Exhibit
10.7


 


 


 


PROMISSORY
NOTE


 


	Principal	Loan Date	Maturity	Loan No	Call / Coll	Account	Officer	Initials
	$ 100,000.00	07-12-2016	07-01-2018	7101066	 	600714	 	 
	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	 	ANAHEIM BRANCH
	 	ANAHEIM, CA 92807	 	1750 S. STATE COLLEGE BLVD.
	 	 	 	ANAHEIM, CA 92806
	 	 	 	(800) 788-9999


 





 



 


	Principal Amount: $100,000.00 	Date of Note: July 12, 2016


 


PROMISE
TO PAY. EACO CORPORATION (“Borrower”) promises to pay to COMMUNITY BANK (“Lender”), or order, In lawful money
of the United States of America, the principal amount of One Hundred Thousand & 00/100 Dollars ($100,000.00) or so much as
may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance.


 


PAYMENT.
Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on July 1, 2018. In addition,
Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning August 1, 2016,
with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by
applicable law, payments will be applied to any accrued unpaid interest; then to principal; then to late charges; then to any unpaid
collection costs. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.


 


VARIABLE
INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent
index which is the Wall Street Journal Prime Rate, which is the Prime Rate published in the “Money Rates” section of
the Wall Street Journal from time to time (the “Index”). The
Index is not necessarily the lowest
rate charged by Lender on its loans.
If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower.
Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will
not occur more often than each day. Borrower understands that Lender may make loans based on other rates as well. The
Index currently is 3.500% per annum. Interest on the unpaid principal balance of this Note will
be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate equal to the Index, resulting
in an initial rate of 3.500%. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed by applicable law.


 


INTEREST
CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over
a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance
is outstanding. All interest payable under this Note is computed using this method.


 


PREPAYMENT.
Borrower may pay without penalty 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 of Borrower’s obligation to continue to make payments of accrued unpaid
interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid
in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender All
written communications concerning disputed amounts, including any check or other payment instrument that indicates that 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 disputed amount must be mailed or delivered to: COMMUNITY BANK, ANAHEIM BRANCH, 1750 S. STATE COLLEGE BLVD.,
ANAHEIM, CA 92806.


 


LATE
CHARGE. If a
payment is 10 days or more late, Borrower will be
charged 6.000% of the unpaid portion of the regularly
scheduled payment or $5.00, whichever is greater.


 


INTEREST
AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under applicable law, immediately increase
by adding an additional 5.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply
to each succeeding interest rate change that would have applied had there been no default.


 


DEFAULT.
Each of the following shall constitute an event of default (“Event of Default”) under this Note:


 


Payment
Default. Borrower fails to make any payment when due under this Note.


 


Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note
or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Borrower.


 


Default
in Favor of Third
Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property
or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.


 


False
Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower
or on Borrower’s behalf under this Note
or the related documents is false or misleading in any material respect, either now
or at the time made or furnished or becomes
false or misleading at any time thereafter.


 


Insolvency.
The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against Borrower,


 


Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral
securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower
gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or
bond for the dispute.


 




     


     


    

 


	 	PROMISSORY NOTE	 
	Loan No: 7101066	(Continued)	Page 2


 


Insufficient
Account Balance. Failure to satisfy Lender’s requirement set forth in the Insufficient Account Balance section of the Assignment
of Deposit Account.


 


Events
Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation
party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes
or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.


 


Change
In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.


 


Adverse
Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or
performance of this Note is impaired.


 


Insecurity.
Lender in good faith believes itself insecure.


 


Cure
Provisions. If any default, other than a default in payment, is curable and if Borrower has not been given a notice
of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender
sends written notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the
cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to
be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.


 


LENDER’S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount.


 


ATTORNEYS’
FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay
Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal
expenses, whether or notthere is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all
other sums provided by law.


 


GOVERNING
LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of
the State of California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of
California.


 


CHOICE
OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of ORANGE
County, State of California.


 


DISHONORED
ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized
charge with which Borrower pays is later dishonored.


 


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


 


COLLATERAL.
Borrower acknowledges this Note is secured by Collateral as described per Assignment of Deposit Account of even date.


 


LINE
OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing
by Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing.
All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender’s office shown
above. The following person or persons are authorized to request advances and authorize payments under the line of credit until
Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority: GLEN F. CEILEY,
CEO/CFO/SECRETARY of EACO CORPORATION. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the
instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender. The unpaid principal balance owing
on this Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer
print-outs.


 


COUNTERPARTS.
This agreement, document or instrument may be executed in any number of counterparts and by different parties on separate
counterparts, each of which when executed and delivered, shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement, document or instrument Delivery by facsimile or by electronic transmission in portable
document format (PDF) of an executed counterpart of this agreement, document or instrument is as effective as delivery of an originally
executed counterpart of this agreement, document or instrument.


 


JUDICIAL
REFERENCE. Borrower and Lender agree that any dispute, action, proceeding or hearing (“Dispute”) arising out of,
or relating to, this Agreement shall be determined by a consensual general judicial reference pursuant to the provisions of California
Code of Civil Procedure Section 638 et seq.; as such statutes may be amended or modified from time to time. Upon a written request,
or upon an appropriate motion by either party to this Agreement, any pending action relating to any Dispute and every Dispute
shall be heard by a retired judge or justice of the courts of the State of California or a federal court judge (the “Referee”),
who shall try ail issues (including any and all questions of law and questions of fact relating thereto), and issue findings of
fact and conclusions of law and report a statement of decision The Referee’s statement of decision will constitute the conclusive
determination of the Dispute. Borrower and Lender agree that the Referee shall have the power to issue all legal and equitable
relief appropriate under the circumstances before him/her in the same manner as would a judge sitting without a jury.


 


LETTER
OF CREDIT FACILITY. Subject to the terms of this Agreement. Lender will issue standby letters of credit and/or commercial
letters of credit (each, a “Letter of Credit”) on behalf of Borrower. At no time, however, shall the total face amount
of all letters of credit outstanding, less any partial draws paid under the letters of credit exceed the amount available under
straight line of credit to maximum of $100,000.00.


 


(1) Upon
Lender’s request, Borrower promptly shall pay to Lender issuance fees and such other fees, commissions, costs, and any out-of-pocket
expenses charged or incurred by Lender with respect to
any Letter of Credit.


 


(2)
The commitment by Lender to issue Letters of Credit shall, unless earlier terminated in accordance with the terms of this Agreement,
automatically terminate on the Expiration Date and no Letter of Credit shall expire after the Expiration Date. Expiration Date
means the current maturity date of the Note or any future maturity date as described in any renewal, extension, modification, refinancing,
consolidation or substitution for the Note.


 


(3)
Each Letter of Credit shall be in form and substance satisfactory to Lender and in favor of beneficiaries satisfactory to Lender,
provided that Lender may refuse to issue a Letter of Credit due to the nature of the transaction or its terms or in connection
with any transaction where Lender, due to the beneficiary or the nationality or residence of the beneficiary, would be prohibited
by any applicable law, regulation, or order from issuing such Letter of Credit.


 




     


     


    

 


	 	PROMISSORY NOTE	 
	Loan No: 7101066	(Continued)	Page 3


 


(4)
Prior to the issuance of each Letter of Credit, and in all events prior to any daily cutoff time Lender may have established
for purposes thereof, Borrower shall deliver to Lender a duly executed form of Lender’s standard form of application for
issuance of letter of credit with proper insertions.


 


(5)
Notwithstanding anything contained in this Agreement or any Related Documents to the contrary, upon issuance of a Letter of Credit
by Lender, the amount available for Advances hereunder shall automatically be reduced by the face amount of such Letter of Credit,
and such amount shall remain unavailable for Advances so long as Lender remains obligated to make payments under the Letter of
Credit.


 


SUCCESSOR
INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors
and assigns, and shall inure to the benefit of Lender and its successors and assigns.


 


NOTIFY
US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any
inaccurate information about Borrower’s account(s) to a consumer reporting agency. Borrower’s written notice describing the
specific inaccuracy(ies) should be sent to Lender at the following address: COMMUNITY BANK Loan Support Group P.O. Box 54477
Los Angeles, CA 90054.


 


GENERAL
PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay
or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand
for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing,
no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party
or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take
any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender
may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.


 


PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE.


 


BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.


 


BORROWER:


 


EACO
CORPORATION


 





	By: 	/s/  GLEN F. CEILEY	 
	 	GLEN F. CEILEY, CEO/CFO/SECRETARY of EACO CORPORATION	 




 





 



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