceptions contained in said title commitment and survey,or specify in writing any exceptions to which Buyer reasonably objects. If Buyer objects to any exceptions, Seller shall, within Five (5) calendar daysafter receipt of Buyer’s objections, deliver to Buyer written notice that either (i) Seller will, at Seller’s expense, attempt to remove the exception(s) to whichBuyer has objected before the Closing Date or (ii) Seller is unwilling or unable to eliminate the exception(s). If Seller fails to so notify Buyer or isunwilling or unable to remove any such exception by the Closing Date, Buyer may elect to terminate this Agreement and receive back the entire Deposit,in which event Buyer and Seller shall have no further obligations under this Agreement; or, alternatively, Buyer may elect to purchase the Propertysubject to such exception(s). Seller shall convey by general warranty deed to Buyer (or such other person as Buyer may specify) marketable fee simple title subject only to theexceptions approved by Buyer in accordance with this Agreement. Title shall be insurable by a standard ALTA Owner’s Policy (Form B-1987) of titleinsurance issued by the Title Company with standard exceptions in the amount of the purchase price with premium paid by Buyer. EACO - Winlee contract 8-1-13rev. GS1 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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. 5)CLOSING: Closing shall be held on or before September 15, 2013 (the “Closing Date”) at 2:pm, or at such other time as is reasonably agreeable toBuyer and Seller with at least five (5) days notice prior to the Closing Date. If on the Closing Date insurance underwriting is suspended, Buyer maypostpone closing up to 5 days after the insurance suspension is lifted. At the Closing, Seller shall execute and deliver to Buyer a general warranty deedsubject to those exceptions permitted by this Agreement, an owner’s affidavit, an I.R.C. Section 1445 non-foreign affidavit, an affidavit of seller’sresidence, and a construction lien affidavit, all in form satisfactory to the Title Company to remove from Buyer’s owner’s title policy any exception forclaims for labor and materials, unpaid federal and state taxes arising from the sale, and unpaid real estate broker’s commissions, and each party heretoshall execute and deliver such other documents necessary or appropriate to effect and complete the Closing. Rents, real property taxes, premiums on insurance acceptable to Buyer, interest on any debt being assumed or taken subject to by Buyer, and any otherongoing expenses or costs of the continued operation of the Property shall be prorated as of the Closing Date. Security deposits, advance rentals, and theamount of any future lease credits shall be credited to Buyer at Closing. The amount of any assessment not customarily paid with real property taxesshall be (select one “X”) Seller paid. 6)FINANCING CONTINGENCIES:***6a.xNEW FIRST LOAN Buyer will be utilizing $750,000 from a 1030-Tax Exchang and obtaining financing for the balance of the purchase price.6b.¨NEW SECOND LOAN6c.¨SHORTFALL CLAUSE6d.¨PURCHASE SUBJECT TO/ASSUMPTION OF FIRST6e.¨PURCHASE SUBJECT TO/ASSUMPTION OF SECOND6f.¨SELLER CARRIES BACK FIRST6g.¨SELLER CARRIES BACK SECOND6h.¨SELLER CARRIES BACK THIRD6i.¨ALL INCLUSIVE PROMISSORY NOTE AND DEED OF TRUST6j.¨NO FINANCING CONTINGENCY — ALL CASH6k.¨OTHER FINANCING This Contract is subject to financing by a third party loan. This Contract is conditioned on Buyer obtaining a written commitment within thirty-five (35) calendar days after the execution of this Contract in the principal amount of $400,000.00 at an initial interest rate not to exceed prevailinginterest rate, for a term of 30 years. Discount and/or origination fee not to exceed 1% of the principal amount. Buyer will make application (5)days after the execution of this Contract, and use reasonable diligence to obtain a loan commitment and, thereafter, to satisfy terms andconditions of the commitment and close the loan. Buyer shall pay all loan expenses. If Buyer fails to obtain a commitment or fails to waiveBuyer’s rights under this subparagraph within the time for obtaining a commitment or after diligent effort fails to meet the terms and conditionsof the commitment, then either party thereafter, by written notice to the other, may cancel this Contract and Buyer shall be refunded the deposit. 7)PEST CONTROL CONTINGENCIES:* * *7a.¨Standard7b.xNO PEST CONTROL CONTINGENCY - “AS IS”7.1)NO PEST CONTROL CONTINGENCY - “AS IS”: Buyer has conducted Buyer’s own investigation with regard to possible infestation and/orinfection by wood-destroying pests or organisms and agrees to purchase the Property in its present condition. Buyer acknowledges that Buyer is notrelying upon any representations or warranties made by Seller or Agent regarding the presence or absence of such infestation or infection. 7c.¨OTHER PEST CONTROL: 8)INSPECTION CONTINGENCIES:* * *8a.xBOOKS AND RECORDS8.1)BOOKS AND RECORDS: Seller agrees to provide Buyer with items A-E listed below within Three (3) calendar days following the Effective Date: A.Previous Phase 1 Environmental Report dated Nov. 1996 B.Copy of current Title policy C.Alta Survey provided by First Financial Surveyors Inc. D.Copy of Tenant Lease and any building drawings available E.Copy of current insurance policy F.Tenant Estoppel Letter G.All Appraisals conducted for the property (if any) H.All Service and Maintenance contracts (if any) I.Zoning verification letter J.Any and all City/County correspondence regarding the property (if any) EACO - Winlee contract 8-1-13rev. GS2 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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. Source: EACO CORP, 10-K, November 29, 2013Powered 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. K.Income & Expense report for 2012 and 2013 year to date income and expense (if any) Buyer shall have Thirty Five (35) calendar days following receipt thereof to review and approve in writing each of these items. If Buyer fails to approvethese items within the specified time, this Agreement shall be rendered null and void, Buyer’s entire deposit shall be returned, and Buyer and Seller shallhave no further obligations hereunder. 8b.xPHYSICAL INSPECTION 8.2)PHYSICAL INSPECTION: Buyer shall have Thirty Five (35) calendar days following the Effective Date to inspect the physical condition of theProperty, and to notify the Seller in writing that Buyer approves same. If Buyer fails to approve the physical condition of the Property within thespecified time, this Agreement shall be null and void, Buyer’s entire deposit shall be returned, and Buyer and Seller shall have no further obligationshereunder. Buyer has the right to a fully refundable deposit if buyer submits to seller written notice of cancelation prior to the expiration of the physicalinspection period. 8c.¨STATE AND LOCAL LAWS8d.¨TENANT FINANCIAL INFORMATION (Leased Properties)8e.xNO INSPECTION CONTINGENCY - “AS IS”8.3)NO INSPECTION CONTINGENCY - “AS IS”: This Agreement is not subject to any inspection contingencies. Buyer warrants that Buyer isknowledgeable in real estate matters and has made all investigations and inspections which Buyer deems necessary and appropriate with regard to itspurchase of the Property. Buyer acknowledges and agrees that Buyer is not relying upon any representation or warranties made by Seller or Agent inelecting to waive inspection contingencies. 8f.xOTHER INSPECTION 8.4)OTHER INSPECTION: Seller to provide copies of Rent checks, previous Environmental inspection and previous survey. Buyer or Buyer’s attorneyshall examine and approve the Title within Ten (10) days of acceptance of the Purchase and Sale Agreement and unless otherwise notifies the Seller ofunacceptable matters the title shall be deemed accepted and approved by the buyer and/or it’s legal counsel. 9)DEPOSIT INCREASE: Upon removal of the inspection contingencies set forth in paragraph(s) n/a hereof, Buyer shall deposit with Broker in Escrowsufficient funds to increase the Deposit to n/a dollars ($n/a). The entire Deposit shall be credited to the purchase price at Closing unless otherwiseprovided herein. 10)DEPOSIT TRANSFER: Buyer’s Deposit shall remain in trust, if held by Agent, or in escrow if previously deposited in escrow, until removal of theinspection contingencies set forth in paragraph(s) 8.2 hereof. Upon removal of said contingencies, Buyer’s Deposit shall be delivered to escrow by Agent(if same has been held in trust by Agent); a grant deed duly executed by Seller, sufficient to convey title to Buyer, shall be delivered to escrow by Seller;and Buyer and Seller shall execute escrow instructions directing the Escrow Holder to release immediately from escrow and deliver to Seller Buyer’s entireDeposit (including increases, if any). Seller shall hold Buyer’s Deposit subject to the remaining terms and conditions of this Agreement. If the Property ismade unmarketable by Seller, or acts of God, the Deposit shall be returned to Buyer and deed shall be returned to Seller. 11)ESTOPPEL CERTIFICATE CONTINGENCY (Leased Properties):***11a.xStandard 11.1)Seller shall obtain and deliver to Buyer, within Three (3) calendar days after the last contingency set forth in paragraph(s) 8.1, 8.2, and 8.4 is removed,estoppel letters or certificates from each lessee or tenant at the Property stating: a) the date of commencement and the scheduled date of termination of thelease, b) the amount of advanced rentals or rent deposits paid to Seller, c) the amount of monthly (or other periodic) rent paid to Seller, d) that the lease isin full force and effect and that there have been no modifications or amendments thereto, or, if there have been any modifications or amendments, anexplanation of same, e) square footage (if set forth in the lease), and f) that there is no default under the terms of the lease by lessor or lessee. Buyer mayonly disapprove said certificates, and cancel the Agreement, if the certificates reflect a discrepancy materially affecting the economics of the transaction,or a previously undisclosed material breach of one of the leases. Upon such disapproval, Buyer’s entire Deposit shall be returned, and the parties shallhave no further obligations hereunder. 11b.¨ESTOPPEL CERTIFICATES NOT APPLICABLE 12)LEASED PROPERTY PRORATIONS: Rents due and owing on the date of closing will be prorated as of the Closing Date, as of the Closing Date andrent collected thereafter applied first to rental payments then owed the Buyer and their remainder paid to the Seller. All free rent due any tenant at the timeof closing for rental periods after the closing shall be a credit against the Purchase Price. Other income and expenses shall be prorated as follows: To BeDetermined. EACO - Winlee contract 8-1-13rev. GS3 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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. 13)PERSONAL PROPERTY: Title to any personal property to be conveyed to Buyer in connection with the sale of the Property shall be conveyed toBuyer by Bill of Sale on the Closing Date free and clear of all encumbrances (except those approved by Buyer as provided above). The price of theseitems shall be included in the Purchase Price for the Property, and Buyer agrees to accept all such personal property in “as is” condition. 14)CONDITION OF PROPERTY: It is understood and agreed that the Property is being sold “as is”; that Buyer has, or will have prior to the ClosingDate, inspected the Property; and that neither Seller nor Agent makes any representation or warranty as to the physical condition or value of the Propertyor its suitability for Buyer’s intended use. Buyer’s Initials BM Seller’s Initials MB__ 15)RISK OF LOSS: Risk of loss to the Property shall be borne by Seller until title has been conveyed to Buyer. In the event that the improvements on theProperty are destroyed or materially damaged between the Effective Date of this Agreement and the date title is conveyed to Buyer, Buyer shall have theoption of demanding and receiving back the entire Deposit and being released from all obligations hereunder, or alternatively, taking such improvementsas Seller can deliver. Upon Buyer’s physical inspection and approval of the Property, Seller shall maintain the Property through closing in the samecondition and repair as approved, reasonable wear and tear excepted. 16)POSSESSION: Possession of the Property shall be delivered to Buyer at closing subject to the existing tenants in possession. 17)LIQUIDATED DAMAGES: By placing their initials immediately below, Buyer and Seller agree that it would be impracticable orextremely difficult to fix actual damages in the event of a default by Buyer, that the amount of Buyer’s Deposit hereunder (as same may beincreased by the terms hereof) is the parties’ reasonable estimate of Seller’s damages in the event of Buyer's default, and that uponBuyer’s default in its purchase obligations under this agreement, not caused by any breach by Seller, Seller shall be released from itsobligations to sell the Property and shall retain Buyer’s Deposit (as same may be increased by the terms hereof) as liquidated and agreedupon damages, which shall be Seller’s sole and exclusive remedy in law or at equity for Buyer’s default. Buyer’s Initials BM Seller’s Initials MB__ 18)SELLER EXCHANGE: Buyer agrees to cooperate should Seller elect to sell the Property as part of a like-kind exchange under IRC Section 1031.Seller’s contemplated exchange shall not impose upon Buyer any additional liability or financial obligation, and Seller agrees to hold Buyer harmlessfrom any liability that might arise from such exchange. This Agreement is not subject to or contingent upon Seller’s ability to acquire a suitable exchangeproperty or effectuate an exchange. In the event any exchange contemplated by Seller should fail to occur, for whatever reason, the sale of the Propertyshall nonetheless be consummated as provided herein. 19)BUYER EXCHANGE: Seller agrees to cooperate should Buyer elect to purchase the Property as part of a like-kind exchange under IRC Section 1031.Buyer’s contemplated exchange shall not impose upon Seller any additional liability or financial obligation, and Buyer agrees to hold Seller harmlessfrom any liability that might arise from such exchange. This Agreement is not subject to or contingent upon Buyer’s ability to dispose of its exchangeproperty or effectuate an exchange. In the event any exchange contemplated by Buyer should fail to occur, for whatever reason, the sale of the Propertyshall nonetheless be consummated as provided herein. 20)DISCLOSURE OF REAL ESTATE LICENSURE:*** 20a.¨License disclosure20b.¨License disclosure 21)AUTHORIZATION: Buyer and Seller authorize Agent to disseminate sales information regarding this transaction, including the purchase price of theProperty. 22)AFFILIATED BROKERS/TRANSACTIONAL AGENCY: Broker/Agent is affiliated with other brokerage companies in other states. Broker/Agentshall disseminate information about the Property to such affiliated brokers, inviting the submission of offers on the Property. Seller authorizes Agent andany affiliated brokers/agents to represent any prospective purchaser in the acquisition of the Property, and to submit offers on behalf of such purchasers.Seller & Buyer understand that this authorization may result in affiliated Brokers/Agents of Broker/Agent representing both Seller and Buyer. In theevent Broker/Agent is the listing agent of Seller with respect to the Property and another Broker/Agent of Broker/Agent procures a Buyer as the purchaserof the Property, then in such event, Seller and Buyer agree that Broker/Agent shall become a transaction Broker/Agent with respect to the transaction, assuch term is defined by Florida law. Buyer & Seller hereby authorize and consent to such agency disclosure and agree to execute a confirmation of suchdisclosed agency. EACO - Winlee contract 8-1-13rev. GS4 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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. 23)OTHER BROKERS: Buyer and Seller agree that, in the event any broker other than Agent or a broker affiliated with Agent is involved in thedisposition of the Property, Agent shall have no liability to Buyer or Seller for the acts or omissions of such other broker, who shall not be deemed to be asubagent of Agent. 24)LIMITATION OF LIABILITY: Except for Agent’s gross negligence or willful misconduct, Agent’s liability for any breach or negligence in itsperformance of this Agreement shall be limited to the greater of $10,000 or the amount of compensation actually received by Agent in any transactionhereunder. 25)SCOPE OF AGENT’S AUTHORITY AND RESPONSIBILITY: Agent shall have no authority to bind either Buyer or Seller to any modification oramendment of this Agreement. Agent shall not be responsible for performing any due diligence or other investigation of the Property on behalf of eitherBuyer or Seller, or for providing either party with professional advice with respect to any legal, tax, engineering, construction or hazardous materialsissues. Except for maintaining the confidentiality of any information regarding Buyer or Seller’s financial condition and any future negotiations regardingthe terms of this Purchase Agreement, Buyer and Seller agree that their relationship with Agent is at arm’s length and is neither confidential nor fiduciaryin nature. 26)BROKER DISCLAIMER: Buyer and Seller acknowledge that, except as otherwise expressly stated herein, Agent has not made any investigation,determination, warranty or representation with respect to any of the following: (a) the financial condition or business prospects of any tenant, or suchtenant’s intent to continue or renew its tenancy in the Property; (b) the legality of the present or any possible future use of the Property under any federal,state or local law; (c) pending or possible future action by any governmental entity or agency which may affect the Property (d) the physical condition ofthe Property, including but not limited to, soil conditions, the structural integrity of the improvements, and the presence or absence of fungi or wood-destroying organisms; (e) the accuracy or completeness of income and expense information and projections, of square footage figures, and of the texts ofleases, options, and other agreements affecting the Property; (f) the possibility that lease, options or other documents exist which affect or encumber theProperty and which have not been provided or disclosed by Seller; or (g) the presence or location of any hazardous materials on or about the Property,including, but not limited to asbestos, PCB’s, or toxic, hazardous or contaminated substances, and underground storage tanks. Buyer agrees that investigation and analysis of the foregoing matters is Buyer’s sole responsibility and that Buyer shall not hold Agent responsibletherefore. Buyer further agrees to reaffirm its acknowledgment of this disclaimer at closing and to confirm that it has relied upon no representations ofAgent in connection with its acquisition of the property. Buyer’s Initials BM Seller’s Initials MB 27)LEAD-BASED PAINT HAZARDS: Every purchaser of any interest in residential real property on which a residential dwelling was built prior to1978 is notified that such property may present exposure to lead from lead- based paint that may place young children at risk of developing leadpoisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotientbehavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential realproperty is required to provide the buyer with any information on lead-based paint hazards. A risk assessment or inspection for possible lead-based painthazards is recommended prior to purchase. (SELLER TO INITIAL ONE BELOW):(_____) 1. Seller warrants that the Property was constructed after 1978.(_____) 2. Seller is not sure when the Property was constructed and/or has reason to believe that lead-based paint hazards may be present (Attach“LEAD-BASED PAINT DISCLOSURE ADDENDUM TO PURCHASE AGREEMENT”). 28)MOLD/ALLERGEN ADVISORY AND DISCLOSURE: Buyer is advised of the possible presence within properties of toxic (or otherwise illness-causing) molds, fungi, spores, pollens and/or other botanical substances and/or allergens (e.g. dust, pet dander, insect material, etc.). These substancesmay be either visible or invisible, may adhere to walls and other accessible and inaccessible surfaces, may be embedded in carpets or other fabrics, maybecome airborne, and may be mistaken for other household substances and conditions. Exposure carries the potential of possible health consequences.Agent strongly recommends that Buyer contact the State Department of Health Services for further information on this topic. Buyer is advised to consider engaging the services of an environmental or industrial hygienist (or similar, qualified professional) to inspect and test forthe presence of harmful mold, fungi, and botanical allergens and substances as part of Buyer’s physical condition inspection of the Property, and Buyeris further advised to obtain from such qualified professionals information regarding the level of health-related risk involved, if any, and the advisabilityand feasibility of eradication and abatement, if any. Buyer is expressly cautioned that Agent has no expertise in this area and is, therefore, incapable of conducting any level of inspection of the Property forthe possible presence of mold and botanical allergens. Buyer acknowledges that Agent has not made any investigation, determination, warranty orrepresentation with respect to the possible presence of mold or other botanical allergens, and Buyer agrees that the investigation and analysis of theforegoing matters is Buyer’s sole responsibility and that Buyer shall not hold Agent responsible therefore. EACO - Winlee contract 8-1-13rev. GS5 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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. 29)ARBITRATION OF DISPUTES: Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by finalbinding arbitration administered before a single arbitrator by the American Arbitration Association (AAA) under its Commercial Arbitration Rules, andjudgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Unless the parties agree otherwise, thearbitration shall be governed by the AAA’s Expedited Procedures. The parties also agree that the AAA’s Optional Rules for Emergency Measures ofProtection shall apply to the proceedings. The AAA’s fees and charges shall be paid equally by the parties as they become due, provided that theprevailing party shall be awarded its costs and expenses associated with any dispute concerning this Agreement, including reasonable attorneys’ feesfrom the non-prevailing party. If either party fails to pay its share of the AAA’s fess or expenses as they become due, and such failure is not cured withinfive days of receiving written notice thereof from the other party or the AAA, such party shall be deemed to have defaulted and the arbitrator shall enterfinal judgment in favor of the non-defaulting 30)SUCCESSORS & ASSIGNS: This Agreement and any addenda hereto shall be binding upon and inure to the benefit of the heirs, successors, agents,representatives and assigns of the parties hereto. 31)ATTORNEYS’ FEES: In any litigation, arbitration or other legal proceeding which may arise between any of the parties hereto, including Agent, theprevailing party shall be entitled to recover its costs and expenses, including costs and expenses of arbitration, court costs and expense and costs andexpenses incurred on appeal, and reasonable attorneys’ fees incurred in any disputes through arbitration and appeal of any final judgment in addition toany other relief to which such party may be entitled. 32)TIME: Time is of the essence of this Agreement. 33)NOTICES: All notices required or permitted hereunder shall be given to the parties in writing (with a copy to Agent) at their respective addresses as setforth below. Should the date upon which any act required to be performed by this Agreement fall on a Saturday, Sunday or holiday, the time forperformance shall be extended to the next business day. 34)ADDENDA: Any addendum attached hereto and either signed or initialed by the parties shall be deemed a part hereof. This Agreement, includingaddenda, if any, expresses the entire agreement of the parties and supersedes any and all previous agreements between the parties with regard to theProperty. There are no other understandings, oral or written, which in any way alter or enlarge its terms, and there are no warranties or representations ofany nature whatsoever, either express or implied, except as set forth herein. Any future modification of this Agreement will be effective only if it is inwriting and signed by the party to be charged. 35)ACCEPTANCE AND EFFECTIVE DATE: Buyer’s signature hereon constitutes an offer to Seller to purchase the Property on the terms andconditions set forth herein. Unless acceptance hereof is made by Seller’s execution of this Agreement and delivery of a fully executed copy to Buyer, eitherin person or by mail at the address shown below, on or before 3: pm est August 5th 20 13, this offer shall be null and void, the Deposit shall be returnedto Buyer, and neither Seller nor Buyer shall have any further rights or obligations hereunder. Delivery shall be effective upon personal delivery to Buyeror Buyer’s agent or, if by mail, on the next business day following the date of postmark. The “Effective Date” of this Agreement shall be the later of (a)the date on which Seller executes this Agreement, or (b) the date of or written acceptance (by either Buyer or Seller) of the final counter-offer submitted bythe other party. 36)GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State Of Florida. 37)EMINENT DOMAIN: In the event that prior to the closing all or any portion of the Property is condemned, or condemnation proceedings have beeninstituted by or on behalf of any public or quasi-public entity or for any public or quasi-public use or purpose, then, in the event that suchcondemnation substantially and materially adversely affects the Property, Buyer shall have the option to: (i) terminate this Agreement and receive thereturn of the deposit and all interest accrued thereon, or (ii) proceed with the closing and receive a credit against the Purchase Price of any award receivedor to be received. 38)RADON: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks topersons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additionalinformation regarding radon and radon testing may be obtained from your county public health unit. 39)SEVERABILITY: In the event any term or provision of this Agreement shall be held illegal, unenforceable or inoperative as a matter of law, theremaining terms and provisions of this Agreement shall not be affected thereby and shall remain in full force and effect. 40)OTHER TERMS AND CONDITIONS: EACO - Winlee contract 8-1-13rev. GS6 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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:Buyer’s Agent will share in listing agent’s commission of which two percent (2.0%) of the gross commission. All other terms and conditions herein. B:Provided that the buyer or buyer’s attorney notifies the seller’s agent prior to the scheduled closing date in writing for said extension the 5-day extensionshall be granted otherwise the closing date will be as referenced herein above per Paragraph (5) including all other terms and conditions herein. C:Prior to closing, the seller is hereby obligated to close out all building permits or expired permits, and to obtain all necessary approval and permits forunpermitted work at the Property, at the sole cost and expense of the seller. Further, seller shall be responsible for all violations of governmental, building,environmental, safety codes, restrictions or requirements, and seller shall cure all such violations prior to closing at the sole cost and expense of the seller. END of TERMS and CONDITIONS EACO - Winlee contract 8-1-13rev. GS7 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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 PARTIES ARE ADVISED TO CONSULT THEIR RESPECTIVE ATTORNEYS WITH REGARD TO THE LEGAL EFFECT AND VALIDITY OFTHIS PURCHASE AGREEMENT. The undersigned Buyer hereby offers and agrees to purchase the above described Property for the price and upon the terms and conditions herein stated. This offer is made by Buyer to Seller on this 2nd day of August , 2013. The undersigned Buyer hereby acknowledges receipt of an executed copy of thisAgreement, including the Agency Disclosure contained in Paragraph 22, above. BUYER: /s/ Bing Yiu Mak ADDRESS:11480 S.W.103 ST, Miami FL 33176 WINLEE Property, Inc. By: Bing Yiu Mak DATE: TELEPHONE: 305-595-4438 BUYER: ADDRESS:* * * * * * * * * DATE:* * * TELEPHONE:* * * SELLER’S ACCEPTANCE AND AGREEMENT TO PAY COMMISSION The undersigned Seller accepts the foregoing offer and agrees to sell the Property to Buyer for the price and on the terms and conditions stated herein. Selleracknowledges receipt of an executed copy of this Agreement and authorizes Agent to deliver an executed copy to Buyer. Seller reaffirms its agreement to pay to Agent a real estate brokerage commission pursuant to the terms of that certain Representation Agreement between Agentand Seller which shall remain in full force and effect. Said commission is payable in full on the Closing Date and shall be paid in cash at closing. ClosingAttorney is directed to make such payment to Agent from Seller’s proceeds of sale. The provisions of this paragraph may not be amended or modified withoutthe written consent of Agent. Agent is made a party to this Agreement for the purpose of enforcing Agent’s rights arising hereunder. Seller acknowledges and agrees that payment of said commission is not contingent upon the closing of the transaction contemplated by this Agreement, andthat, in the event completion of the sale is prevented by default of Seller, then Seller shall immediately be obligated to pay to Agent the entire commission. Selleragrees that in the event completion of the sale is prevented by default of Buyer, then Seller shall be obligated to pay to Agent an amount equal to one half of anydamages or other monetary compensation (including liquidated damages) collected from Buyer by suit or otherwise as a consequence of Buyer’s default, if andwhen such damages or other monetary compensation are collected; provided, however, that the total amount paid to Agent by Seller shall not in any case exceedthe brokerage commission hereinabove set forth. Seller acknowledges and agrees that the existence of any direct claim which Agent may have against Buyer inthe event of Buyer’s default shall not alter or in any way limit the obligations of Seller to Agent as set forth herein. SELLER: /s/ Michael Bains ADDRESS:1500 N. Lakeview Ave. EACO Corporation, Authorized Agent ANAHEIM, CA 92807 DATE:8/5/2013 TELEPHONE: 714-693-2901 SELLER: ADDRESS: DATE: TELEPHONE: Agent accepts and agrees to the foregoing. AGENT: MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES OF FLORIDA, INC. BY:/s/ John Rob Keeler ADDRESS:300 South Orange Ave. Ste 700 John Rob Keeler Orlando, Florida 32810 DATE: July 16th 2013 TELEPHONE: 407-557-3871 PARTIES UNDERSTAND AND ACKNOWLEDGE THAT BROKER IS NOT QUALIFIED TO PROVIDE AND HAS NOT BEEN CONTRACTEDTO PROVIDE, LEGAL, FINANCIAL OR TAX ADVICE, AND THAT ANY SUCH ADVICE MUST BE OBTAINED FROM PARTIES’ ATTORNEY,ACCOUNTANT OR TAX PROFESSIONAL. EACO - Winlee contract 8-1-13rev. GS8 of 8Buyer’s Initials BM Seller’s Initials MB__ FL. 1 – Copyright Marcus and Millichap 2013 Source: EACO CORP, 10-K, November 29, 2013Powered 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.Source: EACO CORP, 10-K, November 29, 2013Powered 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. 1st ADDENDUM TO PURCHASE AGREEMENT This document is an addendum (“Addendum”) to the Purchase Agreement (“Agreement”) between EACO, Corporation (“Seller”) and WINLEE Property, Inc.(“Buyer”) executed on the 5th day of August , 2013 for that certain real property located at: 475 Blanding Blvd. Orange Park, FloridaParcel #7004-00-00-0951 The provisions of this Addendum are hereby added to and incorporated in the Terms and Conditions in the aforementioned Agreement. Any provision of thisAddendum which is not numbered and fully completed shall have no force or effect. The Buyer and Seller agree to modify the Purchase Agreement accordingly: 1.Seller agrees to reduce the sales price to: $1,138,500.00 ACCEPTANCE The undersigned Buyer, Seller and Agent accept and agree to the foregoing. BUYER: /s/ Bing Yiu Mak DATE:8/24/2013 WINLEE Property Inc. SELLER:/s/ Michael Bains DATE: 8/26/2013 EACO, Corporation Source: EACO CORP, 10-K, November 29, 2013Powered 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. 2nd ADDENDUM TO PURCHASE AGREEMENT This document is an addendum (“Addendum”) to the Purchase Agreement (“Purchase Agreement”) between EACO, Corporation (“Seller”) and WINLEEProperty, Inc. (“Buyer”) executed on the 7th day of August, 2013 for that certain real property located at: 475 Blanding Blvd. Orange Park, FloridaParcel #7004-00-00-0951 The provisions of this Addendum are hereby added to and incorporated in the Terms and Conditions in the aforementioned Agreement. Any provision of thisAddendum which is not numbered and fully completed shall have no force or effect. The Buyer and Seller agree to modify the Purchase Agreement accordingly: 1.Seller and Buyer agree to extend the inspection and finance period to September 25th, 2013. In the event the Buyer timely cancels thisAgreement prior to the expiration of the inspection and finance period, all deposits paid under the Contract shall be deemed refundable, andreturned to Buyer. 2.Buyer agrees to increase the deposit to a total of $100,000 by 4:pm EST on September 9th, 2013. 3.Buyer agrees to furnish a written signed letter of loan approval from its lender by the end of business day on September 6th, 2013 4.Seller and Buyer agree to extend the closing date to September 30th, 2013. ACCEPTANCE The undersigned Buyer, Seller and Agent accept and agree to the foregoing. BUYER:/s/ Bing Yiu Mak DATE:9-6-2013 WINLEE Property, Inc. SELLER: /s/ Michael Bains DATE:9/9/2013 EACO, Corporation B.Y. MAK President DATE:9-6-2013 WINLEE Property, Inc. SELLER: DATE: EACO, Corporation Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.30 CHANGE IN TERMS AGREEMENT Principal$5,055,421.29Loan Date11-09-2007Maturity12-01-2017Loan No75101054Call / CollCLS 52 / 810Account600714Officer230InitialsReferences in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.Any item above containing " * * * " has been omitted due to text length limitations Borrower:EACO CORPORATIONLender:COMMUNITY BANK 1500 N. LAKEVIEW AVENUE REAL ESTATE GROUP ANAHEIM, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999 Principal Amount: $5,055,421.29Date of Agreement: November 12, 2013 DESCRIPTION OF EXISTING INDEBTEDNESS. A loan to Borrower evidenced by a Promissory Note dated November 9, 2007 ("Note") DESCRIPTION OF COLLATERAL. A lien on real property as described in a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated November 9, 2007 and recorded onNovember 29, 2007, in the Official Records of Los Angeles County as instrument No, 20072624124 ("Deed of Trust") DESCRIPTION OF CHANGE IN TERMS. EFFECTIVE AS OF OCTOBER 1, 2013 ("Effective Date"): MODIFICATION OF NOTE. The Note is hereby modified and amended as follows: 1)The interest rate is hereby changed from a Fixed Rate of 6,00% to a Fixed Rate of 3.75%.2)The paragraph entitled "PAYMENT" is hereby deleted in its entirety and replaced with the following: PAYMENT. Borrower will pay this loan in 49 regular payments of $26,627.39 each and one irregular last payment estimated at $4,508.813.85. Borrower’sfirst payment is due November 1, 2013, and all subsequent payments are due on the same day of each month after that. Borrower’s final payment will be dueon December 1, 2017, and will be for all principal and all accrued interest not yet paid. 3)The paragraph entitled "PREPAYMENT FEE; MINIMUM INTEREST CHARGE" is hereby deleted in its entirety end replaced with the following: PREPAYMENT FEE; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of thedate of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default, except as otherwise required by law. Uponprepayment of this Note, Lender is entitled to the following prepayment fee: Three Percent (3.0%) of the principal balance prepaid, if suchprepayment occurs prior to the first anniversary date of the Effective Date of this Agreement; two percent (2.0%) of the principal balanceprepaid, if such prepayment occurs on or after the first anniversary date of the Effective Date of this Agreement and before the secondanniversary date of the Effective Date of this Agreement and one percent (1.0%) of the principal balance prepaid, if such prepayment occurs onor after the second anniversary date of the Effective Date of this Agreement but prior to the third anniversary date of the Effective Date of thisAgreement. From and after the third anniversary date of the Effective Date of this Agreement, there will be no prepayment fee. Notwithstandinganything to the contrary contained herein, no prepayment fee shall be due if the amount prepaid is less than $1,000 in excess of the amount of theregularly scheduled payment then due under the Note. Other than Borrower's obligation to pay any minimum interest 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 by Lender in writing relieve Borrower ofBorrower’s obligation to continue to make payments under the payment schedule. Rather early payments will reduce the principal balance due and may resultin Borrower's making fewer payments. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. IfBorrower sends such a payment, Lender may accept it without losing any of Lenders rights under this Note, and Borrower will remain obligated to pay anyfurther amount owed to Lender. Ali written communications concerning disputed amounts, including any check or other payment instrument that indicatesthat the payment constitutes payment in full of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputedamount must be mailed or delivered to: COMMUNITY BANK, 790 E. Colorado Blvd., Pasadena, CA 91101. 4)The paragraph entitled "INTEREST RATE REDUCTION" is hereby deleted in its entirety and replaced with the following:Source: EACO CORP, 10-K, November 29, 2013Powered 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. PRIMARY BANKING RELATIONSHIP. 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. In the event Borrower ceases to maintain itsPrimary Banking Relationship with Lender (as determined by Lender in its sole discretion), the interest rate set forth in this Note shall be increased by onepercent (1.00%), at Lender’s option, following a five (5) day written notice to the Borrower. The payments due after such notice is given to Borrower shall berecalculated in an amount, necessary to amortize the principal balance for the remaining term of the loan. CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreementsevidenced or securing the obligations), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender s right tostrict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute asatisfaction of the obligations). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation is), includingaccommodation parties, unless a party is expressly released by Lender in writing, Any maker or endorser, including accommodation makers, will not bereleased by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing belowacknowledge that this Agreement is given conditionally based on the representation to Lender that the non-signing party consents to the changes and provisionsof this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all suchsubsequent actions Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054CHANGE IN TERMS AGREEMENT(Continued)Page 2 PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENTBORROWER AGREES TO THE TERMS OF THE AGREEMENT. BORROWER: EACO COPORATION By:/s/ GLEN F. CEILEY GLEN F. CEILEY, CEO/SECRETARY of EACO CORPORATION Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.31 COMMUNITY BANK Partnership BankingCOMMERCIAL GUARANTY PrincipalLoan DateMaturityLoan NoCall / CollAccountOfficerInitials CLS 52 / 810 230References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.Any item above containing “***” has been omitted due to text length limitations. Borrower:EACO CORPORATION Lender:COMMUNITY BANK 1500 N. LAKEVIEW AVENUE REAL ESTATE GROUP ANAHEIM, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999 Guarantor:GLEN F. CEILEY 304 Evening Star Lane Newport Beach, CA 92660 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely andunconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of allBorrower’s obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender canenforce this Guaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness oragainst any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or itsorder, on demand, 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 ormore times, 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 or commodityprice protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans ortransactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarilyincurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct orindirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by anegotiable 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 FULLAND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOWEXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ONTHE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTYFOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAYBE A ZERO BALANCE FROM TIME TO TIME. 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 legalSource: EACO CORP, 10-K, November 29, 2013Powered 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.representative 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 Lender receivesfrom any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. Guarantor’s obligations under this Guarantyshall be in addition to any of Guarantor’s obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretofore or hereaftergiven 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 andassigns so long as any 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 maybe had against both his or her separate property and community property. Source: EACO CORP, 10-K, November 29, 2013Powered 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 GUARANTYLoan No: 75101054(Continued)Page 2 GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice ordemand and without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make oneor more 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 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 discretion maydetermine; (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 or inpart. GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreementsof any kind 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’srequest and 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 donot conflict 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 financial conditionas of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the date of the mostrecent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition; (H) nolitigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I)Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining fromBorrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed from such means of anyfacts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that, absent a request forinformation, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship withBorrower. 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) give noticeof 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) disclose anyinformation about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or (G) pursueany 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 Lenderwhich directly 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 ofany collateral by operation of law or otherwise; (L) any statute of limitations in any action under this Guaranty or on the Indebtedness; or (M) anymodification or change in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the timepayment of the Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of thisGuaranty on the Indebtedness 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-judicialforeclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower byoperation 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 rightsSource: EACO CORP, 10-K, November 29, 2013Powered 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.and 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 the Indebtednessis paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, or other 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’sfull knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. Ifany such 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 toany claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Source: EACO CORP, 10-K, November 29, 2013Powered 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 GUARANTYLoan No: 75101054(Continued)Page 3 Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may nowor hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment forthe benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantorshall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have oracquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for thepurpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafterevidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered toLender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuationstatements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights underthis 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 mattersset forth 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. ARBITRATION. Guarantor and Lender agree that all disputes, claims and controversies between them whether individual, joint, or class innature, arising from this Guaranty or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to thefinancial services rules of J.A.M.S or its successor in effect at the time the claim is filed, upon request of either party. No act to take or dispose ofany Collateral shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, withoutlimitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust or mortgage; obtaining awrit of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such propertywith or without judicial process pursuant Article 9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning thelawfulness or reasonableness of any act, or exercise of any right, concerning any Collateral, including any claim to rescind, reform, or otherwisemodify any agreement relating to the Collateral, shall also be arbitrated, provided however that no arbitrator shall have the right or the powerto enjoin or restrain any act of any party. Borrower and Guarantor and Lender agree that in the event of an action for judicial foreclosurepursuant to California Code of Civil Procedure Section 726, or any similar provision in any other state, the commencement of such an action willnot constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such action, including counterclaims, aslawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court havingjurisdiction. Nothing in this Guaranty shall preclude any party from seeking equitable relief from a court of competent jurisdiction. The statuteof limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall beapplicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action forthese purposes. The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision. 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, andGuarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there isa lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction),appeals, and any anticipated post-judgment collection services. 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 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, thelaws of the State of California 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 LOS ANGELES County,State of California. INTEGRATION. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity tobe advised 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 (includingLender’s attorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of thisparagraph. 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 deemedto have 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. Thewords “Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision ofSource: EACO CORP, 10-K, November 29, 2013Powered 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.this Guaranty 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, acourt will 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 ormore of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into thepowers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and anyindebtedness made 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 the sectionof this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal written noticeto the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes. Guarantor agrees to keep Lender informed atall times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to anyGuarantor 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 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 by Lender ofa provision 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. Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054(Continued)Page 4 SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon and inure tothe benefit of the parties, their successors and assigns. WAIVE JURY. To the extent permitted by applicable law, Lender and Guarantor hereby waive the right to any jury trial in any action,proceeding, or counterclaim brought by either Lender or Guarantor against the other. NATURE OF GUARANTY. Guarantor’s liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force.Guarantor intends to guarantee at all times performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, ofall indebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability or Guarantor in connection withany remaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted. PRIOR COMMERCIAL GUARANTY. This Commercial Guaranty hereby supersedes and replaces that certain prior Commercial Guaranty datedNovember 9, 2007, along with all modification(s) and amendment(s) thereto. 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 and includes all co-signers and co-makers signing the Note and all their successorsand assigns. GUARANTOR. The word “Guarantor” means everyone signing this Guaranty, including without limitation GLEN F. 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 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 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 and documents, whethernow or hereafter existing, executed in connection with the Indebtedness. EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY ANDAGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPONGUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUEUNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMALACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED NOVEMBER12, 2013. GUARANTOR: /s/ GLEN F. CEILEY GLEN F. CEILEY Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054(Continued)Page 5 CERTIFICATE OF ACKNOWLEDGMENT STATE OFCalifornia ) ) ss COUNTY OF Orange ) On November 12 , 2013 before me, Courtney Cresap, Notary Public , (here insert name and title of the officer) personally appeared GLEN F. CEILEY, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is subscribed to the withininstrument and 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), orthe entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /s/ Courtney Cresap (Seal) Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.32 COMMERCIAL GUARANTY PrincipalLoan DateMaturityLoan NoCall / CollAccountOfficerInitials CLS 52 / 810 230References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.Any item above containing “***” has been omitted due to text length limitations. Borrower:EACO CORPORATION Lender:COMMUNITY BANK 1500 N. LAKEVIEW AVENUE REAL ESTATE GROUP ANAHEIM, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999 Guarantor: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 andunconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of allBorrower’s obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender canenforce this Guaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness oragainst any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or itsorder, on demand, 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 ormore times, 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 or commodityprice protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans ortransactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarilyincurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct orindirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by anegotiable 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 FULLAND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOWEXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ONTHE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTYFOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAYBE A ZERO BALANCE FROM TIME TO TIME. 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:Source: EACO CORP, 10-K, November 29, 2013Powered 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.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 Lender receivesfrom any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. Guarantor’s obligations under this Guarantyshall be in addition to any of Guarantor’s obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretofore or hereaftergiven 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 andassigns so long as any 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 ordemand and without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make oneor more 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 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 discretion maydetermine; (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 or inpart. Source: EACO CORP, 10-K, November 29, 2013Powered 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 GUARANTYLoan No: 75101054(Continued)Page 2 GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreementsof any kind 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’srequest and 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 donot conflict 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 financial conditionas of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the date of the mostrecent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition; (H) nolitigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I)Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining fromBorrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed from such means of anyfacts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that, absent a request forinformation, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship withBorrower. 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) give noticeof 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) disclose anyinformation about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or (G) pursueany 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 Lenderwhich directly 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 ofany collateral by operation of law or otherwise; (L) any statute of limitations in any action under this Guaranty or on the Indebtedness; or (M) anymodification or change in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the timepayment of the Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of thisGuaranty on the Indebtedness 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-judicialforeclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower byoperation 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 the Indebtednessis paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, or other 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’sfull knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. Ifany such 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 publicSource: EACO CORP, 10-K, November 29, 2013Powered 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.policy. Subordination of Borrower’s Debts to Guarantor. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior toany claim 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. Source: EACO CORP, 10-K, November 29, 2013Powered 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 GUARANTYLoan No: 75101054(Continued)Page 3 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 mattersset forth 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. ARBITRATION. Borrower and Guarantor and Lender agree that all disputes, claims and controversies between them whether individual, joint, or class innature, arising from this Guaranty or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to the financial servicesrules of J.A.M.S. or its successor in effect at the time the claim is filed, upon request of either party. No act to take or dispose of any Collateral shall constitutea waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, without limitation, obtaining injunctive relief or atemporary restraining order; invoking a power of sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; orexercising any rights relating to personal property, including taking or disposing of such property with or without judicial process pursuant to Article 9 of theUniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right,concerning any Collateral, including any claim to rescind, reform, or otherwise modify any agreement relating to the Collateral, shall also be arbitrated,provided however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party. Borrower and Guarantor and Lender agree thatin the event of an action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, or any similar provision in any other state, thecommencement of such an action will not constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such action, includingcounterclaims, as lawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court havingjurisdiction. Nothing in this Guaranty shall preclude any party from seeking equitable relief from a court of competent jurisdiction. The statute of limitations,estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall be applicable in any arbitrationproceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. The Federal ArbitrationAct shall apply to the construction, interpretation, and enforcement of this arbitration provision. 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, andGuarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there isa lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction),appeals, and any anticipated post-judgment collection services. 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 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, thelaws of 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 tobe advised 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 (includingLender’s attorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of thisparagraph. 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 deemedto have 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. Thewords “Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision ofthis Guaranty 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, acourt will 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 ormore of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into thepowers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and anyindebtedness made 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 the sectionof this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal written noticeto the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes. Guarantor agrees to keep Lender informed atall times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to anyGuarantor is deemed to be notice given to all Guarantors. Source: EACO CORP, 10-K, November 29, 2013Powered 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.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 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 by Lender ofa provision 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. Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054(Continued)Page 4 SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon and inure tothe benefit of the parties, their successors and assigns. WAIVE JURY. To the extent permitted by applicable law, Lender and Guarantor hereby waive the right to any jury trial in any action,proceeding, or counterclaim brought by either Lender or Guarantor against the other. NATURE OF GUARANTY. Guarantor’s liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force.Guarantor intends to guarantee at all times the performance and prompt payment when due, whether at maturity or earlier by reason of acceleration orotherwise, of all indebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability of Guarantor inconnection with any remaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted. PRIOR COMMERCIAL GUARANTY. This Commercial Guaranty hereby supersedes and replaces that certain prior Commercial Guaranty datedNovember 9, 2007, along with all modification(s) and amendment(s) thereto. 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 and includes all co-signers and co-makers signing the Note and all their successorsand assigns. GUARANTOR. The word “Guarantor” means everyone signing this Guaranty, including without limitation GLEN F. CEILEY AND BARBARA A.CEILEY REVOCABLE TRUST, 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 ANDAGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPONGUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUEUNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMALACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED NOVEMBER12, 2013. GUARANTOR: GLEN F. CEILEY AND BARBARA A. CEILEY REVOCABLETRUST, dated May 9, 2007 By:/s/ GLEN F. CEILEY By:/s/ BARBARA A. CEILEY GLEN F. CEILEY, Trustee of GLEN F. CEILEY BARBARA A. CEILEY, Trustee of GLEN F. CEILEY AND BARBARA A. CEILEY REVOCABLE TRUST AND BARBARA A. CEILEY REVOCABLE TRUST Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054(Continued)Page 5 CERTIFICATE OF ACKNOWLEDGMENT STATE OFCalifornia ) ) ss COUNTY OF Orange ) On November 12 , 2013 before me, Courtney Cresap, Notary Public , (here insert name and title of the officer) personally appeared GLEN F. CEILEY and BARBARA A. CEILEY, who proved to me on the basis of satisfactory evidence to be the person(s) whosename(s) are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacity(ies), and that by theirsignature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /s/ Courtney Cresap (Seal) Source: EACO CORP, 10-K, November 29, 2013Powered 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 10.33 COMMERCIAL GUARANTY PrincipalLoan DateMaturityLoan NoCall / CollAccountOfficerInitials CLS 52 / 810 230 References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.Any item above containing “***” has been omitted due to text length limitations. Borrower:EACO CORPORATION Lender:COMMUNITY BANK 1500 N. LAKEVIEW AVENUE REAL ESTATE GROUP ANAHEIM, CA 92807 790 EAST COLORADO BOULEVARD PASADENA, CA 91101 (800) 788-9999 Guarantor:BISCO INDUSTRIES, INC. 1500 NORTH LAKEVIEW AVENUE ANAHEIM, CA 92807 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely andunconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of allBorrower’s obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender canenforce this Guaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness oragainst any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or itsorder, on demand, 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 ormore times, 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 or commodityprice protection agreements, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans ortransactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarilyincurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct orindirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by anegotiable 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 FULLAND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOWEXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ONTHE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTYFOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAYBE A ZERO BALANCE FROM TIME TO TIME. 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 orSource: EACO CORP, 10-K, November 29, 2013Powered 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.incapacity, 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 Lender receivesfrom any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. Guarantor’s obligations under this Guarantyshall be in addition to any of Guarantor’s obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretofore or hereaftergiven 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 andassigns so long as any 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 ordemand and without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make oneor more 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 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 discretion maydetermine; (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 or inpart. Source: EACO CORP, 10-K, November 29, 2013Powered 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 GUARANTYLoan No: 75101054(Continued)Page 2 GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreementsof any kind 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’srequest and 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 donot conflict 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 financial conditionas of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the date of the mostrecent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition; (H) nolitigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I)Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining fromBorrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed from such means of anyfacts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that, absent a request forinformation, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship withBorrower. 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) give noticeof 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) disclose anyinformation about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or (G) pursueany 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 Lenderwhich directly 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 ofany collateral by operation of law or otherwise; (L) any statute of limitations in any action under this Guaranty or on the Indebtedness; or (M) anymodification or change in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the timepayment of the Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of thisGuaranty on the Indebtedness 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-judicialforeclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower byoperation 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 the Indebtednessis paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, or other 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’sfull knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. Ifany such 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 publicSource: EACO CORP, 10-K, November 29, 2013Powered 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.policy. Source: EACO CORP, 10-K, November 29, 2013Powered 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 GUARANTYLoan No: 75101054(Continued)Page 3 Subordination of Borrower’s Debts to Guarantor. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior toany claim 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 mattersset forth 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. ARBITRATION. Guarantor and Lender agree that all disputes, claims and controversies between them whether individual, joint, or class innature, arising from this Guaranty or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to thefinancial services rules of J.A.M.S or its successor in effect at the time the claim is filed, upon request of either party. No act to take or dispose ofany Collateral shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, withoutlimitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust or mortgage; obtaining awrit of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such propertywith or without judicial process pursuant Article 9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning thelawfulness or reasonableness of any act, or exercise of any right, concerning any Collateral, including any claim to rescind, reform, or otherwisemodify any agreement relating to the Collateral, shall also be arbitrated, provided however that no arbitrator shall have the right or the powerto enjoin or restrain any act of any party. Borrower and Guarantor and Lender agree that in the event of an action for judicial foreclosurepursuant to California Code of Civil Procedure Section 726, or any similar provision in any other state, the commencement of such an action willnot constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such action, including counterclaims, aslawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court havingjurisdiction. Nothing in this Guaranty shall preclude any party from seeking equitable relief from a court of competent jurisdiction. The statuteof limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall beapplicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action forthese purposes. The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision. 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, andGuarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there isa lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction),appeals, and any anticipated post-judgment collection services. 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 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, thelaws of 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 tobe advised 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 (includingLender’s attorneys’ fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of thisparagraph. 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 deemedto have 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. Thewords “Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision ofthis Guaranty 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, acourt will 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 orSource: EACO CORP, 10-K, November 29, 2013Powered 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.more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into thepowers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and anyindebtedness made 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 the sectionof this Guaranty entitled “DURATION OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal written noticeto the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes. Guarantor agrees to keep Lender informed atall times of Guarantor’s current address. Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to anyGuarantor 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 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 by Lender ofa provision 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. Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054(Continued)Page 4 SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon and inure tothe benefit of the parties, their successors and assigns. WAIVE JURY. To the extent permitted by applicable law, Lender and Guarantor hereby waive the right to any jury trial in any action,proceeding, or counterclaim brought by either Lender or Guarantor against the other. NATURE OF GUARANTY. Guarantor’s liability under this Guaranty shall be open and continuous for so long as this Guaranty remains in force.Guarantor intends to guarantee at all times performance and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, ofall indebtedness. Accordingly, no payments made upon the indebtedness will discharge or diminish the continuing liability or Guarantor in connection withany remaining portions of the indebtedness or any of the indebtedness which subsequently arises or is thereafter incurred or contracted. PRIOR COMMERCIAL GUARANTY. This Commercial Guaranty hereby supersedes and replaces that certain prior Commercial Guaranty datedNovember 9, 2007, along with all modification(s) and amendment(s) thereto. 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 and includes all co-signers and co-makers signing the Note and all their successorsand assigns. GUARANTOR. The word “Guarantor” means everyone signing this Guaranty, including without limitation BISCO INDUSTRIES, INC., 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 ANDAGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPONGUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUEUNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMALACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED NOVEMBER12, 2013. GUARANTOR: BISCO INDUSTRIES, INC. By:/s/ GLEN F. CEILEY GLEN F. CEILEY, CHAIRMAN/CEO/SECY of BISCO INDUSTRIES, INC. Source: EACO CORP, 10-K, November 29, 2013Powered 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: 75101054(Continued)Page 5 CERTIFICATE OF ACKNOWLEDGMENT STATE OFCalifornia ) ) ss COUNTY OF Orange ) On November 12 , 2013 before me, Courtney Cresap, Notary Public , (here insert name and title of the officer) personally appeared GLEN F. CEILEY, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is subscribed to the withininstrument and 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), orthe entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /s/ Courtney Cresap (Seal) Source: EACO CORP, 10-K, November 29, 2013Powered 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 31.1 CERTIFICATION PURSUANT TO EXCHANGE ACTRULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, 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 statea material fact necessary to make the statements made, in light of the circumstances under which such statementswere 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, fairlypresent in all material respects the financial 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 inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in ExchangeAct 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 proceduresto be designed under my supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to me by others within those entities, particularly during the period in whichthis report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of anannual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing theequivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably 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 significantrole in the registrant’s internal control over financial reporting. Date: November 29, 2013 /S/ GLEN CEILEY Glen Ceiley, Chief Executive Officer (principal executive officer and principal financial officer) Source: EACO CORP, 10-K, November 29, 2013Powered 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 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. §1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of EACO Corporation (the “Company”) on Form 10-K for the fiscal yearended August 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,Glen Ceiley, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant toSection 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 SecuritiesExchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financialcondition and results of operations of the Company. Date: November 29 , 2013 /S/ GLEN CEILEY Glen Ceiley, Chief Executive Officer (principal executive officer and principal financial officer) Source: EACO CORP, 10-K, November 29, 2013Powered 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.Source: EACO CORP, 10-K, November 29, 2013Powered 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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