EXHIBIT 10.9
PROMISSORY NOTE
(Tranche B Note)
Loan No. 700218A

     
$9,000,000.00
  February 7, 2008

     FOR VALUE RECEIVED, the undersigned, JOHN B. SANFILIPPO & SON, INC., a
Delaware corporation (hereafter referred to as “Borrower”), hereby promises to
pay to the order of TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa corporation
(hereafter referred to as “Payee”; Payee and/or any subsequent holder(s) hereof,
hereafter referred to as “Holder”), at:
Transamerica Life Insurance Company
c/o AEGON USA Realty Advisors, Inc.
c/o Bank of America
Post Office Box 96273
Chicago, IL 60693-6273
or at such other place as Holder may designate from time to time in writing, in
lawful money of the United States and in immediately available funds, the
principal amount of Nine Million and 00/100 Dollars ($9,000,000.00), together
with interest on the outstanding balance thereof, at the rates set forth below,
from the Disbursement Date (as defined below) until the entire balance of
principal has been paid in full, such principal and interest being due and
payable as set forth in Section 1 below. As used in this Note, (1) the “Loan”
means the loan evidenced by this Note and that certain Promissory Note dated as
of even date herewith made by Borrower payable to the order of Payee in the
original principal amount of Thirty-six Million and 00/100 Dollars
($36,000,000.00) (the “Tranche A Note”), and (2) the “Disbursement Date” means
the date on which Payee initiates the transfer of funds on the Federal Reserve
wire system in disbursement of the proceeds of the Loan.
     1. INTEREST AND PAYMENTS.
          1.A. Interest Rate.  From the Disbursement Date to March 1, 2010 (the
“First Interest Adjustment Date”), interest will accrue on the outstanding
principal balance hereof at the variable rate of interest determined from time
to time as described herein (the “Floating Rate”), but in no event in excess of
the maximum rate of interest allowed by applicable law from time to time. The
initial Floating Rate, at which interest on the Loan shall accrue from the
Disbursement Date through the last day of February, 2008, shall be eight and
sixty-four one-hundredths percent (8.64%) per annum. Effective on the first
(1st) day of March, 2008, and thereafter at intervals of one (1) full calendar
months during the Loan’s term (each such period a “Floating Rate Period”), the
Floating Rate shall be adjusted to the rate which is 550 Basis Points, as
defined in Section 1.E below, over the one-month LIBOR rate (the “Floating
Index”),

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as reported in The Wall Street Journal on the last business day of the preceding
Floating Rate Period (the “Determination Date”). If the Floating Index is no
longer so published, the Floating Index used to adjust the rate shall be the
one-month LIBOR rate published on the related Determination Date by a daily
business publication or Internet service reasonably acceptable to Lender. On the
First Interest Adjustment Date and on March 1st of years 2012, 2014, 2016, 2018,
2020, and 2022 (each, an “Interest Adjustment Date”), the interest rate
hereunder shall be adjusted and interest will accrue on the outstanding
principal balance hereof at the rate determined in accordance with Section 1.B
below (the “Reset Interest Rate”).
     1.B. Reset Interest Rate.
          (1) Unless an Event of Default (as defined in Section 5 below) has
occurred and is uncured, or Borrower has failed to provide the Financial
Information required by Section 1.C. below as and when required, Payee shall
propose an interest rate spread and index in writing (the “Reset Interest Rate
Proposal”) to Borrower during the sixty (60)-day period beginning one hundred
twenty (120) days and ending sixty (60) days prior to the applicable Interest
Adjustment Date. The Reset Interest Rate Proposal for the adjustments occurring
on March 1, 2010, March 1, 2012 and March 1, 2014 shall continue to be based on
the Floating Index. Thereafter, the Reset Interest Rate Proposal may be based on
any spread and index. If Borrower wishes to accept the Reset Interest Rate
Proposal, Borrower shall advise Payee in writing of Borrower’s acceptance any
time within thirty (30) days after the date of the Reset Interest Rate Proposal.
Thereafter, the Reset Interest Rate shall be locked as follows: (a) in the case
of a floating rate Reset Interest Rate Proposal, on the last business day prior
to such Interest Adjustment Date, or (b) in the case of a fixed rate Reset
Interest Rate Proposal, upon Lender’s receipt of Borrower’s written request to
lock not less than ten (10) days nor more than thirty (30) days prior to the
applicable Interest Adjustment Date, provided, if Borrower has not elected to
lock the interest rate during such period, Lender shall lock the interest rate
ten (10) days prior to such Interest Adjustment Date. Once the interest rate has
been locked in accordance with (a) or (b) above, the Reset Interest Rate shall
become effective from the applicable Interest Adjustment Date to the first to
occur of the next Interest Adjustment Date or the Maturity Date (as defined
below). The principal balance of the Loan will not be reamortized following an
Interest Adjustment Date.
          (2) In connection with each Reset Interest Rate and as a condition to
the continuance of the Loan beyond the applicable Interest Adjustment Date,
Borrower shall pay Payee’s reasonable counsel fees, execute such documents and
furnish at Borrower’s expense such title evidence assuring Payee’s continued
first lien, as Payee and Payee’s local counsel may require in connection with
the implementation of the Reset Interest Rate.
          (3) If Borrower does not accept a Reset Interest Rate Proposal in
accordance with this Section or if Payee is not required to make such Reset
Interest Rate Proposal, then the principal balance, together with all accrued
and unpaid interest and all other amounts outstanding under this Note shall be
due and payable without any prepayment premium

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on the Interest Adjustment Date immediately following the date of the Reset
Interest Rate Proposal.
     1.C. Additional Terms Regarding Rate Reset Proposal.
          (1) In addition to any financial information Borrower is required to
deliver to Payee under the terms of the Loan Documents (as hereafter defined),
Borrower shall deliver to Payee by no later than, respectively, the date which
is one hundred twenty (120) days immediately prior to the applicable Interest
Adjustment Date, all information Payee needs, in its sole and absolute
discretion, to determine the Reset Interest Rate Proposal (the “Financial
Information”). The Financial Information may include, but is not limited to,
current financial statements of the Borrower, current operating statements for
the property encumbered by the Mortgages (the “Property”), federal income tax
returns of Borrower and operating budgets for the Property.
          (2) If an Event of Default has occurred and is uncured or Borrower
fails to provide the Financial Information as and when required, Payee shall
have no obligation to make a Reset Interest Reset Proposal; provided, however,
if Borrower cures the Event of Default or provides the requisite Financial
Information within ten (10) days from the first day Payee may make the Reset
Interest Rate Proposal, Payee will proceed to make the Reset Interest Rate
Proposal, otherwise, Payee shall be relieved from making such a proposal, at its
option, and the interest rate otherwise applicable under this Note shall remain
in effect and this Note shall be due and payable in full on the Interest
Adjustment Date as noted above.
          (3) In the event the Reset Interest Rate is a fixed rate, the Borrower
shall execute all such documents as Payee may require to adjust the prepayment
premium calculation set forth in Section 7.A to reflect the prepayment
calculation typically used by Payee in connection with fixed rate loans which
calculation shall be set forth in the Reset Interest Rate Proposal.
     1.D Payment Terms. Principal and interest shall be due and payable as
follows.
          (1) On the Disbursement Date, the Borrower shall remit to Payee a
payment equal to the interest accrued on the outstanding principal balance from
the Disbursement Date through and including February 29, 2008.
          (2) On April 1, 2008 and May 1, 2008, Borrower shall pay to Payee a
monthly installment of accrued interest only on the outstanding principal
balance.
          (3) Thereafter, monthly principal payments in the sum of Fifty
Thousand Dollars ($50,000) plus accrued interest at the interest rate then in
effect on the outstanding principal balance of this Note for the previous month,
each shall be due and payable on the first day of each calendar month, beginning
on June 1, 2008, and continuing until March

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1, 2023 (the “Maturity Date”). Monthly installments of principal and interest
shall be made when due, regardless of the prior acceptance by Lender of
unscheduled payments.
               (4) The entire outstanding principal balance of the indebtedness
evidenced hereby, plus all accrued and unpaid interest thereon, shall be due and
payable in full on the Maturity Date.
          1.E. Basis Point.  As used in this Note, the term “Basis Point” means
one one-hundredth (1/100th) of one percentage point of interest.
          1.F. Calculation of Interest.  All interest on any indebtedness
evidenced by this Note shall be calculated on the basis of a three hundred sixty
(360)-day year composed of twelve (12) thirty (30)-day months. Interest for
partial months shall be calculated by multiplying the principal balance of this
Note by the applicable per annum rate, dividing the product so obtained by 360,
and multiplying the result by the actual number of days elapsed. Calculating
interest for partial months on the basis of a 360-day year results in more
interest than if a 365-day year were used.
          1.G. Balloon Payment.  THIS NOTE PROVIDES FOR A BALLOON PAYMENT WHICH
WILL BE DUE IN FULL ON THE MATURITY DATE, AND BORROWER ACKNOWLEDGES THAT NO
PROVISION OR AGREEMENT HAS BEEN MADE FOR THE REFINANCING BY HOLDER OF THE AMOUNT
TO BE PAID ON SUCH DATE.
     2. APPLICATION OF PAYMENTS.  All payments made under this Note shall be
applied first, to the following, in such order as Holder may elect in its sole
discretion, until all such items are paid in full: (a) any late charges due in
accordance with Section 4 below; (b) any past-due interest, including without
limitation interest accrued at the Default Interest Rate in accordance with
Section 4 below; (c) reimbursement of any sums advanced by Holder to cure
defaults under the Mortgages (to the extent such advances are permitted under
the Mortgages or other Loan Documents (as such terms are defined below));
(d) any applicable prepayment premium due in accordance with Section 7 below;
(e) reimbursement of any expenses to which Holder is entitled pursuant to
Section 10 below; second, to any past-due principal; third, to current interest
accrued as of the date of Holder’s receipt of such payment; and fourth, to
reduce the outstanding principal balance. No partial prepayment of principal
shall result in any adjustment of the amount of the scheduled installments of
principal thereafter becoming due.
     3. COLLATERAL.  The indebtedness evidenced by this Note is secured by,
among other things, (1) that certain Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing executed by Borrower, as
Trustor, in favor of Payee, as Beneficiary, encumbering property located in the
County of Merced, State of California, as more particularly described therein;
(2) that certain Deed of Trust, Security Agreement, Assignment of Leases and
Rents and Fixture Filing executed by Borrower, as Trustor, in favor of Payee, as
Beneficiary, encumbering property located in the County of Northampton, State of
North Carolina, as more particularly described

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therein; (3) that certain Mortgage, Security Agreement, Assignment of Leases and
Rents and Fixture Filing executed by Borrower, as Mortgagor, in favor of Payee,
as Mortgagee, encumbering property located in the County of Kane, State of
Illinois, as more particularly described therein, and (4) that certain Mortgage,
Security Agreement, Assignment of Leases and Rents and Fixture Filing executed
by JBSS Properties, LLC, an Illinois limited liability company (“JBSS”), as
Mortgagor, in favor of Payee, as Mortgagee, encumbering property located in the
County of Kane, State of Illinois, as more particularly described therein, each
dated as of even date herewith (collectively herein, the “Mortgages”).
Furthermore, certain financial and other covenants are set forth in that certain
Loan Agreement dated as of even date herewith among Borrower, JBSS and Payee
(the “Loan Agreement”). This Note, the Tranche A Note, the Mortgages and the
Loan Agreement, together with all other documents or instruments now or
hereafter evidencing, securing, or otherwise relating to the indebtedness
evidenced hereby, as amended or modified in writing from time to time, are
sometimes hereinafter referred to collectively as the “Loan Documents.”
     4. LATE CHARGES AND INTEREST UPON DEFAULT.  If Payee does not receive any
scheduled payment on or before the tenth (10th) day of the calendar month in
which it is due, Payee will send the Borrower written notice that a late charge
equal to four percent (4%) of the late payment has accrued. Borrower shall pay
such late charge on or before the tenth (10th) calendar day of the month
following the month in which the late payment was to have been received. In the
event that any payment of principal, interest, late charges or prepayment
premium payable under this Note is not paid within ten (10) days from its due
date, whether or not by reason of acceleration, such failure shall constitute an
Event of Default hereunder, and such amount shall bear interest from the due
date thereof until paid at a rate per annum Three Hundred (300) Basis Points
above the interest rate otherwise in effect under this Note or the maximum rate
that may be agreed to by law for delinquent payments due under a commercial
loan, whichever is less (the “Default Interest Rate”). Borrower acknowledges and
agrees that during the time that any payment of principal, interest or other
amount due under this Note or any other Loan Document is delinquent, Holder will
incur additional costs and expenses attributable to its loss of use of the money
due and attributable to the adverse impact on Holder’s ability to meet its other
obligations and avail itself of other opportunities. Borrower agrees it is
extremely difficult and impractical to ascertain the extent of such costs and
expenses, and Borrower therefore agrees to payment of the above late charge and
the accrual of interest at the Default Interest Rate in accordance with this
Section, regardless of whether or not there has been an acceleration of the
maturity of the indebtedness evidenced by this Note. Borrower acknowledges that
the charging of interest at the Default Interest Rate will result in compounded
interest (i.e., interest on interest).
     5. EVENT OF DEFAULT. The occurrence of any of the following shall
constitute an “Event of Default” hereunder:
          (a) the failure of Borrower to pay, or cause to be paid, any scheduled
installment of principal and interest or any other indebtedness evidenced by
this Note or the Tranche A Note within ten (10) days of the date when due;

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          (b) the failure of Borrower to pay, or cause to be paid, the entire
indebtedness evidenced hereby on the Maturity Date or on the Interest Adjustment
Date if Borrower fails to accept the Reset Interest Rate Proposal or on
acceleration of the Loan;
          (c) the failure of Borrower to pay, or cause to be paid, any other
amount due and payable under the Loan Documents and any applicable cure period
has expired; or
          (d) the occurrence of a default or Event of Default under any of the
other Loan Documents and the expiration of any applicable cure periods set forth
therein, including without limitation the failure of Borrower to observe the
provisions of Section 12 of the Mortgages (entitled “Due on Transfer or
Encumbrance”).
     6. ACCELERATION.  Upon the occurrence of an Event of Default, Holder may at
its option, in addition to any other remedies to which it may be entitled,
declare the total unpaid principal balance of the indebtedness evidenced hereby,
together with all accrued but unpaid interest thereon and any applicable
prepayment premium and all other sums owing under any of the other Loan
Documents, immediately due and payable, including without limitation all costs
of collection, without further presentment, demand, protest or notice of any
kind, by so notifying Borrower in writing; provided, however, that if the Event
of Default arises solely as the result of the failure of Borrower to make a
regular monthly payment of interest or principal and interest, the Holder shall
provide notice of its intent to accelerate the indebtedness, and a cure period
of three (3) business days, prior to declaring the indebtedness to be
immediately due and payable. From and after acceleration, all sums then due as a
result of acceleration shall bear interest at the Default Interest Rate. If the
Loan has been accelerated and Borrower wishes to pay the Loan in full, the
payment tendered must include the applicable prepayment premium.
     7. PREPAYMENT. Upon giving Holder not less than thirty (30) days’ prior
written notice, Borrower may prepay on the first day of any calendar month the
principal amount due under this Note, in whole or in partial payments of not
less than One Hundred Thousand Dollars ($100,000) each, without prepayment
premium. No partial prepayment shall result in any adjustment of the amount of
the scheduled installments of principal thereafter becoming due.
     8. LITIGATION EXPENSE.  If an Event of Default exists and the Holder
engages counsel to collect any amount due under this Note or if the Holder is
required to protect or enforce this Note in any probate, bankruptcy or other
proceeding, then any expenses incurred by the Holder in respect of the
engagement, including the reasonable fees and reimbursable expenses of counsel
and including such costs and fees which relate to issues that are particular to
any given proceeding, shall constitute indebtedness evidenced by this Note,
shall be payable on demand, and shall bear interest at the Default Interest
Rate. Such fees and expenses include those incurred in connection with any
action against the Borrower for a deficiency judgment after a foreclosure or
trustee’s sale of the Property under the Mortgages, including all of the
Holder’s reasonable attorneys’ fees, property appraisal costs and witness fees.
Such fees and costs, if incurred after a foreclosure or trustee’s sale, shall
not be secured by the Mortgages.

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     9. REIMBURSEMENT OF COSTS AND EXPENSES.  Borrower agrees to reimburse
Holder within five (5) days of Holder’s written demand for all costs and
expenses (including, but not limited to, reasonable attorneys’ fees, including
allocated costs of in-house counsel which are not duplicative of any other costs
and expenses) incurred by Holder in connection with the exercise of Holder’s
rights under this Note or the other Loan Documents, and the enforcement thereof,
whether or not an action is commenced, and in connection with the administration
of Holder’s rights under this Note, other than routine servicing matters
customarily performed by Holder for loans of a similar nature and for which no
cost is customarily charged.
     10. WAIVER.  Borrower and any sureties, guarantors and endorsers of this
Note hereby consent to renewals and extensions of time at or after the Maturity
Date and hereby waive diligence, presentment, protest, demand and notice of
every kind and (to the full extent permitted by law) the right to plead any
statute of limitations as a defense to any demand hereunder or in connection
with any security herefor, and hereby agree that no failure on the part of
Holder to exercise any power, right or privilege hereunder, or to insist upon
prompt compliance with the terms hereof, shall constitute a waiver thereof.
     11. FORBEARANCE.  Holder shall not be deemed to have waived any of Holder’s
rights or remedies under this Note unless such waiver is express and in a
writing signed by Holder, and no delay or omission by Holder in exercising, or
failure by Holder on any one or more occasions to exercise, any of Holder’s
rights hereunder or under the other Loan Documents, or at law or in equity,
including, without limitation, Holder’s right, after any Event of Default, to
declare the entire indebtedness evidenced hereby immediately due and payable,
shall be construed as a novation of this Note or shall operate as a waiver or
prevent the subsequent exercise of any or all of such rights. Acceptance by
Holder of any portion or all of any sum payable hereunder whether before, on or
after the due date of such payment, shall not be a waiver of Holder’s right
either to require prompt payment when due of all other sums payable hereunder or
to exercise any of Holder’s rights, powers and remedies hereunder or under the
other Loan Documents. A waiver of any right on one occasion shall not be
construed as a waiver of Holder’s right to insist thereafter upon strict
compliance with the terms hereof without previous notice of such intention being
given to Borrower. No exercise of any right by Holder shall constitute or be
deemed to constitute an election of remedies by Holder precluding the subsequent
exercise by Holder of any or all of the rights, powers and remedies available to
it hereunder, under any of the other Loan Documents, or at law or in equity.
Borrower expressly waives, to the extent permitted by law, the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to, or in conflict with, the
foregoing. Borrower consents to any and all renewals and extensions in the time
of payment hereof without in any way affecting the liability of Borrower or any
person liable or to become liable with respect to any indebtedness evidenced
hereby. No extension of the time for the payment of this Note or any installment
due hereunder, made by agreement with any person now or hereafter liable for the
payment of this Note shall operate to release, discharge, modify, change or
affect the original liability of Borrower under this Note, either in whole or in
part, unless Holder agrees otherwise in writing.

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     12. RENUNCIATION AND ASSIGNMENT OF EXEMPTIONS.  To the extent permitted by
law, Borrower hereby waives and renounces for itself, its legal representatives,
successors and assigns, all rights to the benefits of any statute of limitations
and any moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption, and homestead right,
entitlement, or exemption now provided, or which may hereafter be provided, by
the Constitution or laws of the United States of America or of any state
thereof, both as to itself and in and to all of its property, real and personal,
against the enforcement and collection of the obligations evidenced by this
Note.
     13. JURY TRIAL WAIVER. TO THE EXTENT NOW OR HEREAFTER PERMITTED BY
APPLICABLE LAW, THE BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS NOTE OR ANY
OTHER LOAN DOCUMENT, OR (B) ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, AND THE BORROWER AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE
A JURY.
                                        
Borrower’s Initials         
     14. APPLICABLE LAW.  This Note shall be governed by, enforced under and
interpreted in accordance with the laws of the State of Illinois.
     15. AMENDMENT.  This Note may be amended or modified only by an instrument
in writing which by its express terms refers to this Note and which is duly
executed by each party sought to be bound thereby.
     16. SEVERABILITY.  If any provision of this Note or the application thereof
to any person or circumstance shall be invalid or unenforceable to any extent,
the remainder of this Note and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
     17. TRANSFERS BY HOLDER.  This Note and the other Loan Documents may be
hypothecated, transferred or assigned by Holder without the prior consent of
Borrower.
     18. SUCCESSORS AND ASSIGNS.  This Note shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns.
     19. TIME.  Time is of the essence with respect to each and every term and
provision of this Note.

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     20. REPLACEMENT OR BIFURCATION OF NOTE. If this Note is lost or destroyed,
the Borrower shall, at the Holder’s request, execute and return to the Holder a
replacement promissory note identical to this Note, provided the Holder delivers
to the Borrower an affidavit to the foregoing effect. In addition, the Holder
may at its sole and absolute discretion require that the Borrower execute and
deliver two separate promissory notes in an aggregate amount equal to the unpaid
principal balance of this Note, which shall replace this Note as evidence of the
Borrower’s obligations. The two replacement promissory notes shall, taken
together, evidence the exact obligations set forth in this Note. The replacement
notes shall be independently transferable. No replacement of this Note under
this Section shall result in a novation of the Borrower’s obligations under this
Note.
     21. USURY. Notwithstanding any provision in this Note which might otherwise
be construed to the contrary, it is the desire of Holder and Borrower that the
total liability for payments in the nature of interest shall not exceed the
limits imposed by any applicable state or federal interest rate laws. If any
payments in the nature of interest, additional interest, and other charges made
under this Note are held to be in excess of the limits imposed by any applicable
state or federal laws, then at Holder’s option, any such excess amount shall
either be refunded to Borrower or shall be considered a premium-free prepayment
of principal and the principal balance shall be reduced by such amount in the
inverse order of maturity so that the total liability for payments in the nature
of interest, additional interest and other charges shall not exceed the limits
imposed by any applicable state or federal interest rate laws.
     22. NOTICES.  All notices, demands or requests provided for or permitted to
be given hereunder shall be in writing and shall be given in the manner set
forth in the Mortgages.
     23. GENDER AND NUMBER.  All personal pronouns used in this Note whether
used in the masculine, feminine, or neuter gender, shall include all other
genders; the singular shall include the plural, and vice versa.
     24. HEADINGS.  The underlined words appearing at the commencement of the
sections are included only as a guide to the contents thereof and are not to be
considered as controlling, enlarging or restructuring the language or meaning of
those sections.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
above written.

            BORROWER:

JOHN B. SANFILIPPO & SON, INC.,
a Delaware corporation
                     

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                  By:   /s/ Michael J. Valentine         Michael J. Valentine   
    Its Chief Financial Officer and Group President     

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