Document:

exv10w4

 

EXHIBIT 10.4

Prepared by and after recording

return document to:

Stoel Rives LLP

600 University Street, Suite 3600

Seattle, Washington 98101

Attention: Virginia M. Pedreira

Loan No. 700218 & 700218A

Mortgage, Security Agreement, Assignment of Leases

and Rents, and Fixture Filing

(Kane County, Illinois)

This Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing (this
“Mortgage”) is made and given as of the 7th day of February, 2008, by JOHN B. SANFILIPPO & SON,
INC., a Delaware corporation, as Mortgagor, whose address is 1703 North Randall Road, Mail Code -
2NW-EX, Elgin, Illinois 60123 (the “Borrower”), to TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa
corporation, as Mortgagee, having an office c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood
Road, N.E., Cedar Rapids, Iowa 52499-5443, and its successors and assigns (the “Lender”). The
definitions of capitalized terms used in this Mortgage may be found either in Section 3
below, or through the cross-references provided in that Section.

	1.	 	RECITALS

	 	A.	 	Under the terms of a Second Revised Agricultural Mortgage Loan
Application/Commitment dated January 31, 2008 (the “Commitment”), AEGON USA Realty
Advisors, Inc. (“AEGON”), as agent for the Lender, agreed to fund a loan in the
original principal amount of Forty-five Million Dollars ($45,000,000) (the “Loan”)
bearing interest as provided in the Notes (hereinafter defined) and maturing on March
1, 2023.
	 
	 	B.	 	The Commitment requires that the Loan be secured by all of the Borrower’s
existing and after-acquired interest in certain real property and by certain tangible
and intangible personal property.

	2.	 	GRANTING CLAUSE
	 
	 	 	To secure the repayment of the Indebtedness, any increases, modifications, renewals or
extensions of the Indebtedness, and any substitutions for the Indebtedness, as well as the
performance of the Borrower’s other Obligations, and in consideration of the sum of Ten
Dollars ($10.00) and other valuable consideration, the receipt and sufficiency of which are
acknowledged, the Borrower mortgages, grants, bargains, warrants, conveys, alienates,
releases,

1

 

	 	 	assigns, sets over and confirms to the Lender, and to its successors and assigns forever,
all of the Borrower’s existing and after acquired interests in the Real Property.
	 
	3.	 	DEFINED TERMS
	 
	 	 	The following defined terms are used in this Mortgage. For ease of reference, terms relating
primarily to the Security Agreement are defined in Subsection 19.1.
	 
	 	 	an “Affiliate” of any person means any entity controlled by, or under common control
with, that person.
	 
	 	 	“Appurtenances” means all rights, estates, titles, interests, privileges, easements,
tenements, hereditaments, titles, royalties, reversions, remainders and other interests,
whether presently held by the Borrower or acquired in the future, that may be conveyed as
interests in the Land under the laws of Illinois. Appurtenances include the Easements and
the Assigned Rights.
	 
	 	 	“Assigned Rights” means all of the Borrower’s rights, easements, privileges,
tenements, hereditaments, contracts, claims, licenses or other interests, whether presently
existing or arising in the future, which, in each case, pertain to the Real Property. The
Assigned Rights include all of the Borrower’s rights in and to:

	 	(i)	 	any greater estate in the Real Property;
	 
	 	(ii)	 	insurance policies required to be carried hereunder with
respect to the Real Property, including the right to negotiate claims and to
receive Insurance Proceeds and unearned insurance premiums with respect to
insurance policies regarding the Real Property (except as expressly provided in
Subsection 8.1);
	 
	 	(iii)	 	Condemnation Proceeds;
	 
	 	(iv)	 	licenses and agreements permitting the use of sources of
groundwater or water utilities, septic leach fields, railroad sidings, sewer
lines, means of ingress and egress;
	 
	 	(v)	 	drainage over other property;
	 
	 	(vi)	 	air space above the Land;
	 
	 	(vii)	 	mineral rights and water rights;
	 
	 	(viii)	 	party walls;
	 
	 	(ix)	 	vaults and their usage;
	 
	 	(x)	 	franchises;
	 
	 	(xi)	 	commercial tort claims that arise during the Loan term in
respect of damages to the Real Property or to its operations, in respect of any
impairment to the value of the Real Property, or in respect of the collection
of any Rents;
	 
	 	(xii)	 	construction contracts;
	 
	 	(xiii)	 	roof and equipment guarantees and warranties;
	 
	 	(xiv)	 	building and development licenses and permits;
	 
	 	(xv)	 	tax credits or other governmental entitlements, credits or
rights, whether or not vested with respect to the Real Property;

2

 

	 	(xvi)	 	licenses and applications (whether or not yet approved or
issued) with respect to the Property;
	 
	 	(xvii)	 	rights under management and service contracts with respect to the Property;
	 
	 	(xviii)	 	leases of Fixtures; and
	 
	 	(xix)	 	agreements with architects, environmental consultants,
property tax consultants, engineers, and any other third party contractors
whose services benefit the Real Property.

	 	 	“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C.
Sections 101 et seq., and the regulations promulgated pursuant to those statutes.
	 
	 	 	“Business Day” means any day when state and federal banks are open for business in
Cedar Rapids, Iowa.
	 
	 	 	“Condemnation Proceeds” means all money or other property that has been, or is in
the future, awarded or agreed to be paid or given in connection with any taking by eminent
domain of all or any part of the Real Property (including a taking through the vacation of
any street dedication or through a change of grade of such a street), either permanent or
temporary, or in connection with any purchase in lieu of such a taking, or as a part of any
related settlement.
	 
	 	 	“Curable Nonmonetary Default” means any of the acts, omissions, or circumstances
specified in Subsection 9.3 below.
	 
	 	 	“Default” means any of the acts, omissions, or circumstances specified in
Section 9 below.
	 
	 	 	“Default Rate” means the rate of interest specified as the “Default Interest Rate”
in the Notes.
	 
	 	 	“Development Agreements” means all development, utility or similar agreements
included in the Permitted Encumbrances.
	 
	 	 	“Easements” means the Borrower’s existing and future interests in and to the
declarations, easements, covenants, and restrictions appurtenant to the Land.
	 
	 	 	“Environmental Indemnity Agreement” means the Environmental Indemnity Agreement by
the Borrower for the benefit of Lender dated as of even date herewith.
	 
	 	 	“Environmental Laws” means all present and future laws, statutes, ordinances, rules,
regulations, orders, guidelines, rulings, decrees, notices and determinations of any
Governmental Authority to the extent that they pertain to: (A) the protection of health
against environmental hazards; (B) the protection of the environment, including air, soils,
wetlands, and surface and underground water, from contamination by any substance that may
have any adverse health effect on humans, livestock, fish, wildlife, or plant life, or which
may disturb an ecosystem; (C) underground storage tank regulation or removal; (D) wildlife
conservation; (E) protection or regulation of natural resources; (F) the protection of
wetlands; (G) management, regulation and disposal of solid and hazardous wastes; (H)
radioactive materials; (I) biologically hazardous materials; (J) indoor air quality; or (K)
the manufacture, possession, presence, use, generation, storage, transportation, treatment,
release, emission, discharge, disposal, abatement, cleanup, removal, remediation or handling
of any Hazardous Substances. “Environmental Laws” include the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended by the

3

 

	 	 	Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the Federal Water Pollution Control
Act, as amended by the Clean Water Act, 33 U.S.C. §1251 et seq., the Clean Air Act, 42
U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq., all similar
state statutes and local ordinances, and all regulations promulgated under any of those
statutes, and all administrative and judicial actions respecting such legislation, all as
amended from time to time.
	 
	 	 	“ESA” means the written environmental site assessment of the Real Property obtained
under the terms of the Commitment.
	 
	 	 	“Fixtures” means all materials, supplies, goods, equipment, apparatus and other
items now or hereafter attached to or installed on the Land and Improvements in a manner
that causes them to become fixtures under the laws of Illinois, including all built-in or
attached furniture or appliances, machinery, elevators, escalators, heating, ventilating and
air conditioning system components, emergency electrical generators and related fuel storage
or delivery systems, septic system components, built-in loading, storage and processing
equipment, storm windows, doors, built-in electrical equipment, plumbing, water
conditioning, lighting, cleaning, snow removal, lawn, landscaping, irrigation, security,
incinerating, fire-fighting, sprinkler or other fire safety equipment, wells, irrigation and
wastewater equipment, built-in bridge cranes or other installed materials handling
equipment, satellite dishes or other built-in telecommunication equipment, built-in video
conferencing equipment, sound systems or other built-in audiovisual equipment, and cable
television distribution systems. Fixtures do not include (A) trade fixtures, office
furniture and office equipment; (B) racking systems; (C) machinery and equipment not
specifically described above as constituting a Fixture; or (D) rolling stock. Without
limiting the foregoing, Fixtures expressly include HVAC, mechanical, security and similar
systems of general utility for the operation of the Improvements as leasable commercial real
property and as a warehouse and processing facility.
	 
	 	 	“Governmental Authority” means any political entity with the legal authority to
impose any requirement on the Property, including the governments of the United States, the
State of Illinois, Kane County, the Township of Dundee, and any other entity with
jurisdiction to decide, regulate, or affect the ownership, construction, use, occupancy,
possession, operation, maintenance, alteration, repair, demolition or reconstruction of any
portion or element of the Real Property.
	 
	 	 	“Hazardous Substance” means any substance the release of or the exposure to which is
prohibited, limited or regulated by any Environmental Law, or which poses a hazard to human
health, including: (A) any “oil,” as defined by the Federal Water Pollution Control Act and
regulations promulgated thereunder (including crude oil or any fraction of crude oil), (B)
any radioactive substance and (C) Stachybotrys chartarum or other molds. However, the term
“Hazardous Substance” includes neither (i) a substance used in the ordinary course of the
business conducted on the Real Property in accordance with the covenants herein contained by
the Borrower or by a tenant under a permitted Lease, or used in the cleaning and maintenance
of the Real Property, if the quantity, storage and manner of its use are customary, prudent,
and do not violate applicable law, nor (ii) automotive motor oil in immaterial quantities,
if leaked from vehicles in the ordinary course of the operation of the Real Property and
cleaned up in accordance with reasonable property management procedures and in a manner that
violates no applicable law.
	 
	 	 	“Impositions” means all real and personal property taxes levied against the
Property; general or special assessments; ground rent; water, gas, sewer, vault, electric or
other utility charges;

4

 

	 	 	common area charges; owners’ association dues or fees; fees for any easement, license or
agreement maintained for the benefit of the Property; and any and all other taxes, levies,
user fees, claims, charges and assessments whatsoever that at any time may be assessed,
levied or imposed on the Property or upon its ownership, use, occupancy or enjoyment, and
any related costs, interest or penalties. In addition, “Impositions” include all
documentary, stamp or intangible personal property taxes that may become due in connection
with the Indebtedness, including Indebtedness in respect of any future advance made by the
Lender to the Borrower, or that are imposed on any of the Loan Documents.
	 
	 	 	“Improvements” means, to the extent of the Borrower’s existing and future interest,
all buildings and improvements of any kind erected or placed on the Land now or in the
future, including the Fixtures, together with all appurtenant rights, privileges, Easements,
tenements, hereditaments, titles, reversions, remainders and other interests.
	 
	 	 	“Indebtedness” means all sums that are owed or become due pursuant to the terms of
the Notes, this Mortgage, or any of the other Loan Documents, including scheduled principal
payments, scheduled interest payments, default interest, late charges, prepayment premiums,
accelerated or matured principal balances, advances, collection costs (including reasonable
attorneys’ fees), reasonable attorneys’ fees and costs in enforcing or protecting the Notes,
the Mortgage, or any of the other Loan Documents in any probate, bankruptcy or other
proceeding, receivership costs and all other financial obligations of the Borrower incurred
in connection with the Loan transaction pursuant to the Loan Documents, provided, however,
that this Mortgage shall not secure any Loan Document or any particular person’s liabilities
or obligations under any Loan Document to the extent that such Loan Document expressly
states that it or such particular person’s liabilities or obligations are unsecured by this
Mortgage. Indebtedness shall also include any obligations under agreements executed and
delivered by Borrower which specifically provide that such obligations are secured by this
Mortgage.
	 
	 	 	“Insurance Premiums” means all premiums or other charges required to maintain in
force any and all insurance policies that this Mortgage requires that the Borrower maintain.
	 
	 	 	“Insurance Proceeds” means all Proceeds of all insurance now or hereafter carried by
or payable to the Borrower with respect to the Property, including with respect to the
interruption of Rents derived from the Property, all unearned insurance premiums with
respect to the Property and all related claims or demands.
	 
	 	 	“Land” means that certain tract of land located in the Township of Dundee, Kane
County, Illinois, which is described on the attached Exhibit A, together with the
Appurtenances.
	 
	 	 	“Leasing Action” means all executions, modifications, terminations and extensions of
Leases, and all other actions taken by the Borrower in exercising its rights as landlord
under the Leases.
	 
	 	 	“Leases” means all leases, subleases, licenses, concessions, extensions, renewals
and other agreements (whether written or oral, and whether presently effective or made in
the future) through which the Borrower grants any possessory interest in and to, or any
right to occupy or use, all or any part of the Real Property, and any related guaranties.

5

 

	 	 	“Legal Requirements” means all laws, statutes, rules, regulations, ordinances,
judicial decisions, administrative decisions, building permits, development permits,
certificates of occupancy, or other requirements of any Governmental Authority.
	 
	 	 	“Loan Agreement” means the Loan Agreement executed as of even date herewith between
Borrower and Lender.
	 
	 	 	“Loan Documents” means the Notes, the Loan Agreement, this Mortgage, the other
Mortgages described in the Loan Agreement and all other documents evidencing the Loan,
whether entered into at the closing of the Loan or in the future, as amended in writing from
time to time.
	 
	 	 	“Maximum Permitted Rate” means the highest rate of interest permitted to be paid or
collected by applicable law with respect to the Loan.
	 
	 	 	“Notes” means (i) the Promissory Note dated of even date herewith in the original
principal amount of Thirty-Six Million Dollars ($36,000,000) evidencing Tranche A of the
Indebtedness; and (ii) the Promissory Note dated of even date herewith in the original
principal amount of Nine Million Dollars ($9,000,000) evidencing Tranche B of the
Indebtedness, together with all extensions, renewals and modifications thereof.
	 
	 	 	“Notice” means a notice given in accordance with the provisions of Subsection
21.13.
	 
	 	 	“Obligations” means all of the obligations required to be performed under the terms
and conditions of any of the Loan Documents by any Obligor.
	 
	 	 	“Obligor” means the Borrower, or any other Person that is liable under the Loan
Documents for the payment of any portion of the Indebtedness, or the performance of any
other obligation required to be performed under the terms and conditions of any of the Loan
Documents, under any circumstances.
	 
	 	 	“Participations” means participation interests in the Loan Documents granted by the
Lender.
	 
	 	 	“Permitted Encumbrances” means (A) the lien of taxes and assessments not yet due and
payable, (B) the liens and security interests in favor of Lender created by the Loan
Documents, (C) Leases permitted under the terms of this Mortgage, which shall include the
Leases identified in the rent roll attached to the Closing Certificate executed as one of
the Loan Documents; and (D) those matters listed as special exceptions in the Lender’s title
insurance policy insuring the priority of this Mortgage.
	 
	 	 	“Person” means any individual, corporation, limited liability company, partnership,
trust, unincorporated association, government, governmental authority or other entity.
	 
	 	 	“Property” means the Real Property and the Leases, Rents and Personal Property (as
defined in Subsection 19.1 below).
	 
	 	 	“Real Property” means the Land and the Improvements.
	 
	 	 	“Rents” means all rents, income, receipts, issues and profits and other benefits
paid or payable for using, leasing, licensing, possessing, operating from or in, residing
in, selling, mining, extracting

6

 

	 	 	minerals from, or otherwise enjoying the Real Property as commercial real estate (but not
any such income, receipts, issues, profits or other benefits arising from the specific
business operations of Borrower and/or its subsidiaries), whether presently existing or
arising in the future, to which the Borrower may now or hereafter become entitled or may
demand or claim from the commencement of the Loan term through the time of the satisfaction
of all of the Obligations, including security deposits, amounts drawn under letters of
credit securing tenant obligations, minimum rents, additional rents, common area maintenance
charges, parking revenues, deficiency rents, termination payments, space contraction
payments, damages following default under a Lease, premiums payable by tenants upon their
exercise of cancellation privileges, proceeds from lease guarantees, proceeds payable under
any policy of insurance covering loss of rents resulting from untenantability caused by
destruction or damage to the Real Property, all rights and claims of any kind which the
Borrower has or may in the future have against the tenants under the Leases, lease
guarantors, or any subtenants or other occupants of the Real Property, all proceeds of any
sale of the Real Property in violation of the Loan Documents, any future award granted the
Borrower in any court proceeding involving any such tenant in any bankruptcy, insolvency, or
reorganization proceedings in any state or federal court, and any and all payments made by
any such tenant in lieu of rent.
	 
	 	 	“Restoration” means (A) in the case of a casualty resulting in damage to or the
destruction of the Improvements, the repair or rebuilding of the Improvements to their
original condition, or (B) in the case of the condemnation of a portion of the Real
Property, the completion of such work as may be necessary in order to remedy the effects of
the condemnation so that the value and income-generating characteristics of the Real
Property are restored.
	 
	4.	 	TITLE
	 
	 	 	The Borrower represents to and covenants with the Lender that, at the point in time of the
grant of the lien created by this Mortgage, the Borrower is well seized of good and
indefeasible title to the Real Property, in fee simple absolute, subject to no lien or
encumbrance except the Permitted Encumbrances. The Borrower warrants this estate and title
to the Lender forever, against all lawful claims and demands of all persons. The Borrower
shall maintain mortgagee title insurance issued by a solvent carrier, covering the Real
Property in an amount at least equal to the amount of the Loan’s original principal balance.
This Mortgage is and shall remain a valid and enforceable first lien on the Real Property,
and if the validity or enforceability of this first lien is attacked by appropriate
proceedings, the Borrower shall diligently and continuously defend it through appropriate
proceedings. Should the Borrower fail to do so, the Lender may at the Borrower’s expense
take all necessary action, including the engagement and compensation of legal counsel, the
prosecution or defense of litigation, and the compromise or discharge of claims. The
Borrower shall defend, indemnify and hold the Lender harmless in any suit or proceeding
brought to challenge or attack the validity, enforceability or priority of the lien granted
by this Mortgage. If a prior construction, mechanics’ or materialmen’s lien on the Real
Property arises by operation of statute during any construction or repair of the
Improvements, the Borrower shall either cause the lien to be discharged by paying when due
any amounts owed to such persons, or shall comply with Section 11 of this Mortgage.
	 
	5.	 	REPRESENTATIONS OF THE MORTGAGOR

7

 

	 	 	The Borrower represents to the Lender as follows:

	 	5.1	 	Formation, Existence, Good Standing
	 
	 	 	 	The Borrower is a corporation duly organized, validly existing and in good standing
under the laws of Delaware and has obtained all licenses and permits and filed all
statements of fictitious name and registrations necessary for the lawful operation
of its business in Delaware.
	 
	 	5.2	 	Qualification to Do Business
	 
	 	 	 	The Borrower is qualified to do business as a foreign corporation under the laws of
Illinois and has obtained all licenses and permits and filed all statements of
fictitious name and registrations necessary for the lawful operation of its business
in Illinois.
	 
	 	5.3	 	Power and Authority
	 
	 	 	 	The Borrower has full power and authority to carry on its business as presently
conducted, to own the Property, to execute and deliver the Loan Documents, and to
perform its Obligations.
	 
	 	5.4	 	Anti-Terrorism Regulations
	 
	 	 	 	No Borrower or Borrower Affiliate is a “Specially Designated National” or a “Blocked
Person” as those terms are defined in the Office of Foreign Asset Control
Regulations (31 CFR Section 500 et seq.).
	 
	 	5.5	 	Due Authorization
	 
	 	 	 	The Loan transaction and the performance of all of the Borrower’s Obligations have
been duly authorized by all requisite corporate action, and each individual
executing any Loan Document on behalf of the Borrower has been duly authorized to do
so.
	 
	 	5.6	 	No Default or Violations
	 
	 	 	 	The execution and performance of the Borrower’s Obligations will not result in any
breach of, or constitute a default under, any contract, agreement, document or other
instrument to which the Borrower is a party or by which the Borrower may be bound or
affected, and do not and will not violate or contravene any law to which the
Borrower is subject; nor do any such other instruments impose or contemplate any
obligations which are or will be inconsistent with the Loan Documents.
	 
	 	5.7	 	No Further Approvals or Actions Required
	 
	 	 	 	No approval by, authorization of, or filing with any federal, state or municipal or
other governmental commission, board or agency or other governmental authority is
necessary in connection with the authorization, execution and delivery of the Loan
Documents by the Borrower.
	 
	 	5.8	 	Due Execution and Delivery
	 
	 	 	 	Each of the Loan Documents to which the Borrower is a party has been duly executed
and delivered on behalf of the Borrower.

8

 

	 	5.9	 	Legal, Valid, Binding and Enforceable
	 
	 	 	 	Each of the Loan Documents to which the Borrower is a party constitutes the legal,
valid and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
	 
	 	5.10	 	Accurate Financial Information
	 
	 	 	 	All financial information furnished by the Borrower to the Lender in connection with
the application for the Loan is true, correct and complete in all material respects
and does not omit to state any fact or circumstance necessary to make the statements
in them not misleading in any material respect, and there has been no material
adverse change in the financial condition of the Borrower since the date of such
financial information.
	 
	 	5.11	 	Compliance with Legal Requirements
	 
	 	 	 	All governmental approvals and licenses required for the conduct of the Borrower’s
business and for the maintenance and operation of the Real Property in compliance
with applicable law are in full force and effect, and the Real Property is currently
being operated in compliance with the Legal Requirements in all material respects.
	 
	 	5.12	 	Contracts and Franchises
	 
	 	 	 	All contracts and franchises necessary for the conduct of the Borrower’s business
and for the operation of the Real Property in accordance with good commercial
practice are in force.
	 
	 	5.13	 	No Condemnation Proceeding
	 
	 	 	 	As of the date of this Mortgage, the Borrower has no knowledge of any present,
pending or threatened condemnation proceeding or award affecting the Real Property.
	 
	 	5.14	 	No Casualty
	 
	 	 	 	As of the date of this Mortgage, no damage to the Real Property by any fire or other
casualty has occurred, other than damage that has been completely repaired in
accordance with good commercial practice and in compliance with applicable law.
	 
	 	5.15	 	Independence of the Real Property
	 
	 	 	 	The Real Property may be operated independently from other land and improvements not
included within or located on the Land, and it is not necessary to own or control
any property other than the Real Property in order to meet the obligations of the
landlord under any Lease, or in order to comply with the Legal Requirements.
	 
	 	5.16	 	Complete Lots and Tax Parcels
	 
	 	 	 	The Land is comprised exclusively of tax parcels that are entirely included within
the Land, and, if the Land is subdivided, of subdivision lots that are entirely
included within the Land.

9

 

	 	5.17	 	Ownership of Fixtures
	 
	 	 	 	The Borrower owns the Fixtures free of any encumbrances, including purchase money
security interests, rights of lessors, and rights of sellers under conditional sales
contracts or other financing arrangements.
	 
	 	5.18	 	Real Property is not Homestead Property
	 
	 	 	 	The Real Property is NOT HOMESTEAD PROPERTY of the Borrower or of the spouse of any
person named as the Borrower.
	 
	 	5.19	 	Performance under Development Agreements
	 
	 	 	 	To the best of Borrower’s knowledge, all of the obligations of the owner of the Real
Property due under the Development Agreements have been fully, timely and completely
performed to the extent required thereunder and such performance has been accepted
by the related governmental agency or utility company, and Borrower has received no
notice by any Governmental Authority that any default exists under any of the
Development Agreements.
	 
	 	5.20	 	Status of Certain Title Matters
	 
	 	 	 	To Borrower’s knowledge, neither Borrower nor any tenant under the Leases is in
material default under the terms of any Easement.
	 
	 	5.21	 	No Prohibited Transactions
	 
	 	 	 	The Borrower represents to the Lender that either (a) the Borrower is not an
“employee benefit plan” within the meaning of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, a
“plan” within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the “Code”), or an entity that is deemed to hold “plan assets” within the
meaning of 29 C.F.R. §2510.3-101 of any such employee benefit plan or (b) the
entering into of the Loan Documents, the acceptance of the Loan by the Borrower and
the existence of the Loan will not result in a non-exempt prohibited transaction
under §406 of ERISA or Section 4975 of the Code. The Borrower further warrants and
covenants that the foregoing representation will remain true during the term of the
Loan.

	6.	 	COVENANTS

	 	6.1	 	Good Standing
	 
	 	 	 	The Borrower shall remain in good standing as a corporation under the laws of
Delaware and shall maintain in force any statements of fictitious name and
registrations necessary to remain in good standing as a corporation under the laws
of the State of Delaware during the term of the Loan.
	 
	 	6.2	 	Qualification to Do Business
	 
	 	 	 	The Borrower shall remain qualified to do business as a foreign corporation under
the laws of Illinois and shall maintain in force any statements of fictitious name
and registrations necessary to remain in good standing as a corporation under the
laws of the

10

 

	 	 	 	State of Illinois during the term of the Loan. The Borrower shall also maintain in
force any licenses and permits, filings and statements of fictitious name and
registrations necessary for the lawful operation of its business in Illinois.
	 
	 	6.3	 	No Default or Violations
	 
	 	 	 	The Borrower shall not enter into any contract, agreement, document or other
instrument, if the performance of the Borrower’s Obligations would result in any
breach of, or constitute a default under, any such contract, agreement, document or
other instrument, or if the contract, agreement, document or other instrument would
impose any obligations the performance of which would result in a Default under the
Loan Documents.
	 
	 	6.4	 	Payment and Performance
	 
	 	 	 	The Borrower shall pay the Indebtedness and perform all of its other Obligations, as
and when the Loan Documents require such payment and performance.
	 
	 	6.5	 	Payment of Impositions
	 
	 	 	 	The Borrower shall pay the Impositions on or before the last day on which they may
be paid without penalty or interest, and shall, within thirty (30) days, furnish the
Lender with a paid receipt or a cancelled check as evidence of payment. If the
Lender does not receive such evidence, the Lender may obtain it directly. If it does
so, the Lender will charge the Borrower an administrative fee of Two Hundred Fifty
Dollars ($250) for securing the evidence of payment. The payment of this fee shall
be a demand obligation of the Borrower. If the Borrower wishes to contest the
validity or amount of an Imposition, it may do so by complying with Section
11. If any new Legal Requirement (other than a general tax on income or on
interest payments) taxes the Mortgage so that the yield on the Indebtedness would be
reduced, and the Borrower may lawfully pay the tax or reimburse the Lender for its
payment, the Borrower shall do so.
	 
	 	6.6	 	Maintenance of the Real Property
	 
	 	 	 	The Borrower shall not commit or permit any waste of the Real Property as a physical
or economic asset, and agrees to maintain (or cause to be maintained) in good repair
the Improvements, including structures, roofs, mechanical systems, parking lots or
garages, and other components of the Real Property that are necessary or desirable
for the use of the Real Property, or which the Borrower as landlord under any Lease
is required to maintain for the benefit of any tenant. In its performance of this
Obligation, the Borrower shall promptly and in a good and workmanlike manner repair
or restore, as required under Subsection 6.16, any elements of the
Improvements that are damaged or destroyed. The Borrower shall also replace roofs,
parking lots, mechanical systems, and other elements of the Improvements requiring
periodic replacement. The Borrower shall carry out such replacements no less
frequently than would a commercially reasonable owner of properties of a similar
use, value, age, nature and construction. The Borrower shall not, without the prior
written consent of the Lender, which consent shall not be unreasonably withheld,
demolish, reconfigure, or materially alter the structural elements of the
Improvements, unless such an action is the obligation of the Borrower under a Lease
approved by Lender or for which the Lender’s approval is not required. The Lender
agrees that any request for its consent to such an action shall be deemed given if
the Lender does not respond within fifteen (15) Business Days to any written request
for such

11

 

	 	 	 	a consent, if the request is accompanied by all materials required to permit the
Lender to analyze the proposed action.
	 
	 	6.7	 	Use of the Real Property
	 
	 	 	 	The Borrower agrees that the Real Property may only be used as a commercial property
and industrial processing facility and distribution warehouse and its related office
building, for ancillary uses related thereto and for no other purpose.
	 
	 	6.8	 	Legal Requirements
	 
	 	 	 	The Borrower shall maintain in full force and effect all governmental approvals and
material permits and licenses required for the conduct of the Borrower’s business
and for the maintenance and operation of the Real Property in compliance with
applicable law, and shall comply in all material respects with all Legal
Requirements relating to the Real Property at all times.
	 
	 	6.9	 	Contracts and Franchises
	 
	 	 	 	The Borrower shall maintain in force all material contracts and franchises necessary
for the conduct of the Borrower’s business and for the operation of the Real
Property in accordance with good commercial practice.
	 
	 	6.10	 	Covenants Regarding Certain Title Matters
	 
	 	 	 	The Borrower shall promptly pay, perform and observe all of its obligations under
the Easements included within the Appurtenances or under reciprocal easement
agreements, operating agreements, declarations, and restrictive covenants included
in the Permitted Encumbrances, shall not modify or consent to the termination of any
of them without the prior written consent of the Lender, shall promptly furnish the
Lender with copies of all notices of default under them, and shall enforce all
covenants and conditions under them and benefiting the Real Property.
	 
	 	6.11	 	Independence of the Real Property
	 
	 	 	 	The Borrower shall maintain the independence of the Real Property from other land
and improvements not included within or located on the Land. In fulfilling this
covenant, the Borrower shall neither take any action which would make it necessary
to own or control any property other than the Real Property in order to meet the
obligations of the landlord under any Lease, or in order to comply with the Legal
Requirements, nor take any action which would cause any land or improvements other
than the Land and the Improvements to rely upon the Land or the Improvements for
those purposes.
	 
	 	6.12	 	Complete Lots and Tax Parcels
	 
	 	 	 	The Borrower shall take no action that would result in the inclusion of any portion
of the Land in a tax parcel or subdivision lot that is not entirely included within
the Land.
	 
	 	6.13	 	Real Property is not Homestead Property
	 
	 	 	 	The Real Property shall NOT BECOME HOMESTEAD PROPERTY of the Borrower or of the
spouse of any person named as the Borrower.

12

 

	 	6.14	 	Performance under Development Agreements
	 
	 	 	 	The Borrower shall fully, timely and completely perform all of the obligations of
the owner of the Real Property due under the Development Agreements and shall cause
no default under any of the Development Agreements.
	 
	 	6.15	 	Status of Certain Title Matters
	 
	 	 	 	The Borrower shall not take or fail to take any action with respect to the Easements
included within the Appurtenances or the reciprocal easement agreements, operating
agreements, declarations, and restrictive covenants included in the Permitted
Encumbrances if, as the result of such an action or failure, the subject Easement or
other title matter would (a) be rendered invalid or without force or effect, (b) be
amended or supplemented without the consent of the Lender, (c) be placed in default
or alleged default, (d) result in any lien against the Real Property, or (e) give
rise to any assessment against the Real Property, unless immediately paid in full.
	 
	 	6.16	 	Restoration upon Casualty or Condemnation
	 
	 	 	 	If a casualty or condemnation occurs, the Borrower shall promptly commence the
Restoration of the Real Property, to the extent that the Lender has made Insurance
Proceeds or Condemnation Proceeds available to the Borrower for such Restoration.
	 
	 	6.17	 	Performance of Landlord Obligations
	 
	 	 	 	The Borrower shall perform, in all material respects, its obligations as landlord
under the Leases. The Borrower shall not, without the Lender’s written consent,
which consent shall not be unreasonably withheld, or except as otherwise provided in
Section 13 below, extend, modify, terminate, or enter into any Lease of the
Real Property.
	 
	 	6.18	 	Financial Reports and Operating Statements

	 	(a)	 	Maintenance of Books and Records
	 
	 	 	 	During the term of the Loan, the Borrower shall maintain complete and
accurate accounting and operational records, including copies of all Leases
and other material written contracts relating to the Real Property, copies
of all tax statements, and evidence to support the payment of all material
property-related expenses.
	 
	 	(b)	 	Delivery of Financial and Property-Related Information
	 
	 	 	 	Within one hundred twenty (120) days after the end of each of its fiscal
years, or, if a Default exists, on demand by the Lender, and within sixty
(60) days after the end of each fiscal quarter, the Borrower shall deliver
to the Lender (A) copies of the financial statements of the Borrower and its
Affiliates, including balance sheets and earnings statements, and (B) a
complete and accurate operating statement for the Real Property, all in form
satisfactory to the Lender. The annual financial statements shall include a
complete rent roll certified by the Borrower to be true and correct and must
include each tenant’s name, premises, square footage, rent, lease expiration
date, renewal options and related rental rates, delinquencies and vacancies
and the existence of any unsatisfied landlord obligations, e.g. in respect
of free rent periods, unfinished tenant improvements or other leasing costs.
If the Borrower fails to deliver the items required in this

13

 

	 	 	 	Subsection, then subject to the Notice and cure period set forth in
Subsection 6.18(c) below, the Lender may engage an accounting firm
to prepare the required items. The Borrower shall cooperate fully with any
investigative audit required to permit the accounting firm to produce these
items, and the fees and expenses incurred in connection with their
preparation shall be paid on demand by the Borrower.
	 
	 	(c)	 	Effect of Failure to Deliver Financial and Property Reports
	 
	 	 	 	If no Default exists and the Borrower fails to provide the financial and
property reports required under this Section within one hundred twenty (120)
days of the close of any fiscal year, the Lender will provide a Notice of
this failure and a thirty (30)-day opportunity to cure before a Default
shall exist.
	 
	 	(d)	 	Certification of Information
	 
	 	 	 	The annual financial and operating statements provided under this Subsection
shall be certified by an independent certified public accountant as having
been prepared in accordance with generally accepted accounting principles,
consistently applied, or, in the case of financial statements prepared on a
cash or income tax basis, or of operating statements, as not materially
misleading based on an audit conducted in accordance with generally accepted
auditing standards. The quarterly financial and operating statements
provided under this Subsection need not be audited. The Borrower shall,
however certify that such statements are true and correct.

	 	6.19	 	Estoppel Statements

	 	 	 	Upon request by the Lender, the Borrower shall, within ten (10) Business Days of
Notice of the request, furnish to the Lender or to whom it may direct, a written
statement acknowledging the amount of the Indebtedness and disclosing whether any
offsets or defenses exist against the Indebtedness.

	 	6.20	 	Prohibition on Certain Distributions
	 
	 	 	 	If a Default exists or would occur as a result, the Borrower shall not pay any
dividend or make any partnership, trust or other distribution, and shall not make
any payment or transfer any property in order to purchase, redeem or retire any
interest in its beneficial interests or ownership.
	 
	 	6.21	 	Use of Loan Proceeds
	 
	 	 	 	The Loan proceeds shall be used solely for business and commercial purposes.
	 
	 	6.22	 	Prohibition on Cutoff Notices
	 
	 	 	 	The Borrower shall not issue any Notice to the Lender to the effect that liens on
the Real Property after the date of the Notice will enjoy priority over the lien of
this Mortgage.
	 
	 	6.23	 	Prohibited Person Compliance
	 
	 	 	 	Borrower warrants, represents and covenants that neither Borrower nor any Obligor
nor any of their respective Affiliates is or will be an entity or person (i) that is
listed in the Annex to, or is otherwise subject to the provisions of, Executive
Order 13224 issued on September 24, 2001 (“EO13224”), (ii) whose name appears on the
United States

14

 

	 	 	 	Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of
“Specifically Designated National and Blocked Persons” (which list may be published
from time to time in various mediums including, but not limited to, the OFAC
website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit
or supports “terrorism”, as that term is defined in EO 13224, or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties or
persons described in subparts [i] — [iv] above are herein referred to as a
“Prohibited Person”). Borrower covenants and agrees that neither Borrower, nor any
Obligor nor any of their respective Affiliates will (i) knowingly conduct any
business, nor engage in any transaction or dealing, with any Prohibited Person,
including, but not limited to, the making or receiving of any contribution of funds,
goods, or services to or for the benefit of a Prohibited Person, or (ii) engage in
or conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
EO13224. Borrower further covenants and agrees to deliver (from time to time) to
Lender any such certification or other evidence as may be requested by Lender in its
sole and absolute discretion, confirming that (i) neither Borrower nor any Obligor
is a Prohibited Person and (ii) neither Borrower nor any Obligor has knowingly
engaged in any business, transaction or dealings with a Prohibited Person,
including, but not limited to, the making or receiving of any contribution of funds,
goods, or services, to or for the benefit of a Prohibited Person.

	7.	 	INSURANCE REQUIREMENTS
	 
	 	 	At all times until the Indebtedness is paid in full, the Borrower shall maintain insurance
coverage and administer insurance claims in compliance with this Section.

	 	7.1	 	Required Coverages

	 	(a)	 	Open Perils/Special Form/Special Perils Property
	 
	 	 	 	The Borrower shall maintain “Open Perils,” “Special Form,” or “Special
Perils” property insurance coverage in an amount not less than one hundred
percent (100%) of the replacement cost of all insurable elements of the Real
Property and of all tangible Personal Property, with coinsurance waived, or
if a coinsurance clause is in effect, with an agreed amount endorsement
acceptable to the Lender. Coverage shall extend to the Real Property and to
all tangible Personal Property.
	 
	 	(b)	 	Broad Form Boiler and Machinery
	 
	 	 	 	If any boiler or other machinery is located on or about the Real Property,
the Borrower shall maintain broad form boiler and machinery coverage,
including a form of business income coverage.
	 
	 	(c)	 	Flood
	 
	 	 	 	If the Real Property is located in a special flood hazard area (that is, an
area within the 100-year floodplain) according to the most current flood
insurance rate map issued by the Federal Emergency Management Agency and if
flood insurance is available, the Borrower shall maintain flood insurance
coverage on all insurable elements of Real Property and of all tangible
Personal Property.
	 
	 	(d)	 	Comprehensive/General Liability

15

 

	 	 	 	The Borrower shall maintain commercial general liability coverage (which may
be in the form of umbrella/excess liability insurance) with a One Million
Dollar ($1,000,000) combined single limit per occurrence and a minimum
aggregate limit of Two Million Dollars ($2,000,000). Lender reserves the
right to require increased coverage with respect to these amounts.
	 
	 	(e)	 	Worker’s Compensation
	 
	 	 	 	The Borrower shall maintain worker’s compensation if applicable.
	 
	 	(f)	 	Elective Coverages
	 
	 	 	 	The Lender may require additional coverages appropriate to the property type
and site location. Additional coverages may include liquor liability,
earthquake, windstorm, mine subsidence, sinkhole, supplemental liability, or
coverages of other property-specific risks, as determined by Lender.

	 	7.2	 	Primary Coverage
	 
	 	 	 	Each coverage required under this Section shall be primary rather than contributing
or secondary to the coverage Borrower may carry for other properties or risks,
provided, however, that blanket coverage shall be acceptable if (a) the
policy includes limits by property location and (b) the Lender determines, in the
exercise of its discretion, that the amount of such coverage is sufficient in light
of the other risks and properties insured under the blanket policy.
	 
	 	7.3	 	How the Lender Shall Be Named
	 
	 	 	 	On all property insurance policies and coverages required under this Section
(including coverage against loss of business income), the Lender must be named as
“first mortgagee” under a standard mortgage clause. On all liability policies and
coverages, the Lender must be named as an “additional insured.” The Lender shall be
referred to verbatim as follows: Transamerica Life Insurance Company and its
successors, assigns, and affiliates; as their interest may appear; c/o AEGON USA
Realty Advisors, Inc.; Mortgage Loan Dept.; 4333 Edgewood Rd., NE; Cedar Rapids,
Iowa 52499-5443.”
	 
	 	7.4	 	Rating
	 
	 	 	 	Each insurance carrier providing insurance required under this Section must have,
independently of its parent’s or any reinsurer’s rating, a General Policyholder
Rating of A, and a Financial Rating of X or better, as reported in the most current
issue of Best’s Insurance Guide, or as reported by Best on its internet web site.
	 
	 	7.5	 	Deductible
	 
	 	 	 	The maximum deductible on each required coverage or policy is One Hundred Thousand
Dollars ($100,000).
	 
	 	7.6	 	Notices, Changes and Renewals
	 
	 	 	 	All policies required under this Section must require the insurance carrier to give
the Lender a minimum of thirty (30) days’ notice in the event of modification,
cancellation or termination or non renewal and shall provide that no act or omission
by the insured shall invalidate or diminish the insurance provided to Lender. The
Borrower shall report to the Lender immediately any facts known to the Borrower that
may adversely affect the

16

 

	 	 	 	appropriateness or enforceability of any insurance contract, including, without
limitation, changes in the ownership or occupancy of the Real Property, any hazard
to the Real Property and any matters that may give rise to any claim. Prior to
expiration of any policy required under this Section, the Borrower shall provide
either (a) an original or certified copy of the renewed policy, or (b) a “binder,”
an Acord 28 (real property), Acord 27 (personal property) or Acord 25 (liability)
certificate, or another document satisfactory to the Lender conferring on the Lender
the rights and privileges of mortgagee. If the Borrower meets the foregoing
requirement under clause (b), the Borrower shall supply an original or certified
copy of the original policy within ninety (90) days. All binders, certificates,
documents, and original or certified copies of policies must name the Borrower as a
named insured or as an additional insured, must include the complete and accurate
property address and must bear the original signature of the issuing insurance
agent.
	 
	 	7.7	 	Unearned Premiums
	 
	 	 	 	If this Mortgage is foreclosed, the Lender may at its discretion cancel any of the
insurance policies required under this Section and apply any unearned premiums to
the Indebtedness.
	 
	 	7.8	 	Insurance Disclosure Notice Under 815 ILCS 180/10
	 
	 	 	 	Unless the Borrower provides the Lender with evidence of the insurance coverage
required by this Section, the Lender may purchase insurance at the expense of the
Borrower to protect the interests of the Lender in the Property. This insurance may,
but need not, protect the Borrower’s interests. The coverage that the Lender
purchases may not pay any claim that the Borrower makes or any claim that is made
against the Borrower in connection with the Property. The Borrower may later cancel
any insurance purchased by the Lender, but only after providing the Lender, in
accordance with this Section, with evidence that the Borrower has purchased the
insurance required by this Section. If the Lender purchases insurance covering the
Property, the Borrower will be responsible for the costs of that insurance,
including interest at the Default Rate and any other charges imposed by the Lender
in connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the insurance may be added
to the Indebtedness. The costs of the insurance may be more than the cost of
insurance the Borrower may be able to obtain on its own.

	8.	 	INSURANCE AND CONDEMNATION PROCEEDS

	 	8.1	 	Adjustment and Compromise of Claims and Awards
	 
	 	 	 	The Borrower may settle any insurance claim or condemnation proceeding if the effect
of the casualty or the condemnation may be remedied for Two Hundred Fifty Thousand
Dollars ($250,000) or less. If a greater sum is required, the Borrower may not
settle any such claim or proceeding without the advance written consent of the
Lender. If a Default exists, the Borrower may not settle any insurance claim or
condemnation proceeding without the advance written consent of the Lender.
	 
	 	8.2	 	Direct Payment to the Lender of Proceeds

17

 

	 	 	 	If the Insurance Proceeds received in connection with a casualty or the Condemnation
Proceeds received in respect of a condemnation exceed Two Hundred Fifty Thousand
Dollars ($250,000), or if there is a Default, then such proceeds shall be paid
directly to the Lender. The Lender shall have the right to endorse instruments which
evidence proceeds that it is entitled to receive directly.
	 
	 	8.3	 	Availability to the Borrower of Proceeds
	 
	 	 	 	The Borrower shall have the right to use the Insurance Proceeds or the Condemnation
Proceeds to carry out the Restoration of the Real Property, if the amount received
is less than Five Million Dollars ($5,000,000), subject to the conditions set forth
in Subsections 8.4, 8.5, and 8.6 of this Section.
	 
	 	 	 	If the amount received in respect of a casualty or condemnation equals or exceeds
Five Million Dollars ($5,000,000), and if the Loan-to-Value ratio of the Property on
completion will be sixty-five percent (65%) or less, as determined by the Lender in
its discretion based on its estimate of the market value of the Real Property, the
Lender shall receive such Insurance Proceeds or Condemnation Proceeds directly and
hold them in a fund for Restoration subject to the conditions set forth in
Subsections 8.4, 8.5, and 8.6 of this Section. If the Lender’s estimate of
the market value of the Real Property implies a Loan-to-Value ratio of over
sixty-five percent (65%), and the Borrower disagrees with the Lender’s estimate, the
Borrower may require that the Lender engage an independent appraiser (the “Fee
Appraiser”) to prepare and submit to AEGON a full narrative appraisal report
estimating the market value of the Real Property. The Fee Appraiser shall be
certified in Illinois and shall be a member of a national appraisal organization
that has adopted the Uniform Standards of Professional Appraisal Practice (USPAP)
established by the Appraisal Standards Board of the Appraisal Foundation. The Fee
Appraiser will be required to use the procedure for the appraisal of the Real
Property at the time of the origination of the Loan, including the required
assumptions and limiting conditions. For purposes of this Section, the independent
appraiser’s value conclusion shall be binding on both the Lender and the Borrower.
The Borrower shall have the right to make a prepayment of the Loan, without premium,
sufficient to achieve this Loan-to-Value ratio. The independent fee appraisal shall
be at the Borrower’s expense.
	 
	 	 	 	Unless the Borrower has the right to use the Insurance Proceeds or the Condemnation
Proceeds under the foregoing paragraphs, the Lender may, in its sole and absolute
discretion, either apply them to the Loan balance or disburse them for the purposes
of repair and reconstruction, or to remedy the effects of the condemnation. No
prepayment premium will be charged on Insurance Proceeds or Condemnation Proceeds
applied to reduce the principal balance of the Loan.
	 
	 	8.4	 	Conditions to Availability of proceeds
	 
	 	 	 	The Lender shall have no obligation to release Insurance Proceeds or Condemnation
Proceeds to the Borrower, and may hold such amounts as additional security for the
Loan, if (a) a Default exists, (b) a payment Default has occurred during the
preceding twelve (12) months, or (c) if the Insurance Proceeds or Condemnation
Proceeds received by the Lender and any other funds deposited by the Borrower with
the Lender are insufficient, as determined by the Lender in its reasonable
discretion, to complete the Restoration. If a Default exists, the Lender may at its
sole and absolute discretion apply

18

 

	 	 	 	such Insurance Proceeds and Condemnation Proceeds to the full or partial cure of the
Default.
	 
	 	8.5	 	Permitted Mezzanine Financing for Rebuilding or Remediation of the Effect
of Taking by Eminent Domain
	 
	 	 	 	If the Lender reasonably determines that the Insurance Proceeds or Condemnation
Proceeds received in respect of a casualty or condemnation, as the case may be,
would be insufficient to permit the Borrower to restore the Improvements to their
condition before the casualty, or to remedy the effect on the Real Property of the
condemnation, then the Borrower shall use its commercially reasonable efforts to
secure such additional funds as are necessary to effect the Restoration. The
Borrower’s obligation to use its commercially reasonable efforts shall be limited to
securing such funds on a non-recourse basis. Interests in the Borrower may be
pledged as security to the extent necessary in connection with any such financing.
	 
	 	8.6	 	Draw Requirements
	 
	 	 	 	The Borrower’s right to receive Insurance Proceeds and Condemnation Proceeds held by
the Lender under this Section shall be conditioned on the Lender’s approval of plans
and specifications for the Restoration, which approval shall not be unreasonably
withheld. Each draw shall be in the minimum amount of Fifty Thousand Dollars
($50,000). Draw requests shall be accompanied by customary evidence of construction
completion, and by endorsements to the Lender’s mortgagee title insurance coverage
insuring the absence of construction, mechanics’ or materialmen’s liens. Draws based
on partial completion of the Restoration shall be subject to a ten percent (10%)
holdback. All transactional expenses shall be paid by the Borrower.

	9.	 	DEFAULT

	 	9.1	 	Payment Defaults
	 
	 	 	 	A “Default” shall exist without Notice upon the occurrence of any of the following
events:

	 	(a)	 	Scheduled Payments
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, (i) any regular
monthly payment of principal and interest under the Notes, on or before the
tenth (10th) day of the month in which it is due or (ii) any
other scheduled payment under the Notes, this Mortgage or any other Loan
Document within ten (10) days of its due date.
	 
	 	(b)	 	Payment at Maturity
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, the Indebtedness when
the Loan matures by acceleration under Section 14, because of a
transfer or encumbrance under Section 12, or by lapse of time.

19

 

	 	(c)	 	Demand Obligations
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, within five (5)
Business Days of the Lender’s demand, any other amount required under the
Notes, this Mortgage or any of the other Loan Documents.

	 	9.2	 	Incurable Nonmonetary Default
	 
	 	 	 	A Default shall exist upon any of the following:

	 	(a)	 	Material Untruth or Misrepresentation
	 
	 	 	 	The Lender’s discovery that any representation made by the Borrower in any
Loan Document was materially and adversely untrue or misleading when made,
if the misrepresentation either was intentional or is not capable of being
cured as described in Subsection 9.3(a) below.
	 
	 	(b)	 	Due on Sale or Encumbrance
	 
	 	 	 	The occurrence of any sale, conveyance, transfer or vesting that would
result in the Loan becoming immediately due and payable at the Lender’s
option under Section 12.
	 
	 	(c)	 	Voluntary Bankruptcy Filing
	 
	 	 	 	The filing by the Borrower of a petition in bankruptcy or for relief from
creditors under any present or future law that affords general protection
from creditors.
	 
	 	(d)	 	Insolvency
	 
	 	 	 	The failure of the Borrower generally to pay its debts as they become due,
its admission in writing to an inability so to pay its debts, the making by
the Borrower of a general assignment for the benefit of creditors, or a
judicial determination that the Borrower is insolvent.
	 
	 	(e)	 	Receivership
	 
	 	 	 	The appointment of a receiver or trustee to take possession of any of the
assets of the Borrower.
	 
	 	(f)	 	Levy or Attachment
	 
	 	 	 	The taking or seizure of any material portion of the Property under levy of
execution or attachment.
	 
	 	(g)	 	Lien
	 
	 	 	 	The filing against the Real Property of any lien or claim of lien for the
performance of work or the supply of materials, or the filing of any
federal, state or local tax lien against the Borrower, or against the Real
Property, unless the Borrower promptly complies with Section 11 of
this Mortgage.
	 
	 	(h)	 	Defaults under other Loan Documents
	 
	 	 	 	The existence of any default or Default under the Loan Agreement or any
other Loan Document, provided any required Notice of such default has been
given and any applicable cure period has expired.
	 
	 	(i)	 	Dissolution or Liquidation

20

 

	 	 	 	The Borrower shall initiate or suffer the commencement of a proceeding for
its dissolution or liquidation, and such proceeding shall not be dismissed
within sixty (60) days, or the Borrower shall cease to exist as a legal
entity.

	 	9.3	 	Curable Non-Monetary Default
	 
	 	 	 	A Default shall exist, following the cure periods specified below, under the
following circumstances:

	 	(a)	 	Unintentional Misrepresentations that are Capable of Being
Cured
	 
	 	 	 	A “Default” shall exist, with Notice, if the Lender discovers that the
Borrower has unintentionally made any material and adverse misrepresentation
that is capable of being cured, unless the Borrower promptly commences and
diligently pursues a cure of the misrepresentation approved by the Lender,
and completes the cure within one hundred twenty (120) days of its receipt
of Notice. Any such cure shall place the Lender in the risk position that
would have existed had the false representation been true when made. The
Lender shall afford the Borrower an additional one hundred twenty (120) day
period in cases where construction or repair is needed to cure the potential
Default, and the cure cannot be completed within the first one hundred
twenty (120) day cure period. During the cure period, the Borrower has the
obligation to provide on demand satisfactory documentation of its effort to
cure, and, upon completion, evidence that the cure has been achieved.
	 
	 	(b)	 	Involuntary Bankruptcy or Similar Filing
	 
	 	 	 	The Borrower becomes the subject of any petition or action seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief, or that may result in a composition of its debts,
provide for the marshaling of the Borrower’s assets for the satisfaction of
its debts, or result in the judicially ordered sale of the Borrower’s assets
for the purpose of satisfying its obligations to creditors, unless dismissed
within sixty (60) days of the filing of the petition or other action.
	 
	 	(c)	 	Entry of a Material Judgment
	 
	 	 	 	Any judgment is entered against the Borrower or any other Obligor involving
an aggregate amount of One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) or more (unless another Default then exists, in which event
there shall be no dollar limitation), and the judgment may materially and
adversely affect the value, use or operation of the Real Property, unless
the judgment is satisfied within thirty (30) days or the Borrower’s insurer
accepts full coverage and liability in writing within such thirty (30) day
period.
	 
	 	(d)	 	Other Defaults
	 
	 	 	 	The Borrower fails to observe any promise or covenant made in this Mortgage,
unless the failure results in a Default described elsewhere in this
Section 9, provided the Lender delivers written Notice to the
Borrower of the existence of such an act, omission or circumstance, and that
such an act, omission or circumstance shall constitute a Default under the
Loan Documents unless the Borrower promptly initiates an effort to cure the
potential Default, pursues the

21

 

	 	 	 	cure diligently and continuously, and succeeds in effecting the cure within
one hundred twenty (120) days of receipt of Notice. The Lender shall afford
the Borrower an additional one hundred twenty (120) day period in cases
where construction or repair is needed to cure the potential Default, and
the cure cannot be completed within the first one hundred twenty (120) day
cure period. During the cure period, the Borrower has the obligation to
provide on demand satisfactory documentation of its effort to cure, and,
upon completion, evidence that the cure has been achieved. All notice and
cure periods provided in this Mortgage shall run concurrently with any
notice or cure periods provided by law and in any of the other Loan
Documents.

	10.	 	RIGHT TO CURE
	 
	 	 	The Lender shall have the right to cure any Default. The expenses of doing so shall be part
of the Indebtedness, and the Borrower shall pay them to the Lender on demand.
	 
	11.	 	CONTEST RIGHTS
	 
	 	 	The Borrower may secure the right to contest Impositions and construction, mechanics’ or
materialmen’s liens, through appropriate proceedings conducted in good faith, by either (A)
depositing with the Lender an amount equal to one hundred twenty five percent (125%) of the
amount of the Imposition or the lien, or (B) obtaining and maintaining in effect a bond
issued by a surety acceptable to the Lender, in an amount equal to the greater of (i) the
amount of a required deposit under clause (A) above and (ii) the amount required by the
surety or by the court in order to obtain a court order staying the foreclosure of the lien
pending resolution of the dispute, and releasing the lien of record. The proceeds of such a
bond must be payable directly to the Lender. The surety issuing such a bond must be
acceptable to the Lender in its reasonable discretion. After such a deposit is made or bond
issued, the Borrower shall promptly commence the contest of the lien and continuously pursue
that contest in good faith and with reasonable diligence. If the contest of the related
Imposition or lien is unsuccessful, any deposits or bond proceeds shall be used to pay the
Imposition or to satisfy the obligation from which the lien has arisen. Any surplus shall be
refunded to the Borrower.
	 
	12.	 	DUE ON TRANSFER OR ENCUMBRANCE
	 
	 	 	Upon the sale or transfer of any portion of the Property or any other conveyance, transfer
or vesting of any direct or indirect interest in the Property, including (i) any encumbrance
(other than a Permitted Encumbrance) of the Real Property (unless the Borrower contests the
encumbrance in compliance with Section 11); and (ii) the granting of any security
interest in the Property (other than Permitted Encumbrances), the Indebtedness shall, at the
Lender’s option, become immediately due and payable without Notice to the Borrower.
	 
	13.	 	ABSOLUTE ASSIGNMENT OF LEASES AND RENTS

	 	13.1	 	ASSIGNMENT OF RENTS AND PROCEEDS AND LEASES 

22

 

	 	 	 	In connection with the Loan, Borrower hereby absolutely, presently and irrevocably
assigns, grants, transfers, and conveys to Lender, its successors and assigns, all
of Borrower’s right, title, and interest in, to, and under all Leases, now or
hereafter affecting all or any part of the Property or Borrower’s use thereof,
including without limitation the right to take all Leasing Actions, together with
all of Borrower’s right, title, and interest in and to all Rents, and the right,
without taking possession of the Real Property, to collect the same as they become
due and to apply such Rents and Proceeds to the Secured Obligations. It is the
intent of Borrower and Lender to establish a present transfer and assignment of all
of the Leases and the Rents to Lender.
	 
	 	13.2	 	DISCLAIMER 
	 
	 	 	 	Neither the assignments set forth in Section 13.1 above nor Lender’s
exercise of its rights thereunder shall be deemed or construed to constitute the
Lender a mortgagee in possession of the Real Property, nor shall the Lender be
deemed to have assumed, by accepting this Assignment, the landlord’s obligations to
any tenant. In particular, acceptance by Lender of this Assignment shall not
obligate the Lender (a) to appear in or to defend any action or proceeding relating
to the Leases or to the Real Property, (b) to perform any obligation as landlord
under the Leases, (c) to pay any amount or to assume any future financial obligation
of the landlord, including any obligation to pay to any tenant a security or other
deposit not actually received by Lender or (d) to indemnify any tenant for any
injury or damage to person or property sustained by any person or persons, firm or
corporation in or about the Real Property.
	 
	 	13.3	 	REPRESENTATIONS, WARRANTIES AND COVENANTS 
	 
	 	 	 	Borrower hereby represents, warrants, and covenants as follows.

	 	(a)	 	Borrower is the sole holder of the landlord’s interest under
the Leases, is entitled to receive the Rents and Proceeds from the Leases and
from the Property, and has the full right to sell, assign, transfer, and set
over the same and to grant to and confer upon Lender the rights, interests,
powers, and authorities herein granted and conferred.
	 
	 	(b)	 	If the Borrower receives any written notice from any tenant
asserting a material default by the landlord under a Lease, or advising the
Borrower that a condition exists which may become a material default with the
passage of time, the Borrower shall send a copy or memorandum of the notice to
the Lender.
	 
	 	(c)	 	The Borrower agrees upon written request of the Lender
following the revocation of the licenses granted in Section 13.4, to
notify the tenants under the Leases of this Assignment, to direct them in
writing to send the Lender, simultaneously, copies of all notices of default
that they serve on the Borrower, and to direct them, at the Lender’s request,
to pay all future Rent directly to the Lender. The Rents and copies of such
notices shall be sent to the Lender at such address as is specified by the
Lender to tenants from time to time.

23

 

	 	(d)	 	The Borrower shall not create or permit any lien, charge, or
encumbrance of the Leases or of the Rents, and shall not pledge, transfer, or
otherwise assign the Leases or the Rents unless at the Lender’s request, or
unless otherwise agreed to by the Lender in writing.
	 
	 	(e)	 	Borrower has made no pledge or assignment of the Leases or
Rents prior to the date hereof, other than collateral assignments to other
lenders that will be released concurrently with the delivery and recordation of
this Mortgage, and Borrower shall not, after the date hereof, make or permit
any such pledge or assignment.
	 
	 	(f)	 	Borrower shall provide Lender with a fully-executed copy of
each Lease, amendment, modification or alteration thereto.

	 	13.4	 	LICENSE
	 
	 	 	 	The Lender grants to the Borrower a conditional license, subject to the Lender’s
rights under Section 13.5 below, to collect the Rents, other than those
Rents paid more than one (1) month in advance. The Borrower may use the Rents so
collected for any lawful purpose which is consistent with the Borrower’s ongoing
performance of its obligations under the Loan Documents, provided (a) no Default
then exists and (b) the Borrower does not intend to cause, and has no reason to
expect the occurrence of, any Default in respect of the Obligations due to be
performed in the following calendar month.
	 
	 	 	 	Any Rents excluded from the scope of this license shall be trust funds for the
benefit of the Lender. The Lender may require that such Rents be deposited in a
reserve fund to serve as additional security for the Loan, or to be used to benefit
the Real Property, under such terms and conditions as the Lender may determine in
the exercise of its sole and absolute discretion.
	 
	 	 	 	The Lender further grants to the Borrower a conditional license subject to the
Lender’s rights under Section 13.5 to take all Leasing Actions in the
ordinary course of business. The license does not extend to any Leasing Action that
permits (i) less than reasonable market rent during its original term or any
extension period, (ii) that permits prepayment of rent more than one (1) year in
advance, or such shorter period as is actually provided for rentals under the Lease,
or (iii) that modifies a Lease in any manner that increases the liability or
obligations of any successor to Borrower’s interest in such Lease or affects the
notice and cure rights available thereunder. Furthermore, any Leases to Affiliates
of Borrower, or other Leases specifically identified by Lender, must be
unconditionally subordinated to this Mortgage.
	 
	 	13.5	 	Revocation of License
	 
	 	 	 	Upon Default, the Lender may by Notice to the Borrower or Assignor immediately
terminate the Borrower’s licenses under Section 13.4, regardless of whether
the Real Property or any other collateral adequately secures the Loan’s eventual
repayment. Upon the termination of the Borrower’s license, the Borrower shall
immediately deliver to the Lender all Rents then in the Borrower’s possession, and
all Rents then due or accruing

24

 

	 	 	 	thereafter shall be payable by tenants directly to the Lender. This Assignment shall
constitute a direction to and full authority to any tenant of the Real Property,
upon the Lender’s written request, to pay all Rents to the Lender, without requiring
the Lender to prove to the tenant the existence of Default. The Borrower agrees to
deliver immediately to the Lender any Rents received by the Borrower after the
revocation of the Borrower’s license under Section 4, and at the Lender’s
written request, shall execute such further assignments to the Lender of any Lease
as the Lender may in its sole judgment request. This Assignment is given in
connection with the Loan and in support of the performance of the Obligations, and
nothing herein contained shall be construed as (a) constituting the Lender a
“mortgagee-in-possession” of the Real Property, or (b) an assumption by the Lender
of the Borrower’s obligations as landlord under the Leases.
	 
	 	 	 	Upon the cure of all Defaults, the Lender may by Notice to the Borrower, reinstate
the licenses of the Borrower under Section 13.4 of this Mortgage.

	14.	 	ACCELERATION
	 
	 	 	If a Default exists, the Lender may, at its option, declare the unpaid principal balance of
the Notes to be immediately due and payable, together with all accrued interest on the
Indebtedness, all costs of collection (including reasonable attorneys’ fees and expenses)
and all other charges due and payable by the Borrower under the Notes or any other Loan
Document.
	 
	 	 	If the subject Default is nonmonetary in nature other than a Default arising under
Section 9.2(b), the Lender shall exercise its option to accelerate only by giving
Notice of acceleration to the Borrower. The Lender shall not give any such Notice of
acceleration until (a) the Borrower has been given any required Notice of the prospective
Default and (b) any applicable cure period has expired.
	 
	 	 	Except as expressly described in this Section, no notice of acceleration shall be required
in order for the Lender to exercise its option to accelerate the Indebtedness in the event
of Default.
	 
	15.	 	RIGHTS OF ENTRY AND TO OPERATE

	 	15.1	 	Entry on Real Property
	 
	 	 	 	If a Default exists, the Lender may, to the extent permitted by applicable law,
enter upon the Real Property and take exclusive possession of the Real Property and
of all books, records and accounts, all without Notice and without being guilty of
trespass, but subject to the rights of tenants in possession under the Leases. If
the Borrower remains in possession of all or any part of the Property after Default
and without the Lender’s prior written consent, the Lender may, without Notice to
the Borrower, invoke any and all legal remedies to dispossess the Borrower.
	 
	 	15.2	 	Operation of Real Property
	 
	 	 	 	If a Default exists, the Lender may hold, lease, manage, operate or otherwise use or
permit the use of the Real Property, either itself or by other persons, firms or
entities, in such manner, for such time and upon such other terms as the Lender may
deem to be

25

 

	 	 	 	prudent under the circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with reference thereto,
from time to time, as the Lender deems prudent), and apply all Rents and other
amounts collected by the Lender to the Obligations.

	16.	 	RECEIVERSHIP
	 
	 	 	Following Default, the Lender may apply to a court of competent jurisdiction for the
appointment of a receiver of the Property, ex parte without Notice to the Borrower, whether
or not the value of the Property exceeds the Indebtedness, whether or not waste or
deterioration of the Real Property has occurred, and whether or not other arguments based on
equity would justify the appointment. The Borrower irrevocably, with knowledge and for
valuable consideration, consents to such an appointment. Any such receiver shall have all
the rights and powers customarily given to receivers in Illinois, including the rights and
powers granted to the Lender by this Mortgage, the power to maintain, lease and operate the
Real Property on terms approved by the court, and the power to collect the Rents and apply
them to the Indebtedness or otherwise as the court may direct. Once appointed, a receiver
may at the Lender’s option remain in place until the Indebtedness has been paid in full.
	 
	17.	 	FORECLOSURE; POWER OF SALE

	 	17.1	 	Availability of Remedies
	 
	 	 	 	Upon Default, the Lender may immediately proceed to foreclose the lien of this
Mortgage, against all or part of the Property, or to sell the Property, by judicial
or nonjudicial foreclosure in accordance with the laws of Illinois and may pursue
any other remedy available to commercial mortgage lenders under the laws of
Illinois.
	 
	 	17.2	 	Construction with Illinois Mortgage Foreclosure Law
	 
	 	 	 	In the event that any provision of this Mortgage shall be inconsistent with any
provision of the Illinois Mortgage Foreclosure Law (Chapter 735, Sections 5/15-1101
et seq., Illinois Compiled Statutes) (the “Act”), the provisions of the Act shall
take precedence over the provisions of this Mortgage, but shall not invalidate or
render unenforceable any other provision of this Mortgage that can be construed in a
manner consistent with the Act.
	 
	 	17.3	 	Availability of all Remedies under the Act
	 
	 	 	 	If any provision of this Mortgage shall grant to Mortgagee any rights or remedies
upon default of the Mortgagor which are more limited than the rights that would
otherwise be vested in Mortgagee under the Act in the absence of said provision, the
Mortgagee shall be vested with the rights granted in the Act to the full extent
permitted by law.
	 
	 	17.4	 	Expenses included in Indebtedness
	 
	 	 	 	Without limiting the generality of the foregoing, all expenses incurred by the
Mortgagee to the extent reimbursable under Section 15-1512 of the Act, whether
incurred before or after any decree or judgment of foreclosure, and whether
enumerated in this Mortgage,

26

 

	 	 	 	shall be added to the Indebtedness secured by this Mortgage or by the judgment of
foreclosure.

	18.	 	WAIVERS
	 
	 	 	To the maximum extent permitted by applicable law, the Borrower irrevocably and
unconditionally WAIVES and RELEASES any present or future rights (a) of reinstatement or
redemption pursuant to 735 ILSC 5/15-1601 or similar reinstatement or redemption rights now
or hereafter available to the Lender following a Default, (b) that may exempt the Property
from any civil process, (c) to appraisal or valuation of the Property, (d) to extension of
time for payment, (e) that may subject the Lender’s exercise of its remedies to the
administration of any decedent’s estate or to any partition or liquidation action, (f) to
any homestead and exemption rights provided by the Constitution and laws of the United
States and of Illinois, (g) to notice of acceleration or notice of intent to accelerate
(other than as expressly stated herein) following a Default, and (h) that in any way would
delay or defeat the right of the Lender to cause the sale of the Real Property for the
purpose of satisfying the Indebtedness following a Default,. The Borrower agrees that the
price paid at a lawful foreclosure sale, whether by the Lender or by a third party, and
whether paid through cancellation of all or a portion of the Indebtedness or in cash, shall
conclusively establish the value of the Real Property.
	 
	 	 	The foregoing waivers shall apply to and bind any party assuming the Obligations of the
Borrower under this Mortgage.
	 
	19.	 	SECURITY AGREEMENT AND FIXTURE FILING

	 	19.1	 	Definitions
	 
	 	 	 	“Account” shall have the definition assigned in the UCC.
	 
	 	 	 	“Account Collateral” means all Accounts that arise from the leasing,
licensing or use by third parties of the Property, from the commencement of the Loan
term through the satisfaction of all of the Obligations.
	 
	 	 	 	“Chattel Paper” shall have the definition assigned in the UCC.
	 
	 	 	 	“Chattel Paper Collateral” means all Chattel Paper arising from the sale or
other disposition of all or part of the Property.
	 
	 	 	 	“Control Agreement” means a Deposit Account or Securities Account control
agreement by and among the Borrower, the Lender and the relevant depository or
securities intermediary providing the Lender with “control” of such Deposit Account
or Securities Account within the meaning of Articles 8 and 9 of the UCC.
	 
	 	 	 	“Deposit Account” shall have the definition assigned in the UCC.
	 
	 	 	 	“Deposit Account Collateral” means that certain demand account number
0692-37808 established with Cole Taylor Bank in Rosemont, Illinois (the “Proceeds
Account”) and any replacement or successor accounts and all other Deposit Accounts
and/or Securities

27

 

	 	 	 	Accounts over which Lender has obtained a Control Agreement into which Rents ,
Insurance Proceeds, Condemnation Proceeds or Proceeds of the Property are deposited
or held at any time from the commencement of the Loan term through the satisfaction
of all of the Obligations and shall include all funds in such Deposit Accounts.
	 
	 	 	 	“Document” shall have the definition assigned in the UCC.
	 
	 	 	 	“Document Collateral” means all Documents that evidence title to all or any
part of the Goods Collateral.
	 
	 	 	 	“Equipment” shall have the definition assigned in the UCC.
	 
	 	 	 	“Equipment Collateral” means all Equipment that relates to the Real Property
arising from the sale or other disposition of all or part of the Property.
	 
	 	 	 	“Excluded Collateral” means (A) trade fixtures, office furniture and office
equipment; (B) racking systems; (C) machinery and equipment which does not
constitute a Fixture or Equipment Collateral; or (D) rolling stock.
	 
	 	 	 	“Financing Statements” shall have the definition assigned in the UCC.
	 
	 	 	 	“General Intangibles” shall have the definition assigned in the UCC.
	 
	 	 	 	“General Intangible Collateral” means all General Intangibles that have
arisen or that arise in the future in connection with the Borrower’s ownership,
operation or leasing of the Real Property as commercial real estate (but not any
General Intangibles arising from the specific business operations of Borrower and/or
its subsidiaries), at any time from the commencement of the Loan term through the
satisfaction of all of the Obligations.
	 
	 	 	 	“Goods” shall have the definition assigned in the UCC. “Goods” include all
detached Fixtures, items of Personal Property that may become Fixtures, property
management files, accounting books and records, reports of consultants relating to
the Real Property as commercial real estate, site plans, test borings, environmental
or geotechnical surveys, samples and test results, blueprints, construction and shop
drawings, and plans and specifications.
	 
	 	 	 	“Goods Collateral” means all Goods that relate to the Real Property as
commercial real estate and are used in the operation of the Real Property as
commercial real estate.
	 
	 	 	 	“Instrument” shall have the definition assigned in the UCC.
	 
	 	 	 	“Instrument Collateral” means all Instruments received as Rents or
identifiable Proceeds of Property or purchased by the Borrower with Rents or
identifiable Proceeds.
	 
	 	 	 	“Investment Property” shall have the definition assigned in the UCC.
	 
	 	 	 	“Investment Property Collateral” means all the Investment Property purchased
using Rents or identifiable Proceeds of Property, or received in respect of Account
Collateral.

28

 

	 	 	 	“Money Collateral” means all money received in respect of Rents.
	 
	 	 	 	“Personal Property” means Account Collateral, Chattel Paper Collateral,
Commercial Tort Claim Collateral, Deposit Account Collateral, Document Collateral,
Equipment Collateral, General Intangibles Collateral, Goods Collateral, Instrument
Collateral, Investment Property Collateral, and Money Collateral, but shall not
include the Excluded Collateral.
	 
	 	 	 	 “Proceeds” mean all proceeds (as defined in the UCC) of any Property.
	 
	 	 	 	“UCC” means the Uniform Commercial Code as adopted in Illinois.
	 
	 	19.2	 	Creation of Security Interest
	 
	 	 	 	This Mortgage shall be self-operative and shall constitute a security agreement
pursuant to the provisions of the UCC with respect to the Personal Property. The
Borrower, as debtor, hereby grants the Lender, as secured party, for the purpose of
securing the Indebtedness, a security interest in the Account Collateral, Chattel
Paper Collateral, Commercial Tort Claim Collateral, Deposit Account Collateral,
Document Collateral, Equipment Collateral, General Intangible Collateral, Goods
Collateral, Instrument Collateral, Investment Property Collateral, and Money
Collateral, in the accessions, additions, replacements, substitutions and Proceeds
of any of the foregoing items of collateral. Upon Default, the Lender shall have the
rights and remedies of a secured party under the UCC as well as all other rights and
remedies available at law or in equity, and, at the Lender’s option, the Lender may
also invoke the remedies provided elsewhere in this Mortgage as to such Property.
The Borrower and the Lender agree that the rights granted to the Lender as secured
party under this Section 19 are in addition to rather than a limitation on
any of the Lender’s other rights under this Mortgage with respect to the Property.
	 
	 	19.3	 	Filing Authorization
	 
	 	 	 	The Borrower irrevocably authorizes the Lender to file, in the appropriate locations
for filings of UCC financing statements in any jurisdictions as the Lender in good
faith deems appropriate, such financing statements and amendments as the Lender may
require in order to perfect or continue this security interest, or in order to
prevent any filed financing statement from becoming misleading or from losing its
perfected status.
	 
	 	19.4	 	Additional Searches and Documentation
	 
	 	 	 	Borrower shall provide to Lender upon request, certified copies of any searches of
UCC records deemed necessary or appropriate by Lender to confirm the first priority
status of its security interest in the Personal Property, together with copies of
all documents or records evidencing security interests disclosed by such searches.
	 
	 	19.5	 	Costs
	 
	 	 	 	The Borrower shall pay all filing fees and costs and all reasonable costs and
expenses of any record searches (or their continuations) as the Lender may require.

29

 

	 	19.6	 	Representations, Warranties and Covenants of the Borrower

	 	(a)	 	Ownership of the Personal Property
	 
	 	 	 	All of the Personal Property is owned by the Borrower, and except for the
Collateral Use Agreement executed among Borrower, Lender and Wells Fargo
Foothill, LLC, in its capacity as agent for the Revolving Credit Lenders
referenced therein, is not the subject matter of any lease, control
agreement or other instrument, agreement or transaction whereby any
ownership, security or beneficial interest in the Personal Property is held
by any person or entity other than the Borrower, subject only to (1) the
Lender’s security interest, (2) the rights of tenants occupying the Property
pursuant to Leases approved by the Lender, which shall include the Leases
identified in the rent roll attached to the Closing Certificate executed as
one of the Loan Documents, and (3) the Permitted Encumbrances.
	 
	 	(b)	 	No Other Identity
	 
	 	 	 	Except as set forth on Schedule 19.6, the Borrower represents and warrants
that the Borrower has not used or operated under any other name or identity
for at least five (5) years. The Borrower covenants and agrees that Borrower
will furnish Lender with notice of any change in its name, form of
organization, or state of organization within thirty (30) days prior to the
effective date of any such change.
	 
	 	(c)	 	Location of Equipment
	 
	 	 	 	All Equipment Collateral is located upon the Land.
	 
	 	(d)	 	Removal of Goods
	 
	 	 	 	The Borrower will not remove or permit to be removed any detached Fixtures
or Goods that may become Fixtures from the Land, unless the same is replaced
immediately with unencumbered assets (1) of a quality and value equal or
superior to that which it replaces and (2) which is located on the Land. All
such replacements, renewals, and additions shall become and be immediately
subject to the security interest of this Mortgage.
	 
	 	(e)	 	Proceeds
	 
	 	 	 	The Borrower shall not, without the Lender’s prior written consent, dispose
of any Personal Property in any other manner, except in compliance with
Subsection 19.6(d) above

	 	19.7	 	Fixture Filing
	 
	 	 	 	This Mortgage constitutes a financing statement filed as a fixture filing in the
Official Records of the County Recorder of Kane County, Illinois with respect to any
and all fixtures comprising Property. The “debtor” is John B. Sanfilippo & Son,
Inc., a corporation organized under Delaware law, the “secured party” is
Transamerica Life Insurance Company, the collateral is as described in
Subsection 19.1 above and the granting clause of this Mortgage, and the
addresses of the debtor and secured party are the addresses stated in Subsection
21.13 of this Mortgage for Notices to such parties. The organizational
identification number of the debtor is 0878236. The owner of record of the Real
Property is John B. Sanfilippo & Son, Inc.

30

 

	 	19.8	 	Deposit Account

	 	(a)	 	Borrower shall deposit all Rents, Insurance Proceeds and
Condemnation Proceeds, as well as the Proceeds of any of the other Property
described herein, in the Proceeds Account, all of which shall be subject to the
terms of this Agreement.
	 
	 	(b)	 	Borrower shall maintain the Proceeds Account in effect at all
times during the term of the Loan.
	 
	 	(c)	 	Borrower shall take all steps necessary to create in Lender a
perfected security interest in the Proceeds Account, and shall afford Lender
control of the Proceeds Account within the meaning of Section 9104 of the UCC
(and any successor or replacement statutes) within ten (10) business days
following the recordation of this instrument in the real estate records of the
County in which the Real Property is located.
	 
	 	(d)	 	If the depository bank at which the Proceeds Account is located
becomes insolvent, ceases doing business or is otherwise incapable in Lender’s
reasonable discretion of holding and administering the Proceeds Account for its
intended purposes, the Proceeds Account shall be moved to a replacement
depository bank reasonably acceptable to Lender, and Lender’s security interest
therein shall be perfected by control agreement with the replacement depository
bank.
	 
	 	(e)	 	Upon the occurrence of a Default, Lender shall be entitled to
provide the depository bank with notice of exclusive control of the Proceeds
Account and Lender shall have the unilateral right to provide instructions as
to the use, disposition and application of the funds or other financial assets
in the Proceeds Account.

	20.	 	ENVIRONMENTAL MATTERS

	 	20.1	 	Representations
	 
	 	 	 	The Borrower represents as follows:

	 	(a)	 	No Hazardous Substances
	 
	 	 	 	To the best of the Borrower’s knowledge, and except as disclosed in the ESA,
no release of any Hazardous Substance has occurred on or about the Real
Property in a quantity or at a concentration level that (i) violates any
Environmental Law, or (ii) requires reporting to any regulatory authority or
may result in any obligation to remediate under any Environmental Law.
	 
	 	(b)	 	Absence of Mold Contamination
	 
	 	 	 	To the best of Borrower’s knowledge, there are no mold issues present in the
Improvements that result in a violation of Environmental Laws. Borrower has
received no mold-related tenant complaint or notice of any legal proceeding
relating to mold affecting the Improvements.
	 
	 	(c)	 	Compliance with Environmental Laws

31

 

	 	 	 	The Real Property and its current use and presently anticipated uses comply
with all Environmental Laws, including those requiring permits, licenses,
authorizations, and other consents and approvals.

	 	(d)	 	No Actions or Proceedings
	 
	 	 	 	To the best of Borrower’s knowledge, no governmental authority or agency has
commenced any action, proceeding or investigation based on any suspected or
actual violation of any Environmental Law on or about the Real Property. To
the best of the Borrower’s knowledge, no such authority or agency has
threatened to commence any such action, proceeding, or investigation.

	 	20.2	 	Environmental Covenants
	 
	 	 	 	The Borrower covenants as follows:

	 	(a)	 	Compliance with Environmental Laws
	 
	 	 	 	The Borrower shall, and the Borrower shall cause all employees, agents,
contractors, and tenants of the Borrower to, keep and maintain the Real
Property in compliance with all Environmental Laws.
	 
	 	(b)	 	Notices, Actions and Claims
	 
	 	 	 	The Borrower shall immediately advise the Lender in writing of (i) any
written notices from any governmental or quasi-governmental agency or
authority of violation or potential violation of any Environmental Law
received by the Borrower, (ii) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
pursuant to any Environmental Law about which Borrower has received written
notice, (iii) all claims made or threatened by any third party against the
Borrower or the Real Property relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous
Substances, and (iv) discovery by the Borrower of any occurrence or
condition on any real property adjoining or in the vicinity of the Real
Property that creates a foreseeable risk of contamination of the Real
Property by or with Hazardous Substances.

	 	20.3	 	The Lender’s Right to Control Claims
	 
	 	 	 	The Lender shall have the right (but not the obligation) to join and participate in,
as a party if it so elects, any legal proceedings or actions initiated in connection
with any Hazardous Substances and to have its related and reasonable attorneys’ and
consultants’ fees paid by the Borrower upon demand.
	 
	 	20.4	 	Indemnification
	 
	 	 	 	The Borrower shall be solely responsible for, and shall indemnify, defend, and hold
harmless the Lender and its directors, officers, employees, agents, successors and
assigns, from and against, any claim, judgment, loss, damage, demand, cost, expense
or liability of whatever kind or nature, known or unknown, contingent or otherwise,
directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence (whether
prior to or after the date of this Mortgage) of Hazardous Substances on, in, under
or about the Real Property (whether by the Borrower, a predecessor in title, any
tenant, or any employees, agents, contractor or subcontractors of any of the
foregoing or any third persons at any time occupying or

32

 

	 	 	 	present on the Real Property), including: (i) personal injury; (ii) death; (iii)
damage to property; (iv) all consequential damages; (v) the cost of any required or
necessary repair, cleanup or detoxification of the Real Property, including the soil
and ground water thereof, and the preparation and implementation of any closure,
remedial or other required plans; (vi) damage to any natural resources; and (vii)
all reasonable costs and expenses incurred by the Lender in connection with clauses
(i) through (vi), including reasonable attorneys’ and consultants’ fees;
provided, however, that nothing contained in this Section shall be deemed to
preclude the Borrower from seeking indemnification from, or otherwise proceeding
against, any third party including any tenant or predecessor in title to the Real
Property, and further provided that this indemnification will not extend to
matters caused by the Lender’s gross negligence or willful misconduct, or arising
from a release of Hazardous Substances which occurs after the Lender has taken
possession of the Real Property, so long as the Borrower has not caused the release
through any act or omission. The covenants, agreements, and indemnities set forth in
this Section shall be binding upon the Borrower and its successors and assigns, and
shall survive repayment of the Indebtedness, foreclosure of the Real Property, and
the Borrower’s granting of a deed to the Real Property in lieu of foreclosure.
Payment shall not be a condition precedent to this indemnity. Any costs or expenses
incurred by the Lender for which the Borrower is responsible or for which the
Borrower has indemnified the Lender shall be paid to the Lender on demand, with
interest at the Default Rate from the date incurred by the Lender until paid in
full, and shall be secured by this Mortgage. Without the prior written consent of
the Lender, which consent shall not be unreasonably withheld, the Borrower shall not
enter into any settlement agreement, consent decree, or other compromise in respect
to any claims relating to Hazardous Substances. The Lender agrees that it shall not
unreasonably delay its consideration of any written request for its consent to any
such settlement agreement, consent decree, or other compromise once all information,
reports, studies, audits, and other documentation have been submitted to the Lender.

	 	20.5	 	Environmental Audits
	 
	 	 	 	If a Default exists, or the Lender has a reasonable basis to believe that a release
of Hazardous Substances may have occurred, the Lender may require that the Borrower
retain, or the Lender may retain directly, at the sole cost and expense of the
Borrower, a licensed geologist, industrial hygienist or an environmental consultant
acceptable to the Lender to conduct an environmental assessment or audit of the Real
Property. In the event that the Lender makes a reasonable determination of the need
for an environmental assessment or audit, the Lender shall inform the Borrower in
writing that such a determination has been made and, if requested to do so by the
Borrower, give the Borrower a written explanation of that determination before the
assessment or audit is conducted. The Borrower shall afford any person conducting an
environmental assessment or audit access to the Real Property and all materials
reasonably requested; provided that such person shall not unreasonably interfere
with the use and operation of the Real Property. Except as set forth below, the
Borrower shall pay on demand the cost and expenses of any environmental consultant
engaged by the Lender under this Subsection. The Borrower shall, at the Lender’s
request and at the Borrower’s sole cost and expense, take such investigative and
remedial measures determined by the geologist, hygienist or consultant to be
necessary to address any condition discovered by the assessment or audit so that (i)
the Real Property shall be in compliance with all

33

 

	 	 	 	Environmental Laws, (ii) the condition of the Real Property shall not constitute any
identifiable risk to human health or to the environment, and (iii) the value of the
Real Property shall not be affected by the presence of Hazardous Substances.
Notwithstanding the foregoing, the Borrower shall not be required to pay for the
costs of such audit or assessment if it reasonably disagrees with the Lender’s
determination that there is a reasonable basis that a release of a Hazardous
Substance has occurred, the Lender proceeds with such audit or assessment and the
audit or assessment does not reveal any material violation of Environmental Laws
that were not identified on the ESA.

	21.	 	MISCELLANEOUS

	 	21.1	 	Successors and Assigns
	 
	 	 	 	All of the terms of the Loan Documents shall apply to, be binding upon and inure to
the benefit of the successors and assigns of the Obligors, or to the holder of the
Notes, as the case may be.
	 
	 	21.2	 	Survival of Obligations
	 
	 	 	 	Each and all of the Obligations shall continue in full force and effect until the
latest of (a) the date the Indebtedness has been paid in full and the Obligations
have been performed and satisfied in full, (b) the last date permitted by law for
bringing any claim or action with respect to which the Lender may seek payment or
indemnification in connection with the Loan Documents, and (c) the date on which any
claim or action for which the Lender seeks payment or indemnification is fully and
finally resolved and, if applicable, any compromise thereof of judgment or award
thereon is paid in full.
	 
	 	21.3	 	Further Assurances
	 
	 	 	 	The Borrower, upon the request of the Lender, shall complete, execute, acknowledge,
deliver and record or file such further instruments and do such further acts as may
be reasonably necessary to carry out more effectively the purposes of this Mortgage,
to subject any property intended to be covered by this Mortgage to the liens and
security interests it creates, to place third parties on notice of those liens and
security interests, or to correct any defects which may be found in any Loan
Document.
	 
	 	21.4	 	Right of Inspection
	 
	 	 	 	The Lender shall have the right from time to time, upon reasonable advance notice to
the Borrower, to enter onto the Real Property during regular business hours for the
purpose of inspecting and reporting on its physical condition, tenancy and
operations; provided the Lender shall not unreasonably interfere with the use and
operation of the Real Property.
	 
	 	21.5	 	Expense Indemnification
	 
	 	 	 	The Borrower shall pay all filing and recording fees, documentary stamps, intangible
taxes, and all expenses incident to the execution and acknowledgment of this
Mortgage, the Notes or any of the other Loan Documents, any supplements, amendments,
renewals or extensions of any of them, or any instrument entered into under
Subsection 21.3. The Borrower shall pay or reimburse the Lender, upon
demand, for all costs and expenses,

34

 

	 	 	 	including appraisal and reappraisal costs of the Property and reasonable attorneys’
and legal assistants’ fees, which the Lender may incur in connection with
enforcement proceedings under the Notes, this Mortgage, or any of the other Loan
Documents (including all fees and costs incurred in enforcing or protecting the
Notes, this Mortgage, or any of the other Loan Documents in any bankruptcy
proceeding), and reasonable attorneys’ and legal assistants’ fees incurred by the
Lender in any other suit, action, legal proceeding or dispute of any kind in which
the Lender is made a party or appears as party plaintiff or defendant, affecting the
Indebtedness, the Notes, this Mortgage, any of the other Loan Documents, or the
Property, or required to protect or sustain the lien of this Mortgage. The
Borrower shall be obligated to pay (or to reimburse the Lender) for such
fees, costs and expenses and shall indemnify and hold the Lender harmless from and
against any and all loss, cost, expense, liability, damage and claims and causes of
action, including reasonable attorneys’ fees, incurred or accruing by reason of the
Borrower’s failure to promptly repay any such fees, costs and expenses. If any suit
or action is brought to enforce or interpret any of the terms of this Mortgage
(including any effort to modify or vacate any automatic stay or injunction, any
trial, any appeal, any petition for review or any bankruptcy proceeding), the Lender
shall be entitled to recover all expenses reasonably incurred in preparation for or
during the suit or action or in connection with any appeal of the related decision,
whether or not taxable as costs. Such expenses include reasonable attorneys’ fees,
witness fees (expert or otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including the costs of searching records, obtaining title reports, appraisals,
environmental assessments, surveying costs, title insurance premiums, and reasonable
attorneys’ fees, incurred by the Lender that are necessary at any time in the
Lender’s opinion for the protection of its interest or enforcement of its rights
shall become a part of the Indebtedness payable on demand and shall bear interest
from the date of expenditure until repaid at the interest rate as provided in the
Notes.

	 	21.6	 	General Indemnification
	 
	 	 	 	The Borrower shall indemnify, defend and hold the Lender harmless against: (i) any
and all claims for brokerage, leasing, finder’s or similar fees which may be made
relating to the Real Property or the Indebtedness and (ii) any and all liability,
obligations, losses, damages, penalties, claims, actions, suits costs and expenses
(including the Lender’s reasonable attorneys’ fees, together with reasonable
appellate counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by the Lender in connection with the Indebtedness,
this Mortgage, the Real Property or any part thereof, or the operation, maintenance
and/or use thereof, or the exercise by the Lender of any rights or remedies granted
to it under this Mortgage or pursuant to applicable law; provided, however, that
nothing herein shall be construed to obligate the Borrower to indemnify, defend and
hold harmless the Lender from and against any of the foregoing which is imposed on
or incurred by the Lender by reason of the Lender’s willful misconduct or gross
negligence.
	 
	 	21.7	 	Recording and Filing
	 
	 	 	 	The Borrower shall cause this Mortgage and all amendments, supplements, and
substitutions to be recorded, filed, re-recorded and re-filed in such manner and in
such places as the Lender may reasonably request. The Borrower will pay all
recording filing, re-recording and re-filing taxes, fees and other charges.

35

 

	 	21.8	 	No Waiver
	 
	 	 	 	No deliberate or unintentional failure by the Lender to require strict performance
by the Borrower of any Obligation shall be deemed a waiver, and the Lender shall
have the right at any time to require strict performance by the Borrower of any
Obligation.
	 
	 	21.9	 	Covenants Running with the Land
	 
	 	 	 	All Obligations are intended by the parties to be and shall be construed as
covenants running with the Land.
	 
	 	21.10	 	Severability
	 
	 	 	 	The Loan Documents are intended to be performed in accordance with, and only to the
extent permitted by, all applicable Legal Requirements. Any provision of the Loan
Documents that is prohibited or unenforceable in any jurisdiction shall nevertheless
be construed and given effect to the extent possible. The invalidity or
unenforceability of any provision in a particular jurisdiction shall neither
invalidate nor render unenforceable any other provision of the Loan Documents in
that jurisdiction, and shall not affect the validity or enforceability of that
provision in any other jurisdiction. If a provision is held to be invalid or
unenforceable as to a particular person or under a particular circumstance, it shall
nevertheless be presumed valid and enforceable as to others, or under other
circumstances.
	 
	 	21.11	 	Usury
	 
	 	 	 	The parties intend that no provision of the Notes or the Loan Documents be
interpreted, construed, applied, or enforced so as to permit or require the payment
or collection of interest in excess of the Maximum Permitted Rate. In this regard,
the Borrower and the Lender each stipulate and agree that it is their common and
overriding intent to contract in strict compliance with applicable usury laws.
Accordingly, none of the terms of this Mortgage, the Notes or any of the other Loan
Documents shall ever be construed to create a contract to pay, as consideration for
the use, forbearance or detention of money, interest at a rate in excess of the
Maximum Permitted Rate, and the Borrower shall never be liable for interest in
excess of the Maximum Permitted Rate. Therefore, (a) in the event that the
Indebtedness and Obligations are prepaid or the maturity of the Indebtedness and
Obligations is accelerated by reason of an election by the Lender, unearned interest
shall be canceled and, if theretofore paid, shall either be refunded to the Borrower
or credited on the Indebtedness, as the Lender may elect; (b) the aggregate of all
interest and other charges constituting interest under applicable laws and
contracted for, chargeable or receivable under the Notes and the other Loan
Documents or otherwise in connection with the transaction contemplated thereby shall
never exceed the maximum amount of interest, nor produce a rate in excess of the
Maximum Permitted Rate; and (c) if any excess interest is provided for or received,
it shall be deemed a mistake, and the same shall, at the option of the Lender,
either be refunded to the Borrower or credited on the unpaid principal amount (if
any), and the Indebtedness shall be automatically reformed so as to permit only the
collection of the interest at the Maximum Permitted Rate. Furthermore, if any
provision of the Notes or any of the other Loan Documents is interpreted, construed,
applied, or enforced, in such a manner as to provide for interest in
excess of the Maximum Permitted Rate, then the parties intend that such provision automatically
shall be deemed reformed retroactively so as to require payment only of

36

 

	 	 	 	interest at the Maximum Permitted Rate. If, for any reason whatsoever, interest paid
or received during the full term of the applicable Indebtedness produces a rate
which exceeds the Maximum Permitted Rate, then the amount of such excess shall be
deemed credited retroactively in reduction of the then outstanding principal amount
of the Indebtedness, together with interest at such Maximum Permitted Rate. The
Lender shall credit against the principal of such Indebtedness (or, if such
Indebtedness shall have been paid in full, shall refund to the payor of such
interest) such portion of said interest as shall be necessary to cause the interest
paid to produce a rate equal to the Maximum Permitted Rate. All sums paid or agreed
to be paid to the Lender for the use, forbearance or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of the applicable Indebtedness, so that the
interest rate is uniform throughout the full term of such Indebtedness. In
connection with all calculations to determine the Maximum Permitted Rate, the
parties intend that all charges be excluded to the extent they are properly
excludable under applicable usury laws, as they from time to time are determined to
apply to this transaction. The provisions of this Section shall control all
agreements, whether now or hereafter existing and whether written or oral, between
the Borrower and the Lender.

	 	21.12	 	Entire Agreement
	 
	 	 	 	The Loan Documents contain the entire agreements between the parties relating to the
financing of the Real Property, and all prior agreements which are not contained in
the Loan Documents, other than the unsecured Environmental Indemnity Agreement, are
terminated. The Loan Documents represent the final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties. The Loan Documents may be amended, revised, waived, discharged, released or
terminated only by a written instrument or instruments executed by the party against
whom enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge, release
or termination that is not so documented shall be null and void.
	 
	 	21.13	 	Notices
	 
	 	 	 	In order for any demand, consent, approval or other communication to be effective
under the terms of this Mortgage, “Notice” must be provided under the terms of this
Subsection. All Notices must be in writing. Notices may be (a) delivered by hand,
(b) transmitted by facsimile (with a duplicate copy sent by first class mail,
postage prepaid), (c) sent by certified or registered mail, postage prepaid, return
receipt requested, or (d) sent by reputable overnight courier service, delivery
charges prepaid. Notices shall be addressed as set forth below:

If to the Lender:

Transamerica Life Insurance Company

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E.

Cedar Rapids, Iowa 52499-5443

Attn: Mortgage Loan Department

37

 

Reference: Loan No. D700218

Fax Number: (319) 369-2277

If to the Borrower:

John B. Sanfilippo & Son, Inc.

1703 North Randall Road

Mail Code — 2NW-EX

Elgin, Illinois 60123

Attn: Michael J. Valentine

Fax Number: (866) 610-1294

	 	 	 	Notices delivered by hand or by overnight courier shall be deemed given when
actually received or when refused by their intended recipient. Notices sent by
facsimile will be deemed delivered when a legible copy has been received (provided
receipt has been verified by telephone confirmation or one of the other permitted
means of giving Notices under this Subsection). Mailed Notices shall be deemed given
on the date of the first attempted delivery (whether or not actually received).
Either the Lender or the Borrower may change its address for Notice by giving at
least fifteen (15) Business Days’ prior Notice of such change to the other party.
	 
	 	21.14	 	Counterparts
	 
	 	 	 	This Mortgage may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute but one instrument.
	 
	 	21.15	 	Choice of Law
	 
	 	 	 	This Mortgage shall be interpreted, construed, applied, and enforced according to,
and will be governed by, the laws of Illinois, without regard to any choice of law
principle which, but for this provision, would require the application of the law of
another jurisdiction and regardless of where executed or delivered, where payable or
paid, where any cause of action accrues in connection with this transaction, where
any action or other proceeding involving the Loan is instituted, or whether the laws
of Illinois otherwise would apply the laws of another jurisdiction.
	 
	 	21.16	 	Forum Selection
	 
	 	 	 	The Borrower and Lender (by acceptance hereof) agree that the sole and exclusive
forum for the determination of any action relating to the validity and
enforceability of the Notes, this Mortgage and the other Loan Documents, and any
other instruments securing the Notes shall be either in an appropriate court of the
State of Illinois or the applicable United States District Court, except as
otherwise set forth in the Loan Documents.
	 
	 	21.17	 	Sole Benefit
	 
	 	 	 	This Mortgage and the other Loan Documents have been executed for the sole benefit
of the Borrower and the Lender and the successors and assigns of the Lender. No
other party shall have rights thereunder or be entitled to assume that the parties
thereto will insist upon strict performance of their mutual obligations hereunder,
any of which may be

38

 

	 	 	 	waived from time to time. The Borrower shall have no right to assign any of its
rights under the Loan Documents to any party whatsoever.

	 	21.18	 	Release of Claims
	 
	 	 	 	The Borrower hereby RELEASES, DISCHARGES and ACQUITS forever the Lender and its
officers, directors, trustees, agents, employees and counsel (in each case, past,
present or future) from any and all Claims existing as of the date hereof (or the
date of actual execution hereof by the Borrower, if later). As used herein, the term
“Claim” shall mean any and all liabilities, claims, defenses, demands, actions,
causes of action, judgments, deficiencies, interest, liens, costs or expenses
(including court costs, penalties, attorneys’ fees and disbursements, and amounts
paid in settlement) of any kind and character whatsoever, including claims for
usury, breach of contract, breach of commitment, negligent misrepresentation or
failure to act in good faith, in each case whether now known or unknown, suspected
or unsuspected, asserted or unasserted or primary or contingent, and whether arising
out of written documents, unwritten undertakings, course of conduct, tort,
violations of laws or regulations or otherwise.
	 
	 	21.19	 	No Partnership
	 
	 	 	 	Nothing contained in the Loan Documents is intended to create any partnership, joint
venture or association between the Borrower and the Lender, or in any way make the
Lender a co-principal with the Borrower with reference to the Property.
	 
	 	21.20	 	Payoff Procedures
	 
	 	 	 	If the Borrower pays or causes to be paid to the Lender all of the Indebtedness,
then Lender’s interest in the Real Property shall cease, and upon receipt by the
Lender of such payment, the Lender shall either (a) release this Mortgage or (b)
assign the Loan Documents and endorse the Notes (in either case without recourse or
warranty of any kind) to a takeout lender, upon payment (in the latter case) of an
administrative fee of Seven Hundred Fifty Dollars ($750).
	 
	 	21.21	 	Future Advances
	 
	 	 	 	Under this Mortgage, “Indebtedness” is defined to include certain advances made by
the Lender in the future. Such advances include any additional disbursements to the
Borrower (unless in connection with another, independent mortgage financing) and any
obligations under agreements which specifically provide that such obligations are
secured by this Mortgage. In addition, Indebtedness is defined to include any
amounts advanced to pay Impositions, to cure Defaults, or to pay the costs of
collection and receivership. Accordingly, all such advances and obligations shall be
equally secured with, and shall have the same priority as, the Indebtedness, and
shall be subject to all of the terms and provisions of this Mortgage. The Borrower
shall pay any taxes that may be due in connection with any such future advance.
Notwithstanding anything to the contrary contained herein, the total unpaid balance
so secured at any one time by this Mortgage shall not exceed the maximum principal
amount of Ninety Million and 00/100 Dollars ($90,000,000.00), which includes the
principal of the Loan, interest, any disbursements made under the Mortgage for the
payment of impositions, taxes, assessments, levies, insurance, or otherwise, with
interest on such disbursements, and any other costs set forth in the Loan Documents.
	 
	 	21.22	 	Interpretation

39

 

	 	(a)	 	Headings and General Application
	 
	 	 	 	The section, subsection, paragraph and subparagraph headings of this
Mortgage are provided for convenience of reference only and shall in no way
affect, modify or define, or be used in construing, the text of the
sections, subsections, paragraphs or subparagraphs. If the text requires,
words used in the singular shall be read as including the plural, and
pronouns of any gender shall include all genders.
	 
	 	(b)	 	Result of Negotiations
	 
	 	 	 	This Mortgage results from negotiations between the Borrower and the Lender
and from their mutual efforts. Therefore, it shall be so construed, and not
as though it had been prepared solely by the Lender.
	 
	 	(c)	 	Reference to Particulars
	 
	 	 	 	The scope of a general statement made in this Mortgage or in any other Loan
Document shall not be construed as having been reduced through the inclusion
of references to particular items that would be included within the
statement’s scope. Therefore, unless the relevant provision of a Loan
Document contains specific language to the contrary, the term “include”
shall mean “include, but shall not be limited to” and the term “including”
shall mean “including, without limitation.”

	 	21.23	 	Joint and Several Liability
	 
	 	 	 	If there is more than one individual or entity executing this Mortgage as the
Borrower, liability of such individuals and entities under this Mortgage shall be
joint and several.
	 
	 	21.24	 	Time of Essence
	 
	 	 	 	Time is of the essence of each and every covenant, condition and provision of this
Mortgage to be performed by the Borrower.
	 
	 	21.25	 	Jury Waiver
	 
	 	 	 	The Borrower and by its acceptance hereof, the Lender, hereby waive any right to a
trial by jury in any action or proceeding to enforce or defend any rights (i) under
this Mortgage or any other Loan Document or (ii) arising from any lending
relationship existing in connection with this Mortgage or any other Loan Document,
and the Borrower and by its acceptance hereof, the Lender, agree that any such
action or proceeding shall be tried before a judge and not before a jury.
	 
	 	21.26	 	Renewal, Extension, Modification and Waiver
	 
	 	 	 	The Lender may enter into a modification of any Loan Document or of the
Environmental Indemnity Agreement without the consent of any person not a party to
the document being modified. The Lender may waive any covenant or condition of any
Loan Document or of the Environmental Indemnity Agreement, in whole or in part, at
the request of any person then having an interest in the Property or in any way
liable for any part of the Indebtedness. The Lender may take, release, or resort to
any security for the Notes and the Obligations and may release any party primarily
or secondarily liable on any Loan Document or on the Environmental Indemnity
Agreement, all without affecting any liability not expressly released in writing by
the Lender.

40

 

	 	21.27	 	Cumulative Remedies
	 
	 	 	 	Every right and remedy provided in this Mortgage shall be cumulative of every other
right or remedy of the Lender, whether conferred by law or by grant or contract, and
may be enforced concurrently with any such right or remedy. The acceptance of the
performance of any obligation to cure any Default shall not be construed as a waiver
of any rights with respect to any other past, present or future Default. No waiver
in a particular instance of the requirement that any Obligation be performed shall
be construed as a waiver with respect to any other Obligation or instance.
	 
	 	21.28	 	No Obligation to Marshal Assets
	 
	 	 	 	No holder of any mortgage, security interest or other encumbrance affecting all or
any portion of the Real Property, which encumbrance is inferior to the lien and
security interest of this Mortgage, shall have any right to require the Lender to
marshal assets.
	 
	 	21.29	 	Transfer of Ownership
	 
	 	 	 	The Lender may, without notice to the Borrower, deal with any person in whom
ownership of any part of the Real Property has vested, without in any way vitiating
or discharging the Borrower from liability for any of the Obligations.

IN WITNESS WHEREOF, the Borrower has caused this Mortgage to be duly executed as of the date
first above written.

	 	 	 	 	 
	 	BORROWER:

JOHN B. SANFILIPPO & SON, INC.,

a Delaware corporation

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

41exv10w5

 

EXHIBIT 10.5

Prepared by and after recording

return document to:

Stoel Rives LLP

600 University Street, Suite 3600

Seattle, Washington 98101

Attention: Virginia M. Pedreira

Loan No. 700218 and 700218A

Mortgage, Security Agreement, Assignment of Leases

and Rents, and Fixture Filing

(Kane County, Illinois)

This Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing (this
“Mortgage”) is made and given as of the 7th day of February, 2008, by JBSS PROPERTIES, LLC, an
Illinois limited liability company, whose address is 1703 North Randall Road, Mail Code — 2NW-EX,
Elgin, Illinois 60123 (the “Mortgagor”), to TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa
corporation, as Mortgagee, having an office c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood
Road, N.E., Cedar Rapids, Iowa 52499-5443, and its successors and assigns (the “Lender”). The
definitions of capitalized terms used in this Mortgage may be found either in Section 3
below, or through the cross-references provided in that Section.

	1.	 	RECITALS

	 	A.	 	Under the terms of a commercial Second Revised Agricultural Mortgage Loan
Application/Commitment dated January 31, 2008 (the “Commitment”), AEGON USA Realty
Advisors, Inc. (“AEGON”), as agent for the Lender, agreed to fund a loan to JOHN B.
SANFILIPPO & SON, INC., a Delaware corporation (the “Borrower”), in the original
aggregate principal amount of Forty-five Million Dollars ($45,000,000) (the “Loan”)
bearing interest as provided in the Notes (as hereinafter defined) and maturing on
March 1, 2023.
	 
	 	B.	 	The Lender has funded the Loan to the Borrower in the principal amount of
$45,000,000 in accordance with the Commitment, and to evidence the Loan, the Borrower
has executed and delivered to Lender (i) a certain Promissory Note (Tranche A Note)
dated as of even date herewith in the principal amount of Thirty-six Million Dollars
($36,000,000) payable to the order of Lender (“Note A”), and (ii) a certain Promissory
Note (Tranche B Note) dated as of even date herewith in the principal amount of Nine
Million Dollars ($9,000,000) payable to the order of Lender (“Note B”).
	 
	 	C.	 	The Commitment requires that the Loan be secured by all of the Borrower’s and
Mortgagor’s existing and after-acquired interest in certain real property and by
certain tangible and intangible personal property.

1

 

	2.	 	GRANTING CLAUSE
	 
	 	 	To secure the repayment of the Indebtedness, any increases, modifications, renewals or
extensions of the Indebtedness, and any substitutions for the Indebtedness, as well as the
performance of the Borrower’s and Mortgagor’s other Obligations, and in consideration of the
sum of Ten Dollars ($10.00) and other valuable consideration, the receipt and sufficiency of
which are acknowledged, the Mortgagor mortgages, grants, bargains, warrants, conveys,
alienates, releases, assigns, sets over and confirms to the Lender, and to its successors
and assigns forever, all of the Mortgagor’s existing and after acquired interests in the
Real Property.
	 
	3.	 	DEFINED TERMS
	 
	 	 	The following defined terms are used in this Mortgage. For ease of reference, terms relating
primarily to the Security Agreement are defined in Subsection 19.1.
	 
	 	 	an “Affiliate” of any person means any entity controlled by, or under common control
with, that person.
	 
	 	 	“Appurtenances” means all rights, estates, titles, interests, privileges, easements,
tenements, hereditaments, titles, royalties, reversions, remainders and other interests,
whether presently held by the Mortgagor or acquired in the future, that may be conveyed as
interests in the Land under the laws of Illinois. Appurtenances include the Easements and
the Assigned Rights.
	 
	 	 	“Assigned Rights” means all of the Mortgagor’s rights, easements, privileges,
tenements, hereditaments, contracts, claims, licenses or other interests, whether presently
existing or arising in the future, which, in each case, pertain to the Real Property. The
Assigned Rights include all of the Mortgagor’s rights in and to:

	 	(i)	 	any greater estate in the Real Property;
	 
	 	(ii)	 	insurance policies required to be carried hereunder with
respect to the Real Property, including the right to negotiate claims and to
receive Insurance Proceeds and unearned insurance premiums with respect to
insurance policies regarding the Real Property (except as expressly provided in
Subsection 8.1);
	 
	 	(iii)	 	Condemnation Proceeds;
	 
	 	(iv)	 	licenses and agreements permitting the use of sources of
groundwater or water utilities, septic leach fields, railroad sidings, sewer
lines, means of ingress and egress;
	 
	 	(v)	 	drainage over other property;
	 
	 	(vi)	 	air space above the Land;
	 
	 	(vii)	 	mineral rights and water rights;
	 
	 	(viii)	 	party walls;
	 
	 	(ix)	 	vaults and their usage;
	 
	 	(x)	 	franchises;
	 
	 	(xi)	 	commercial tort claims that arise during the Loan term in
respect of damages to the Real Property or to its operations, in respect of any
impairment to the value of the Real Property, or in respect of the collection
of any Rents;

2

 

	 	(xii)	 	construction contracts;
	 
	 	(xiii)	 	roof and equipment guarantees and warranties;
	 
	 	(xiv)	 	building and development licenses and permits;
	 
	 	(xv)	 	tax credits or other governmental entitlements, credits or
rights, whether or not vested with respect to the Real Property;
	 
	 	(xvi)	 	licenses and applications (whether or not yet approved or
issued) with respect to the Property;
	 
	 	(xvii)	 	rights under management and service contracts with respect to the Property;
	 
	 	(xviii)	 	leases of Fixtures; and
	 
	 	(xix)	 	agreements with architects, environmental consultants,
property tax consultants, engineers, and any other third party contractors
whose services benefit the Real Property.

	 	 	“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C.
Sections 101 et seq., and the regulations promulgated pursuant to those statutes.
	 
	 	 	“Business Day” means any day when state and federal banks are open for business in
Cedar Rapids, Iowa.
	 
	 	 	“Condemnation Proceeds” means all money or other property that has been, or is in
the future, awarded or agreed to be paid or given in connection with any taking by eminent
domain of all or any part of the Real Property (including a taking through the vacation of
any street dedication or through a change of grade of such a street), either permanent or
temporary, or in connection with any purchase in lieu of such a taking, or as a part of any
related settlement.
	 
	 	 	“Curable Nonmonetary Default” means any of the acts, omissions, or circumstances
specified in Subsection 9.3 below.
	 
	 	 	“Default” means any of the acts, omissions, or circumstances specified in
Section 9 below.
	 
	 	 	“Default Rate” means the rate of interest specified as the “Default Interest Rate”
in the Notes.
	 
	 	 	“Development Agreements” means all development, utility or similar agreements
included in the Permitted Encumbrances.
	 
	 	 	“Easements” means the Mortgagor’s existing and future interests in and to the
declarations, easements, covenants, and restrictions appurtenant to the Land.
	 
	 	 	“Elgin Purchase Contract” means that certain Purchase and Sale Agreement dated
January 11, 2008 executed between Mortgagor and Shorewood Property Investments, LLC.
	 
	 	 	“Environmental Indemnity Agreement” means the Environmental Indemnity Agreement by
the Mortgagor for the benefit of Lender dated as of even date herewith.
	 
	 	 	“Environmental Laws” means all present and future laws, statutes, ordinances, rules,
regulations, orders, guidelines, rulings, decrees, notices and determinations of any
Governmental Authority to the extent that they pertain to: (A) the protection of health
against environmental hazards; (B) the protection of the environment, including air, soils,
wetlands, and surface and underground water,

3

 

	 	 	from contamination by any substance that may have any adverse health effect on humans,
livestock, fish, wildlife, or plant life, or which may disturb an ecosystem; (C) underground
storage tank regulation or removal; (D) wildlife conservation; (E) protection or regulation
of natural resources; (F) the protection of wetlands; (G) management, regulation and
disposal of solid and hazardous wastes; (H) radioactive materials; (I) biologically
hazardous materials; (J) indoor air quality; or (K) the manufacture, possession, presence,
use, generation, storage, transportation, treatment, release, emission, discharge, disposal,
abatement, cleanup, removal, remediation or handling of any Hazardous Substances.
“Environmental Laws” include the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. §9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.,
the Federal Water Pollution Control Act, as amended by the Clean Water Act, 33 U.S.C. §1251
et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15
U.S.C. §2601 et seq., all similar state statutes and local ordinances, and all regulations
promulgated under any of those statutes, and all administrative and judicial actions
respecting such legislation, all as amended from time to time.
	 
	 	 	“ESA” means the written environmental site assessment of the Real Property obtained
under the terms of the Commitment, the environmental disclosures set forth in the Elgin
Purchase Contract , any environmental matters disclosed in the commitment for title
insurance provided by First American Title Insurance Company dated January 4, 2008 under
order number NCS-337561, and those additional materials identified on Exhibit B
attached hereto.
	 
	 	 	“Fixtures” means all materials, supplies, goods, equipment, apparatus and other
items now or hereafter attached to or installed on the Land and Improvements in a manner
that causes them to become fixtures under the laws of Illinois, including all built-in or
attached furniture or appliances, machinery, elevators, escalators, heating, ventilating and
air conditioning system components, emergency electrical generators and related fuel storage
or delivery systems, septic system components, built-in loading, storage and processing
equipment, storm windows, doors, built-in electrical equipment, plumbing, water
conditioning, lighting, cleaning, snow removal, lawn, landscaping, irrigation, security,
incinerating, fire-fighting, sprinkler or other fire safety equipment, wells, irrigation and
wastewater equipment, built-in bridge cranes or other installed materials handling
equipment, satellite dishes or other built-in telecommunication equipment, built-in video
conferencing equipment, sound systems or other built-in audiovisual equipment, and cable
television distribution systems. Fixtures do not include (A) trade fixtures, office
furniture and office equipment; (B) racking systems; (C) machinery and equipment not
specifically described above as constituting a Fixture; or (D) rolling stock. Without
limiting the foregoing, Fixtures expressly include HVAC, mechanical, security and similar
systems of general utility for the operation of the Improvements as leasable commercial real
property and as a warehouse and processing facility.
	 
	 	 	“Governmental Authority” means any political entity with the legal authority to
impose any requirement on the Property, including the governments of the United States, the
State of Illinois, Kane County, the City of Elgin, and any other entity with jurisdiction to
decide, regulate, or affect the ownership, construction, use, occupancy, possession,
operation, maintenance, alteration, repair, demolition or reconstruction of any portion or
element of the Real Property.
	 
	 	 	“Hazardous Substance” means any substance the release of or the exposure to which is
prohibited, limited or regulated by any Environmental Law, or which poses a hazard to human
health, including: (A) any “oil,” as defined by the Federal Water Pollution Control Act and

4

 

	 	 	regulations promulgated thereunder (including crude oil or any fraction of crude oil), (B)
any radioactive substance and (C) Stachybotrys chartarum or other molds. However, the term
“Hazardous Substance” includes neither (i) a substance used in the ordinary course of the
business conducted on the Real Property in accordance with the covenants herein contained by
the Mortgagor or by a tenant under a permitted Lease, or used in the cleaning and
maintenance of the Real Property, if the quantity, storage and manner of its use are
customary, prudent, and do not violate applicable law, and (ii) automotive motor oil in
immaterial quantities, if leaked from vehicles in the ordinary course of the operation of
the Real Property and cleaned up in accordance with reasonable property management
procedures and in a manner that violates no applicable law.
	 
	 	 	“Impositions” means all real and personal property taxes levied against the
Property; general or special assessments; ground rent; water, gas, sewer, vault, electric or
other utility charges; common area charges; owners’ association dues or fees; fees for any
easement, license or agreement maintained for the benefit of the Property; and any and all
other taxes, levies, user fees, claims, charges and assessments whatsoever that at any time
may be assessed, levied or imposed on the Property or upon its ownership, use, occupancy or
enjoyment, and any related costs, interest or penalties. In addition, “Impositions” include
all documentary, stamp or intangible personal property taxes that may become due in
connection with the Indebtedness, including Indebtedness in respect of any future advance
made by the Lender to the Borrower, or that are imposed on any of the Loan Documents.
	 
	 	 	“Improvements” means, to the extent of the Mortgagor’s existing and future interest,
all buildings and improvements of any kind erected or placed on the Land now or in the
future, including the Fixtures, together with all appurtenant rights, privileges, Easements,
tenements, hereditaments, titles, reversions, remainders and other interests.
	 
	 	 	“Indebtedness” means all sums that are owed or become due pursuant to the terms of
the Notes, this Mortgage, or any of the other Loan Documents, including scheduled principal
payments, scheduled interest payments, default interest, late charges, prepayment premiums,
accelerated or matured principal balances, advances, collection costs (including reasonable
attorneys’ fees), reasonable attorneys’ fees and costs in enforcing or protecting the Notes,
the Mortgage, or any of the other Loan Documents in any probate, bankruptcy or other
proceeding, receivership costs and all other financial obligations of the Borrower or
Mortgagor incurred in connection with the Loan transaction pursuant to the Loan Documents,
provided, however, that this Mortgage shall not secure any Loan Document or any particular
person’s liabilities or obligations under any Loan Document to the extent that such Loan
Document expressly states that it or such particular person’s liabilities or obligations are
unsecured by this Mortgage. Indebtedness shall also include any obligations under agreements
executed and delivered by Borrower or Mortgagor which specifically provide that such
obligations are secured by this Mortgage.
	 
	 	 	“Insurance Premiums” means all premiums or other charges required to maintain in
force any and all insurance policies that this Mortgage requires that the Mortgagor
maintain.
	 
	 	 	“Insurance Proceeds” means all Proceeds of all insurance now or hereafter carried by
or payable to the Mortgagor with respect to the Property, including with respect to the
interruption of Rents derived from the Property, all unearned insurance premiums with
respect to the Property and all related claims or demands.

5

 

	 	 	“Land” means that certain tract of land located in the City of Elgin, Kane County,
Illinois, which is described on the attached Exhibit A, together with the
Appurtenances.
	 
	 	 	“Leasing Action” means all executions, modifications, terminations and extensions of
Leases, and all other actions taken by the Mortgagor in exercising its rights as landlord
under the Leases.
	 
	 	 	“Leases” means all leases, subleases, licenses, concessions, extensions, renewals
and other agreements (whether written or oral, and whether presently effective or made in
the future) through which the Mortgagor grants any possessory interest in and to, or any
right to occupy or use, all or any part of the Real Property, and any related guaranties.
	 
	 	 	“Legal Requirements” means all laws, statutes, rules, regulations, ordinances,
judicial decisions, administrative decisions, building permits, development permits,
certificates of occupancy, or other requirements of any Governmental Authority.
	 
	 	 	“Loan Agreement” means the Loan Agreement executed as of even date herewith between
Borrower, Mortgagor and Lender.
	 
	 	 	“Loan Documents” means the Notes, the Loan Agreement, this Mortgage, the other
Mortgages described in the Loan Agreement and all other documents evidencing the Loan,
whether entered into at the closing of the Loan or in the future, as amended in writing from
time to time.
	 
	 	 	“Maximum Permitted Rate” means the highest rate of interest permitted to be paid or
collected by applicable law with respect to the Loan.
	 
	 	 	“Note A” means the Promissory Note (Tranche A Note) dated of even date herewith
executed by the Borrower and payable to the Lender to evidence a portion of the Indebtedness
in the original principal amount of Thirty-six Million Dollars ($36,000,000), together with
all extensions, renewals and modifications thereof.
	 
	 	 	“Note B” means the Promissory Note (Tranche B Note) dated of even date herewith
executed by the Borrower and payable to the Lender to evidence a portion of the Indebtedness
in the original principal amount of Nine Million Dollars ($9,000,000), together with all
extensions, renewals and modifications thereof.
	 
	 	 	“Notes” means, collectively, Note A and Note B.
	 
	 	 	“Notice” means a notice given in accordance with the provisions of Subsection
21.13.
	 
	 	 	“Obligations” means all of the obligations required to be performed under the terms
and conditions of any of the Loan Documents by any Obligor.
	 
	 	 	“Obligor” means the Borrower, the Mortgagor or any other Person that is liable under
the Loan Documents for the payment of any portion of the Indebtedness, or the performance of
any other obligation required to be performed under the terms and conditions of any of the
Loan Documents, under any circumstances.
	 
	 	 	“Participations” means participation interests in the Loan Documents granted by the
Lender.

6

 

	 	 	“Permitted Encumbrances” means (A) the lien of taxes and assessments not yet due and
payable, (B) the liens and security interests in favor of Lender created by the Loan
Documents, and (C) those matters listed as special exceptions in the Lender’s title
insurance policy insuring the priority of this Mortgage.
	 
	 	 	“Person” means any individual, corporation, limited liability company, partnership,
trust, unincorporated association, government, governmental authority or other entity.
	 
	 	 	“Property” means the Real Property and the Leases, Rents and Personal Property (as
defined in Subsection 19.1 below).
	 
	 	 	“Real Property” means the Land and the Improvements.
	 
	 	 	“Rents” means all rents, income, receipts, issues and profits and other benefits
paid or payable for using, leasing, licensing, possessing, operating from or in, residing
in, selling, mining, extracting minerals from, or otherwise enjoying the Real Property as
commercial real estate (but not any such income, receipts, issues, profits or other benefits
arising from the specific business operations of Mortgagor and/or its subsidiaries), whether
presently existing or arising in the future, to which the Mortgagor may now or hereafter
become entitled or may demand or claim from the commencement of the Loan term through the
time of the satisfaction of all of the Obligations, including security deposits, amounts
drawn under letters of credit securing tenant obligations, minimum rents, additional rents,
common area maintenance charges, parking revenues, deficiency rents, termination payments,
space contraction payments, damages following default under a Lease, premiums payable by
tenants upon their exercise of cancellation privileges, proceeds from lease guarantees,
proceeds payable under any policy of insurance covering loss of rents resulting from
untenantability caused by destruction or damage to the Real Property, all rights and claims
of any kind which the Mortgagor has or may in the future have against the tenants under the
Leases, lease guarantors, or any subtenants or other occupants of the Real Property, all
proceeds of any sale of the Real Property, any future award granted the Mortgagor in any
court proceeding involving any such tenant in any bankruptcy, insolvency, or reorganization
proceedings in any state or federal court, and any and all payments made by any such tenant
in lieu of rent.
	 
	 	 	“Restoration” means (A) in the case of a casualty resulting in damage to or the
destruction of the Improvements, the repair or rebuilding of the Improvements to their
original condition, or (B) in the case of the condemnation of a portion of the Real
Property, the completion of such work as may be necessary in order to remedy the effects of
the condemnation so that the value and income-generating characteristics of the Real
Property are restored.

	4.	 	TITLE
	 
	 	 	The Mortgagor represents to and covenants with the Lender that, at the point in time of the
grant of the lien created by this Mortgage, the Mortgagor is well seized of good and
indefeasible title to the Real Property, in fee simple absolute, subject to no lien or
encumbrance except the Permitted Encumbrances and the Elgin Purchase Contract . The
Mortgagor warrants this estate and title to the Lender forever, against all lawful claims
and demands of all persons. The Mortgagor shall maintain mortgagee title insurance issued by
a solvent carrier, covering the Real Property in an amount at least equal to the amount of
the Loan’s original principal balance. This Mortgage is

7

 

	 	 	and shall remain a valid and enforceable first lien on the Real Property, and if the
validity or enforceability of this first lien is attacked by appropriate proceedings, the
Mortgagor shall diligently and continuously defend it through appropriate proceedings.
Should the Mortgagor fail to do so, the Lender may at the Mortgagor’s expense take all
necessary action, including the engagement and compensation of legal counsel, the
prosecution or defense of litigation, and the compromise or discharge of claims. The
Mortgagor shall defend, indemnify and hold the Lender harmless in any suit or proceeding
brought to challenge or attack the validity, enforceability or priority of the lien granted
by this Mortgage. If a prior construction, mechanics’ or materialmen’s lien on the Real
Property arises by operation of statute during any construction or repair of the
Improvements, the Mortgagor shall either cause the lien to be discharged by paying when due
any amounts owed to such persons, or shall comply with Section 11 of this Mortgage.

	5.	 	REPRESENTATIONS OF THE MORTGAGOR
	 
	 	 	The Mortgagor represents to the Lender as follows:

	 	5.1	 	Formation, Existence, Good Standing

	 	 	 	The Mortgagor is a limited liability company duly organized, validly existing and in
good standing under the laws of Illinois and has obtained all licenses and permits
and filed all statements of fictitious name and registrations necessary for the
lawful operation of its business in Illinois.

	 	5.2	 	Power and Authority

	 	 	 	The Mortgagor has full power and authority to carry on its business as presently
conducted, to own the Property, to execute and deliver the Loan Documents to which
it is a party, and to perform its Obligations.
	 
	 	5.3	 	Anti-Terrorism Regulations

	 	 	 	No Mortgagor or Mortgagor Affiliate is a “Specially Designated National” or a
“Blocked Person” as those terms are defined in the Office of Foreign Asset Control
Regulations (31 CFR Section 500 et seq.).

	 	5.4	 	Due Authorization

	 	 	 	The Loan transaction and the performance of all of the Mortgagor’s Obligations have
been duly authorized by all requisite membership action, and each individual
executing any Loan Document on behalf of the Mortgagor has been duly authorized to
do so.

	 	5.5	 	No Default or Violations

	 	 	 	The execution and performance of the Mortgagor’s Obligations will not result in any
breach of, or constitute a default under, any contract, agreement, document or other
instrument to which the Mortgagor is a party or by which the Mortgagor may be bound
or affected, and do not and will not violate or contravene any law to which the
Mortgagor is subject; nor do any such other instruments impose or contemplate any
obligations which are or will be inconsistent with the Loan Documents.

	 	5.6	 	No Further Approvals or Actions Required

8

 

	 	 	 	No approval by, authorization of, or filing with any federal, state or municipal or
other governmental commission, board or agency or other governmental authority is
necessary in connection with the authorization, execution and delivery of the Loan
Documents by the Mortgagor.

	 	5.7	 	Due Execution and Delivery

	 	 	 	Each of the Loan Documents to which the Mortgagor is a party has been duly executed
and delivered on behalf of the Mortgagor.

	 	5.8	 	Legal, Valid, Binding and Enforceable

	 	 	 	Each of the Loan Documents to which the Mortgagor is a party constitutes the legal,
valid and binding obligation of the Mortgagor, enforceable against the Mortgagor in
accordance with its terms.

	 	5.9	 	Accurate Financial Information

	 	 	 	All financial information furnished by the Mortgagor to the Lender in connection
with the application for the Loan is true, correct and complete in all material
respects and does not omit to state any fact or circumstance necessary to make the
statements in them not misleading in any material respect, and there has been no
material adverse change in the financial condition of the Mortgagor since the date
of such financial information.

	 	5.10	 	Compliance with Legal Requirements

	 	 	 	All governmental approvals and licenses required for the conduct of the Mortgagor’s
business and for the maintenance and operation of the Real Property in compliance
with applicable law are in full force and effect, and the Real Property is currently
being operated in compliance with the Legal Requirements in all material respects.

	 	5.11	 	Contracts and Franchises

	 	 	 	All contracts and franchises necessary for the conduct of the Mortgagor’s business
and for the operation of the Real Property in accordance with good commercial
practice are in force.

	 	5.12	 	No Condemnation Proceeding

	 	 	 	As of the date of this Mortgage, the Mortgagor has no knowledge of any present,
pending or threatened condemnation proceeding or award affecting the Real Property.

	 	5.13	 	No Casualty

	 	 	 	As of the date of this Mortgage, no damage to the Real Property by any fire or other
casualty has occurred, other than damage that has been completely repaired in
accordance with good commercial practice and in compliance with applicable law.

	 	5.14	 	Independence of the Real Property

	 	 	 	The Real Property may be operated independently from other land and improvements not
included within or located on the Land, and it is not necessary to own or control
any

9

 

	 	 	 	property other than the Real Property in order to meet the obligations of the
landlord under any Lease, or in order to comply with the Legal Requirements.

	 	5.15	 	Complete Lots and Tax Parcels

	 	 	 	The Land is comprised exclusively of tax parcels that are entirely included within
the Land, and, if the Land is subdivided, of subdivision lots that are entirely
included within the Land.

	 	5.16	 	Ownership of Fixtures

	 	 	 	The Mortgagor owns the Fixtures free of any encumbrances, including purchase money
security interests, rights of lessors, and rights of sellers under conditional sales
contracts or other financing arrangements other than the rights arising under the
Elgin Purchase Contract.

	 	5.17	 	Real Property is not Homestead Property

	 	 	 	The Real Property is NOT HOMESTEAD PROPERTY of the Mortgagor or of the spouse of any
person named as the Mortgagor.

	 	5.18	 	Performance under Development Agreements

	 	 	 	To the best of Mortgagor’s knowledge, all of the obligations of the owner of the
Real Property due under the Development Agreements have been fully, timely and
completely performed to the extent required thereunder and such performance has been
accepted by the related governmental agency or utility company, and Mortgagor has
received no notice by any Governmental Authority that any default exists under any
of the Development Agreements.

	 	5.19	 	Status of Certain Title Matters

	 	 	 	To Mortgagor’s knowledge, the Mortgagor is not in material default under the terms
of any Easement.

	 	5.20	 	No Prohibited Transactions

	 	 	 	The Mortgagor represents to the Lender that either (a) the Mortgagor is not an
“employee benefit plan” within the meaning of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, a
“plan” within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the “Code”), or an entity that is deemed to hold “plan assets” within the
meaning of 29 C.F.R. §2510.3-101 of any such employee benefit plan or (b) the
entering into of the Loan Documents, the acceptance of the Loan by the Borrower and
the existence of the Loan will not result in a non-exempt prohibited transaction
under §406 of ERISA or Section 4975 of the Code. The Mortgagor further warrants and
covenants that the foregoing representation will remain true during the term of this
Mortgage.

10

 

	6.	 	COVENANTS

	 	6.1	 	Good Standing

	 	 	 	The Mortgagor shall remain in good standing as a limited liability company under the
laws of Illinois and shall maintain in force any statements of fictitious name and
registrations necessary to remain in good standing as a limited liability company
under the laws of the State of Illinois during the term of this Mortgage.

	 	6.2	 	No Default or Violations

	 	 	 	The Mortgagor shall not enter into any contract, agreement, document or other
instrument, if the performance of the Mortgagor’s Obligations would result in any
breach of, or constitute a default under, any such contract, agreement, document or
other instrument, or if the contract, agreement, document or other instrument would
impose any obligations the performance of which would result in a Default under the
Loan Documents.

	 	6.3	 	Payment and Performance

	 	 	 	The Mortgagor shall pay and perform all of its Obligations as and when the Loan
Documents to which it is a party require such payment and performance.

	 	6.4	 	Payment of Impositions

	 	 	 	The Mortgagor shall pay the Impositions on or before the last day on which they may
be paid without penalty or interest, and shall, within thirty (30) days, furnish the
Lender with a paid receipt or a cancelled check as evidence of payment. If the
Lender does not receive such evidence, the Lender may obtain it directly. If it does
so, the Lender will charge the Borrower an administrative fee of Two Hundred Fifty
Dollars ($250) for securing the evidence of payment. The payment of this fee shall
be a demand obligation of the Mortgagor. If the Mortgagor wishes to contest the
validity or amount of an Imposition, it may do so by complying with Section
11. If any new Legal Requirement (other than a general tax on income or on
interest payments) taxes the Mortgage so that the yield on the Indebtedness would be
reduced, and the Mortgagor may lawfully pay the tax or reimburse the Lender for its
payment, the Mortgagor shall do so.

	 	6.5	 	Maintenance of the Real Property

	 	 	 	The Mortgagor shall not commit or permit any waste of the Real Property as a
physical or economic asset, and agrees to maintain (or cause to be maintained) in
good repair the Improvements, including structures, roofs, mechanical systems,
parking lots or garages, and other components of the Real Property that are
necessary or desirable for the use of the Real Property, or which the Mortgagor as
landlord under any Lease is required to maintain for the benefit of any tenant. In
its performance of this Obligation, the Mortgagor shall promptly and in a good and
workmanlike manner repair or restore, as required under Subsection 6.15, any
elements of the Improvements that are damaged or destroyed. The Mortgagor shall also
replace roofs, parking lots, mechanical systems, and other elements of the
Improvements requiring periodic replacement. The Mortgagor shall carry out such
replacements no less frequently than would a commercially reasonable owner of
properties of a similar use, value, age, nature and construction. The Mortgagor
shall not, without the prior written consent of the Lender, which consent shall not
be

11

 

	 	 	 	unreasonably withheld, demolish, reconfigure, or materially alter the structural
elements of the Improvements, unless such an action is the obligation of the
Mortgagor under a Lease approved by Lender or for which the Lender’s approval is not
required. The Lender agrees that any request for its consent to such an action shall
be deemed given if the Lender does not respond within fifteen (15) Business Days to
any written request for such a consent, if the request is accompanied by all
materials required to permit the Lender to analyze the proposed action. The
Mortgagor’s maintenance obligations under this Section during the term of the Elgin
Purchase Contract shall be deemed discharged if performed in accordance with and to
the extent required under the Elgin Purchase Contract.

	 	6.6	 	Use of the Real Property

	 	 	 	The Mortgagor agrees that the Real Property may only be used as a commercial
property and for no other purpose, and may be operated and subjected to zoning
changes under the terms of the Elgin Purchase Contract until its consummation or
termination.

	 	6.7	 	Legal Requirements

	 	 	 	The Mortgagor shall maintain in full force and effect all governmental approvals and
material permits and licenses required for the conduct of the Mortgagor’s business
and for the maintenance and operation of the Real Property in compliance with
applicable law, and shall comply in all material respects with all Legal
Requirements relating to the Real Property at all times.

	 	6.8	 	Contracts and Franchises

	 	 	 	The Mortgagor shall maintain in force all material contracts and franchises
necessary for the conduct of the Mortgagor’s business and for the operation of the
Real Property in accordance with good commercial practice.

	 	6.9	 	Covenants Regarding Certain Title Matters

	 	 	 	The Mortgagor shall promptly pay, perform and observe all of its obligations under
the Easements included within the Appurtenances or under reciprocal easement
agreements, operating agreements, declarations, and restrictive covenants included
in the Permitted Encumbrances, shall not modify or consent to the termination of any
of them without the prior written consent of the Lender, shall promptly furnish the
Lender with copies of all notices of default under them, and shall enforce all
covenants and conditions under them and benefiting the Real Property.

	 	6.10	 	Independence of the Real Property

	 	 	 	The Mortgagor shall maintain the independence of the Real Property from other land
and improvements not included within or located on the Land. In fulfilling this
covenant, the Mortgagor shall neither take any action which would make it necessary
to own or control any property other than the Real Property in order to meet the
obligations of the landlord under any Lease, or in order to comply with the Legal
Requirements, nor take any action which would cause any land or improvements other
than the Land and the Improvements to rely upon the Land or the Improvements for
those purposes.

12

 

	 	6.11	 	Complete Lots and Tax Parcels

	 	 	 	The Mortgagor shall take no action that would result in the inclusion of any portion
of the Land in a tax parcel or subdivision lot that is not entirely included within
the Land.

	 	6.12	 	Real Property is not Homestead Property

	 	 	 	The Real Property shall NOT BECOME HOMESTEAD PROPERTY of the Mortgagor or of the
spouse of any person named as the Mortgagor.

	 	6.13	 	Performance under Development Agreements

	 	 	 	The Mortgagor shall fully, timely and completely perform all of the obligations of
the owner of the Real Property due under the Development Agreements and shall cause
no default under any of the Development Agreements.

	 	6.14	 	Status of Certain Title Matters

	 	 	 	The Mortgagor shall not take or fail to take any action with respect to the
Easements included within the Appurtenances or the reciprocal easement agreements,
operating agreements, declarations, and restrictive covenants included in the
Permitted Encumbrances if, as the result of such an action or failure, the subject
Easement or other title matter would (a) be rendered invalid or without force or
effect, (b) be amended or supplemented without the consent of the Lender, (c) be
placed in default or alleged default, (d) result in any lien against the Real
Property, or (e) give rise to any assessment against the Real Property, unless
immediately paid in full.

	 	6.15	 	Restoration upon Casualty or Condemnation

	 	 	 	If a casualty or condemnation occurs, the Mortgagor shall promptly commence the
Restoration of the Real Property, to the extent that the Lender has made Insurance
Proceeds or Condemnation Proceeds available to the Mortgagor for such Restoration,
subject to the terms of the Elgin Purchase Contract.

	 	6.16	 	Performance of Landlord Obligations

	 	 	 	The Mortgagor shall perform, in all material respects, its obligations as landlord
under any Leases. The Mortgagor shall not, without the Lender’s written consent,
which consent shall not be unreasonably withheld, or except as otherwise provided in
Section 13 below, extend, modify, terminate, or enter into any Lease of the
Real Property.

	 	6.17	 	Financial Reports and Operating Statements

	 	(a)	 	Maintenance of Books and Records

	 	 	 	During the term of the Loan, the Mortgagor shall maintain complete and
accurate accounting and operational records, including copies of all Leases
and other material written contracts relating to the Real Property, copies
of all tax statements, and evidence to support the payment of all material
property-related expenses.

	 	(b)	 	Delivery of Property-Related Information

13

 

	 	 	 	Within one hundred twenty (120) days after the end of each of its fiscal
years, or, if a Default exists, on demand by the Lender, and within sixty
(60) days after the end of each fiscal quarter, the Mortgagor shall deliver
to the Lender a complete and accurate operating statement for the Real
Property, all in form satisfactory to the Lender, including a complete rent
roll certified by the Mortgagor to be true and correct and must include each
tenant’s name, premises, square footage, rent, lease expiration date,
renewal options and related rental rates, delinquencies and vacancies and
the existence of any unsatisfied landlord obligations, e.g. in respect of
free rent periods, unfinished tenant improvements or other leasing costs.
If the Mortgagor fails to deliver the items required in this Subsection,
then subject to the Notice and cure period set forth in
Subsection 6.17(c) below, the Lender may engage an accounting firm
to prepare the required items. The Mortgagor shall cooperate fully with any
investigative audit required to permit the accounting firm to produce these
items, and the fees and expenses incurred in connection with their
preparation shall be paid on demand by the Mortgagor.

	 	(c)	 	Effect of Failure to Deliver Property Reports

	 	 	 	If no Default exists and the Mortgagor fails to provide the financial and
property reports required under this Section within one hundred twenty (120)
days of the close of any fiscal year, the Lender will provide a Notice of
this failure and a thirty (30)-day opportunity to cure before a Default
shall exist.

	 	(d)	 	Certification of Information

	 	 	 	The annual operating statements provided under this Subsection shall be
certified by an independent certified public accountant as having been
prepared in accordance with generally accepted accounting principles,
consistently applied, or, in the case of financial statements prepared on a
cash or income tax basis, or of operating statements, as not materially
misleading based on an audit conducted in accordance with generally accepted
auditing standards. The quarterly financial and operating statements
provided under this Subsection need not be audited. The Mortgagor shall,
however certify that such statements are true and correct.

	 	6.18	 	Prohibition on Certain Distributions

	 	 	 	If a Default exists or would occur as a result, the Mortgagor shall not pay any
dividend or make any partnership, trust or other distribution, and shall not make
any payment or transfer any property in order to purchase, redeem or retire any
interest in its beneficial interests or ownership.

	 	6.19	 	Use of Loan Proceeds

	 	 	 	The Loan proceeds shall be used solely for business and commercial purposes.

	 	6.20	 	Prohibition on Cutoff Notices

	 	 	 	The Mortgagor shall not issue any Notice to the Lender to the effect that liens on
the Real Property after the date of the Notice will enjoy priority over the lien of
this Mortgage.

14

 

	 	6.21	 	Prohibited Person Compliance

	 	 	 	Mortgagor warrants, represents and covenants that neither Mortgagor nor any Obligor
nor any of their respective Affiliates is or will be an entity or person (i) that is
listed in the Annex to, or is otherwise subject to the provisions of, Executive
Order 13224 issued on September 24, 2001 (“EO13224”), (ii) whose name appears on the
United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most
current list of “Specifically Designated National and Blocked Persons” (which list
may be published from time to time in various mediums including, but not limited to,
the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens
to commit or supports “terrorism”, as that term is defined in EO 13224, or (iv) who
is otherwise affiliated with any entity or person listed above (any and all parties
or persons described in subparts [i] — [iv] above are herein referred to as a
“Prohibited Person”). Mortgagor covenants and agrees that neither Mortgagor, nor any
Obligor nor any of their respective Affiliates will (i) knowingly conduct any
business, nor engage in any transaction or dealing, with any Prohibited Person,
including, but not limited to, the making or receiving of any contribution of funds,
goods, or services to or for the benefit of a Prohibited Person, or (ii) engage in
or conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
EO13224. Mortgagor further covenants and agrees to deliver (from time to time) to
Lender any such certification or other evidence as may be requested by Lender in its
sole and absolute discretion, confirming that (i) neither Mortgagor nor any Obligor
is a Prohibited Person and (ii) neither Mortgagor nor any Obligor has knowingly
engaged in any business, transaction or dealings with a Prohibited Person,
including, but not limited to, the making or receiving of any contribution of funds,
goods, or services, to or for the benefit of a Prohibited Person.

	7.	 	INSURANCE REQUIREMENTS
	 
	 	 	At all times until the Mortgage is released by Lender, the Mortgagor shall maintain
insurance coverage and administer insurance claims in compliance with this Section.

	 	7.1	 	Required Coverages

	 	(a)	 	Open Perils/Special Form/Special Perils Property

	 	 	 	The Mortgagor shall maintain “Open Perils,” “Special Form,” or “Special
Perils” property insurance coverage in an amount not less than one hundred
percent (100%) of the replacement cost of all insurable elements of the Real
Property and of all tangible Personal Property, with coinsurance waived, or
if a coinsurance clause is in effect, with an agreed amount endorsement
acceptable to the Lender. Coverage shall extend to the Real Property and to
all tangible Personal Property.

	 	(b)	 	Broad Form Boiler and Machinery

	 	 	 	If any boiler or other machinery is located on or about the Real Property,
the Mortgagor shall maintain broad form boiler and machinery coverage,
including a form of business income coverage.

15

 

	 	(c)	 	Flood

If the Real Property is located in a special flood hazard area (that is, an
area within the 100-year floodplain) according to the most current flood
insurance rate map issued by the Federal Emergency Management Agency and if
flood insurance is available, the Mortgagor shall maintain flood insurance
coverage on all insurable elements of Real Property and of all tangible
Personal Property.
	 
	 	(d)	 	Comprehensive/General Liability
	 
	 	 	 	

The Mortgagor shall maintain commercial general liability coverage (which
may be in the form of umbrella/excess liability insurance) with a One
Million Dollar ($1,000,000) combined single limit per occurrence and a
minimum aggregate limit of Two Million Dollars ($2,000,000). Lender
reserves the right to require increased coverage with respect to these
amounts.
	 
	 	(e)	 	Worker’s Compensation
	 
	 	 	 	The Mortgagor shall maintain worker’s compensation if applicable.
	 
	 	(f)	 	Elective Coverages
	 
	 	 	 	The Lender may require additional coverages appropriate to the property type
and site location. Additional coverages may include liquor liability,
earthquake, windstorm, mine subsidence, sinkhole, supplemental liability, or
coverages of other property-specific risks, as determined by Lender.

	 	7.2	 	Primary Coverage
	 
	 	 	 	Each coverage required under this Section shall be primary rather than contributing
or secondary to the coverage Mortgagor may carry for other properties or risks,
provided, however, that blanket coverage shall be acceptable if (a) the
policy includes limits by property location and (b) the Lender determines, in the
exercise of its discretion, that the amount of such coverage is sufficient in light
of the other risks and properties insured under the blanket policy.
	 
	 	7.3	 	How the Lender Shall Be Named
	 
	 	 	 	On all property insurance policies and coverages required under this Section
(including coverage against loss of business income), the Lender must be named as
“first mortgagee” under a standard mortgage clause. On all liability policies and
coverages, the Lender must be named as an “additional insured.” The Lender shall be
referred to verbatim as follows: Transamerica Life Insurance Company and its
successors, assigns, and affiliates; as their interest may appear; c/o AEGON USA
Realty Advisors, Inc.; Mortgage Loan Dept.; 4333 Edgewood Rd., NE; Cedar Rapids,
Iowa 52499-5443.”
	 
	 	7.4	 	Rating
	 
	 	 	 	Each insurance carrier providing insurance required under this Section must have,
independently of its parent’s or any reinsurer’s rating, a General Policyholder
Rating of A, and a Financial Rating of X or better, as reported in the most current
issue of Best’s Insurance Guide, or as reported by Best on its internet web site.

16

 

	 	7.5	 	Deductible
	 
	 	 	 	The maximum deductible on each required coverage or policy is One Hundred Thousand
Dollars ($100,000).
	 
	 	7.6	 	Notices, Changes and Renewals
	 
	 	 	 	All policies required under this Section must require the insurance carrier to give
the Lender a minimum of thirty (30) days’ notice in the event of modification,
cancellation or termination or non renewal and shall provide that no act or omission
by the insured shall invalidate or diminish the insurance provided to Lender. The
Mortgagor shall report to the Lender immediately any facts known to the Mortgagor
that may adversely affect the appropriateness or enforceability of any insurance
contract, including, without limitation, changes in the ownership or occupancy of
the Real Property, any hazard to the Real Property and any matters that may give
rise to any claim. Prior to expiration of any policy required under this Section,
the Mortgagor shall provide either (a) an original or certified copy of the renewed
policy, or (b) a “binder,” an Acord 28 (real property), Acord 27 (personal property)
or Acord 25 (liability) certificate, or another document satisfactory to the Lender
conferring on the Lender the rights and privileges of mortgagee. If the Mortgagor
meets the foregoing requirement under clause (b), the Mortgagor shall supply an
original or certified copy of the original policy within ninety (90) days. All
binders, certificates, documents, and original or certified copies of policies must
name the Mortgagor as a named insured or as an additional insured, must include the
complete and accurate property address and must bear the original signature of the
issuing insurance agent.
	 
	 	7.7	 	Unearned Premiums
	 
	 	 	 	If this Mortgage is foreclosed, the Lender may at its discretion cancel any of the
insurance policies required under this Section and apply any unearned premiums to
the Indebtedness.
	 
	 	7.8	 	Insurance Disclosure Notice Under 815 ILCS 180/10
	 
	 	 	 	Unless the Mortgagor provides the Lender with evidence of the insurance coverage
required by this Section, the Lender may purchase insurance at the expense of the
Mortgagor to protect the interests of the Lender in the Property. This insurance
may, but need not, protect the Mortgagor’s interests. The coverage that the Lender
purchases may not pay any claim that the Mortgagor makes or any claim that is made
against the Mortgagor in connection with the Property. The Mortgagor may later
cancel any insurance purchased by the Lender, but only after providing the Lender,
in accordance with this Section, with evidence that the Mortgagor has purchased the
insurance required by this Section. If the Lender purchases insurance covering the
Property, the Mortgagor will be responsible for the costs of that insurance,
including interest at the Default Rate and any other charges imposed by the Lender
in connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the insurance may be added
to the Indebtedness. The costs of the insurance may be more than the cost of
insurance the Mortgagor may be able to obtain on its own.

17

 

	8.	 	INSURANCE AND CONDEMNATION PROCEEDS

	 	8.1	 	Adjustment and Compromise of Claims and Awards
	 
	 	 	 	The Mortgagor may settle any insurance claim or condemnation proceeding if the
effect of the casualty or the condemnation may be remedied for Two Hundred Fifty
Thousand Dollars ($250,000) or less. If a greater sum is required, the Mortgagor may
not settle any such claim or proceeding without the advance written consent of the
Lender. If a Default exists, the Mortgagor may not settle any insurance claim or
condemnation proceeding without the advance written consent of the Lender.
	 
	 	8.2	 	Direct Payment to the Lender of Proceeds
	 
	 	 	 	If the Insurance Proceeds received in connection with a casualty or the Condemnation
Proceeds received in respect of a condemnation exceed Two Hundred Fifty Thousand
Dollars ($250,000), or if there is a Default, then such proceeds shall be paid
directly to the Lender. The Lender shall have the right to endorse instruments which
evidence proceeds that it is entitled to receive directly.
	 
	 	8.3	 	Availability to the Mortgagor of Proceeds
	 
	 	 	 	The Mortgagor shall have the right to use the Insurance Proceeds or the Condemnation
Proceeds to carry out the Restoration of the Real Property, if the amount received
is less than Five Million Dollars ($5,000,000), subject to the conditions set forth
in Subsections 8.4, 8.5, and 8.6 of this Section.
	 
	 	 	 	If the amount received in respect of a casualty or condemnation equals or exceeds
Five Million Dollars ($5,000,000), and if the Loan-to-Value ratio of the Property on
completion will be sixty-five percent (65%) or less, as determined by the Lender in
its discretion based on its estimate of the market value of the Real Property, the
Lender shall receive such Insurance Proceeds or Condemnation Proceeds directly and
hold them in a fund for Restoration subject to the conditions set forth in
Subsections 8.4, 8.5, and 8.6 of this Section. If the Lender’s estimate of
the market value of the Real Property implies a Loan-to-Value ratio of over
sixty-five percent (65%), and the Mortgagor disagrees with the Lender’s estimate,
the Mortgagor may require that the Lender engage an independent appraiser (the “Fee
Appraiser”) to prepare and submit to AEGON a full narrative appraisal report
estimating the market value of the Real Property. The Fee Appraiser shall be
certified in Illinois and shall be a member of a national appraisal organization
that has adopted the Uniform Standards of Professional Appraisal Practice (USPAP)
established by the Appraisal Standards Board of the Appraisal Foundation. The Fee
Appraiser will be required to use the procedure for the appraisal of the Real
Property at the time of the origination of the Loan, including the required
assumptions and limiting conditions. For purposes of this Section, the independent
appraiser’s value conclusion shall be binding on both the Lender and the Mortgagor.
The Mortgagor or the Borrower shall have the right to make a prepayment of the Loan,
without premium, sufficient to achieve this Loan-to-Value ratio. The independent fee
appraisal shall be at the Mortgagor’s expense.
	 
	 	 	 	Unless the Mortgagor has the right to use the Insurance Proceeds or the Condemnation
Proceeds under the foregoing paragraphs, the Lender may, in its sole and absolute
discretion, either apply them to the Loan balance or disburse them for the purposes
of repair and reconstruction, or to remedy the effects of the condemnation. No
prepayment

18

 

	 	 	 	premium will be charged on Insurance Proceeds or Condemnation Proceeds applied to
reduce the principal balance of the Loan.

	 	8.4	 	Conditions to Availability of proceeds
	 
	 	 	 	The Lender shall have no obligation to release Insurance Proceeds or Condemnation
Proceeds to the Mortgagor, and may hold such amounts as additional security for the
Loan, if (a) a Default exists, (b) a payment Default has occurred during the
preceding twelve (12) months, or (c) if the Insurance Proceeds or Condemnation
Proceeds received by the Lender and any other funds deposited by the Mortgagor with
the Lender are insufficient, as determined by the Lender in its reasonable
discretion, to complete the Restoration. If a Default exists, the Lender may at its
sole and absolute discretion apply such Insurance Proceeds and Condemnation Proceeds
to the full or partial cure of the Default.
	 
	 	8.5	 	Permitted Mezzanine Financing for Rebuilding or Remediation of the Effect
of Taking by Eminent Domain
	 
	 	 	 	If the Lender reasonably determines that the Insurance Proceeds or Condemnation
Proceeds received in respect of a casualty or condemnation, as the case may be,
would be insufficient to permit the Mortgagor to restore the Improvements to their
condition before the casualty, or to remedy the effect on the Real Property of the
condemnation, then the Mortgagor shall use its commercially reasonable efforts to
secure such additional funds as are necessary to effect the Restoration. The
Mortgagor’s obligation to use its commercially reasonable efforts shall be limited
to securing such funds on a non-recourse basis. Interests in the Mortgagor may be
pledged as security to the extent necessary in connection with any such financing.
	 
	 	8.6	 	Draw Requirements
	 
	 	 	 	The Mortgagor’s right to receive Insurance Proceeds and Condemnation Proceeds held
by the Lender under this Section shall be conditioned on the Lender’s approval of
plans and specifications for the Restoration, which approval shall not be
unreasonably withheld. Each draw shall be in the minimum amount of Fifty Thousand
Dollars ($50,000). Draw requests shall be accompanied by customary evidence of
construction completion, and by endorsements to the Lender’s mortgagee title
insurance coverage insuring the absence of construction, mechanics’ or materialmen’s
liens. Draws based on partial completion of the Restoration shall be subject to a
ten percent (10%) holdback. All transactional expenses shall be paid by the
Mortgagor.

	9.	 	DEFAULT

	 	9.1	 	Payment Defaults
	 
	 	 	 	A “Default” shall exist without Notice upon the occurrence of any of the following
events:

	 	(a)	 	Scheduled Payments
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, (i) any regular
monthly payment of principal and interest under either of the Notes, on or
before the tenth

19

 

	 	 	 	(10th) day of the month in which it is due or (ii) any other
scheduled payment under either of the Notes, this Mortgage or any other Loan
Document within ten (10) days of its due date.

	 	(b)	 	Payment at Maturity
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, the Indebtedness when
the Loan matures by acceleration under Section 14, because of a
transfer or encumbrance under Section 12, or by lapse of time.
	 
	 	(c)	 	Demand Obligations
	 
	 	 	 	The Borrower’s or Mortgagor’s failure to pay, or to cause to be paid, within
five (5) Business Days of the Lender’s demand, any other amount required
under the Notes, this Mortgage or any of the other Loan Documents.

	 	9.2	 	Incurable Nonmonetary Default
	 
	 	 	 	A Default shall exist upon any of the following:

	 	(a)	 	Material Untruth or Misrepresentation
	 
	 	 	 	The Lender’s discovery that any representation made by Mortgagor in any Loan
Document was materially and adversely untrue or misleading when made, if the
misrepresentation either was intentional or is not capable of being cured as
described in Subsection 9.3(a) below.
	 
	 	(b)	 	Due on Sale or Encumbrance
	 
	 	 	 	The occurrence of any sale, conveyance, transfer or vesting that would
result in the Loan becoming immediately due and payable at the Lender’s
option under Section 12.
	 
	 	(c)	 	Voluntary Bankruptcy Filing
	 
	 	 	 	The filing by the Mortgagor of a petition in bankruptcy or for relief from
creditors under any present or future law that affords general protection
from creditors.
	 
	 	(d)	 	Insolvency
	 
	 	 	 	The failure of the Mortgagor generally to pay its debts as they become due,
its admission in writing to an inability so to pay its debts, the making by
the Mortgagor of a general assignment for the benefit of creditors, or a
judicial determination that the Mortgagor is insolvent.
	 
	 	(e)	 	Receivership
	 
	 	 	 	The appointment of a receiver or trustee to take possession of any of the
assets of the Mortgagor.
	 
	 	(f)	 	Levy or Attachment
	 
	 	 	 	The taking or seizure of any material portion of the Property under levy of
execution or attachment.
	 
	 	(g)	 	Lien
	 
	 	 	 	The filing against the Real Property of any lien or claim of lien for the
performance of work or the supply of materials, or the filing of any
federal, state

20

 

	 	 	 	or local tax lien against the Mortgagor, or against the Real Property,
unless the Mortgagor promptly complies with Section 11 of this
Mortgage.

	 	(h)	 	Defaults under other Loan Documents
	 
	 	 	 	The existence of any default or Default under the Loan Agreement or any
other Loan Document, provided any required Notice of such default has been
given and any applicable cure period has expired.
	 
	 	(i)	 	Dissolution or Liquidation
	 
	 	 	 	The Mortgagor shall initiate or suffer the commencement of a proceeding for
its dissolution or liquidation, and such proceeding shall not be dismissed
within sixty (60) days, or the Mortgagor shall cease to exist as a legal
entity.

	 	9.3	 	Curable Non-Monetary Default
	 
	 	 	 	A Default shall exist, following the cure periods specified below, under the
following circumstances:

	 	(a)	 	Unintentional Misrepresentations that are Capable of Being
Cured
	 
	 	 	 	A “Default” shall exist, with Notice, if the Lender discovers that the
Mortgagor has unintentionally made any material and adverse
misrepresentation that is capable of being cured, unless the Mortgagor
promptly commences and diligently pursues a cure of the misrepresentation
approved by the Lender, and completes the cure within one hundred twenty
(120) days of its receipt of Notice. Any such cure shall place the Lender in
the risk position that would have existed had the false representation been
true when made. The Lender shall afford the Mortgagor an additional one
hundred twenty (120) day period in cases where construction or repair is
needed to cure the potential Default, and the cure cannot be completed
within the first one hundred twenty (120) day cure period. During the cure
period, the Mortgagor has the obligation to provide on demand satisfactory
documentation of its effort to cure, and, upon completion, evidence that the
cure has been achieved.
	 
	 	(b)	 	Involuntary Bankruptcy or Similar Filing
	 
	 	 	 	The Mortgagor becomes the subject of any petition or action seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief, or that may result in a composition of its debts,
provide for the marshaling of the Mortgagor’s assets for the satisfaction of
its debts, or result in the judicially ordered sale of the Mortgagor’s
assets for the purpose of satisfying its obligations to creditors, unless
dismissed within sixty (60) days of the filing of the petition or other
action.
	 
	 	(c)	 	Entry of a Material Judgment
	 
	 	 	 	Any judgment is entered against the Mortgagor or any other Obligor involving
an aggregate amount of One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) or more (unless another Default then exists, in which event
there shall be no dollar limitation), and the judgment may materially and
adversely affect the value, use or operation of the Real Property, unless
the judgment is

21

 

	 	 	 	satisfied within thirty (30) days or the Mortgagor’s insurer accepts full
coverage and liability in writing within such thirty (30) day period.

	 	(d)	 	Other Defaults
	 
	 	 	 	The Mortgagor fails to observe any promise or covenant made in this
Mortgage, unless the failure results in a Default described elsewhere in
this Section 9, provided the Lender delivers written Notice to the
Mortgagor of the existence of such an act, omission or circumstance, and
that such an act, omission or circumstance shall constitute a Default under
the Loan Documents unless the Mortgagor promptly initiates an effort to cure
the potential Default, pursues the cure diligently and continuously, and
succeeds in effecting the cure within one hundred twenty (120) days of
receipt of Notice. The Lender shall afford the Mortgagor an additional one
hundred twenty (120) day period in cases where construction or repair is
needed to cure the potential Default, and the cure cannot be completed
within the first one hundred twenty (120) day cure period. During the cure
period, the Mortgagor has the obligation to provide on demand satisfactory
documentation of its effort to cure, and, upon completion, evidence that the
cure has been achieved. All notice and cure periods provided in this
Mortgage shall run concurrently with any notice or cure periods provided by
law and in any of the other Loan Documents.

	10.	 	RIGHT TO CURE
	 
	 	 	The Lender shall have the right to cure any Default. The expenses of doing so shall be part
of the Indebtedness, and the Mortgagor shall pay them to the Lender on demand.
	 
	11.	 	CONTEST RIGHTS
	 
	 	 	The Mortgagor may secure the right to contest Impositions and construction, mechanics’ or
materialmen’s liens, through appropriate proceedings conducted in good faith, by either (A)
depositing with the Lender an amount equal to one hundred twenty five percent (125%) of the
amount of the Imposition or the lien, or (B) obtaining and maintaining in effect a bond
issued by a surety acceptable to the Lender, in an amount equal to the greater of (i) the
amount of a required deposit under clause (A) above and (ii) the amount required by the
surety or by the court in order to obtain a court order staying the foreclosure of the lien
pending resolution of the dispute, and releasing the lien of record. The proceeds of such a
bond must be payable directly to the Lender. The surety issuing such a bond must be
acceptable to the Lender in its reasonable discretion. After such a deposit is made or bond
issued, the Mortgagor shall promptly commence the contest of the lien and continuously
pursue that contest in good faith and with reasonable diligence. If the contest of the
related Imposition or lien is unsuccessful, any deposits or bond proceeds shall be used to
pay the Imposition or to satisfy the obligation from which the lien has arisen. Any surplus
shall be refunded to the Mortgagor.
	 
	12.	 	DUE ON TRANSFER OR ENCUMBRANCE
	 
	 	 	Upon the sale or transfer of any portion of the Property or any other conveyance, transfer
or vesting of any direct or indirect interest in the Property, including (i) any encumbrance
(other

22

 

	 	 	than a Permitted Encumbrance) of the Real Property (unless the Mortgagor contests the
encumbrance in compliance with Section 11); and (ii) the granting of any security
interest in the Property (other than Permitted Encumbrances), the Indebtedness shall, at the
Lender’s option, become immediately due and payable without Notice to the Borrower or the
Mortgagor.

	13.	 	ABSOLUTE ASSIGNMENT OF LEASES AND RENTS

	 	13.1	 	ASSIGNMENT OF RENTS AND PROCEEDS AND LEASES 
	 
	 	 	 	In connection with the Loan, Mortgagor hereby absolutely, presently and irrevocably
assigns, grants, transfers, and conveys to Lender, its successors and assigns, all
of Mortgagor’s right, title, and interest in, to, and under all Leases, now or
hereafter affecting all or any part of the Property or Mortgagor’s use thereof,
including without limitation the right to take all Leasing Actions, together with
all of Mortgagor’s right, title, and interest in and to all Rents, and the right,
without taking possession of the Real Property, to collect the same as they become
due and to apply such Rents and Proceeds to the Secured Obligations. It is the
intent of Mortgagor and Lender to establish a present transfer and assignment of all
of the Leases and the Rents to Lender.
	 
	 	13.2	 	DISCLAIMER 
	 
	 	 	 	Neither the assignments set forth in Section 13.1 above nor Lender’s
exercise of its rights thereunder shall be deemed or construed to constitute the
Lender a mortgagee in possession of the Real Property, nor shall the Lender be
deemed to have assumed, by accepting this Assignment, the landlord’s obligations to
any tenant. In particular, acceptance by Lender of this Assignment shall not
obligate the Lender (a) to appear in or to defend any action or proceeding relating
to the Leases or to the Real Property, (b) to perform any obligation as landlord
under the Leases, (c) to pay any amount or to assume any future financial obligation
of the landlord, including any obligation to pay to any tenant a security or other
deposit not actually received by Lender or (d) to indemnify any tenant for any
injury or damage to person or property sustained by any person or persons, firm or
corporation in or about the Real Property.
	 
	 	13.3	 	REPRESENTATIONS, WARRANTIES AND COVENANTS 
	 
	 	 	 	Mortgagor hereby represents, warrants, and covenants as follows.

	 	(a)	 	Mortgagor is the sole holder of the landlord’s interest under
the Leases, is entitled to receive the Rents and Proceeds from the Leases and
from the Property, and has the full right to sell, assign, transfer, and set
over the same and to grant to and confer upon Lender the rights, interests,
powers, and authorities herein granted and conferred.
	 
	 	(b)	 	If the Mortgagor receives any written notice from any tenant
asserting a material default by the landlord under a Lease, or advising the
Mortgagor that a condition exists which may become a material default with the
passage of time, the Mortgagor shall send a copy or memorandum of the notice to
the Lender.

23

 

	 	(c)	 	The Mortgagor agrees upon written request of the Lender
following the revocation of the licenses granted in Section 13.4, to
notify the tenants under the Leases of this Assignment, to direct them in
writing to send the Lender, simultaneously, copies of all notices of default
that they serve on the Mortgagor, and to direct them, at the Lender’s request,
to pay all future Rent directly to the Lender. The Rents and copies of such
notices shall be sent to the Lender at such address as is specified by the
Lender to tenants from time to time.
	 
	 	(d)	 	The Mortgagor shall not create or permit any lien, charge, or
encumbrance of the Leases or of the Rents, and shall not pledge, transfer, or
otherwise assign the Leases or the Rents unless at the Lender’s request, or
unless otherwise agreed to by the Lender in writing.
	 
	 	(e)	 	Mortgagor has made no pledge or assignment of the Leases or
Rents prior to the date hereof, other than collateral assignments to other
lenders that will be released concurrently with the delivery and recordation of
this Mortgage, and Mortgagor shall not, after the date hereof, make or permit
any such pledge or assignment.
	 
	 	(f)	 	Mortgagor shall provide Lender with a fully-executed copy of
each Lease, amendment, modification or alteration thereto.

	 	13.4	 	LICENSE
	 
	 	 	 	The Lender grants to the Mortgagor a conditional license, subject to the Lender’s
rights under Section 13.5 below, to collect the Rents, other than those
Rents paid more than one (1) month in advance. The Mortgagor may use the Rents so
collected for any lawful purpose which is consistent with the Mortgagor’s ongoing
performance of its obligations under the Loan Documents, provided (a) no Default
then exists and (b) the Mortgagor does not intend to cause, and has no reason to
expect the occurrence of, any Default in respect of the Obligations due to be
performed in the following calendar month.
	 
	 	 	 	Any Rents excluded from the scope of this license shall be trust funds for the
benefit of the Lender. The Lender may require that such Rents be deposited in a
reserve fund to serve as additional security for the Loan, or to be used to benefit
the Real Property, under such terms and conditions as the Lender may determine in
the exercise of its sole and absolute discretion.
	 
	 	 	 	The Lender further grants to the Mortgagor a conditional license subject to the
Lender’s rights under Section 13.5 to take all Leasing Actions in the
ordinary course of business. The license does not extend to any Leasing Action that
permits (i) less than reasonable market rent during its original term or any
extension period, (ii) that permits prepayment of rent more than one (1) year in
advance, or such shorter period as is actually provided for rentals under the Lease,
or (iii) that modifies a Lease in any manner that increases the liability or
obligations of any successor to Mortgagor’s interest in such Lease or affects the
notice and cure rights available thereunder. Furthermore, any Leases to Affiliates
of Mortgagor, or other Leases specifically identified by Lender, must be
unconditionally subordinated to this

24

 

	 	 	 	Mortgage, and Mortgagor shall not be entitled to enter into any new Leases of the
Property absent Lender’s prior written consent.

	 	13.5	 	Revocation of License
	 
	 	 	 	Upon Default, the Lender may by Notice to the Mortgagor or Assignor immediately
terminate the Mortgagor’s licenses under Section 13.4, regardless of whether
the Real Property or any other collateral adequately secures the Loan’s eventual
repayment. Upon the termination of the Mortgagor’s license, the Mortgagor shall
immediately deliver to the Lender all Rents then in the Mortgagor’s possession, and
all Rents then due or accruing thereafter shall be payable by tenants directly to
the Lender. This Assignment shall constitute a direction to and full authority to
any tenant of the Real Property, upon the Lender’s written request, to pay all Rents
to the Lender, without requiring the Lender to prove to the tenant the existence of
Default. The Mortgagor agrees to deliver immediately to the Lender any Rents
received by the Mortgagor after the revocation of the Mortgagor’s license under
Section 4, and at the Lender’s written request, shall execute such further
assignments to the Lender of any Lease as the Lender may in its sole judgment
request. This Assignment is given in connection with the Loan and in support of the
performance of the Obligations, and nothing herein contained shall be construed as
(a) constituting the Lender a “mortgagee-in-possession” of the Real Property, or (b)
an assumption by the Lender of the Mortgagor’s obligations as landlord under the
Leases.
	 
	 	 	 	Upon the cure of all Defaults, the Lender may by Notice to the Mortgagor, reinstate
the licenses of the Mortgagor under Section 13.4 of this Mortgage.

	14.	 	ACCELERATION
	 
	 	 	If a Default exists, the Lender may, at its option, declare the unpaid principal balance of
the Notes to be immediately due and payable, together with all accrued interest on the
Indebtedness, all costs of collection (including reasonable attorneys’ fees and expenses)
and all other charges due and payable under the Notes or any other Loan Document.
	 
	 	 	If the subject Default is nonmonetary in nature other than a Default arising under
Section 9.2(b), the Lender shall exercise its option to accelerate only by giving
Notice of acceleration to the Borrower and the Mortgagor. The Lender shall not give any
such Notice of acceleration until (a) the Borrower and the Mortgagor have been given any
required Notice of the prospective Default and (b) any applicable cure period has expired.
	 
	 	 	Except as expressly described in this Section, no notice of acceleration shall be required
in order for the Lender to exercise its option to accelerate the Indebtedness in the event
of Default.
	 
	15.	 	RIGHTS OF ENTRY AND TO OPERATE

	 	15.1	 	Entry on Real Property
	 
	 	 	 	If a Default exists, the Lender may, to the extent permitted by applicable law,
enter upon the Real Property and take exclusive possession of the Real Property and
of all books,

25

 

	 	 	 	records and accounts, all without Notice and without being guilty of trespass, but
subject to the rights of tenants in possession under the Leases. If the Mortgagor
remains in possession of all or any part of the Property after Default and without
the Lender’s prior written consent, the Lender may, without Notice to the Borrower
or the Mortgagor, invoke any and all legal remedies to dispossess the Mortgagor.

	 	15.2	 	Operation of Real Property
	 
	 	 	 	If a Default exists, the Lender may hold, lease, manage, operate or otherwise use or
permit the use of the Real Property, either itself or by other persons, firms or
entities, in such manner, for such time and upon such other terms as the Lender may
deem to be prudent under the circumstances (making such repairs, alterations,
additions and improvements thereto and taking any and all other action with
reference thereto, from time to time, as the Lender deems prudent), and apply all
Rents and other amounts collected by the Lender to the Obligations.

	16.	 	RECEIVERSHIP
	 
	 	 	Following Default, the Lender may apply to a court of competent jurisdiction for the
appointment of a receiver of the Property, ex parte without Notice to the Mortgagor, whether
or not the value of the Property exceeds the Indebtedness, whether or not waste or
deterioration of the Real Property has occurred, and whether or not other arguments based on
equity would justify the appointment. The Mortgagor irrevocably, with knowledge and for
valuable consideration, consents to such an appointment. Any such receiver shall have all
the rights and powers customarily given to receivers in Illinois, including the rights and
powers granted to the Lender by this Mortgage, the power to maintain, lease and operate the
Real Property on terms approved by the court, and the power to collect the Rents and apply
them to the Indebtedness or otherwise as the court may direct. Once appointed, a receiver
may at the Lender’s option remain in place until the Indebtedness has been paid in full.
	 
	17.	 	FORECLOSURE; POWER OF SALE

	 	17.1	 	Availability of Remedies
	 
	 	 	 	Upon Default, the Lender may immediately proceed to foreclose the lien of this
Mortgage, against all or part of the Property, or to sell the Property, by judicial
or nonjudicial foreclosure in accordance with the laws of Illinois and may pursue
any other remedy available to commercial mortgage lenders under the laws of
Illinois.
	 
	 	17.2	 	Construction with Illinois Mortgage Foreclosure Law
	 
	 	 	 	In the event that any provision of this Mortgage shall be inconsistent with any
provision of the Illinois Mortgage Foreclosure Law (Chapter 735, Sections 5/15-1101
et seq., Illinois Compiled Statutes) (the “Act”), the provisions of the Act shall
take precedence over the provisions of this Mortgage, but shall not invalidate or
render unenforceable any other provision of this Mortgage that can be construed in a
manner consistent with the Act.

26

 

	 	17.3	 	Availability of all Remedies under the Act
	 
	 	 	 	If any provision of this Mortgage shall grant to Mortgagee any rights or remedies
upon default of the Mortgagor which are more limited than the rights that would
otherwise be vested in Mortgagee under the Act in the absence of said provision, the
Mortgagee shall be vested with the rights granted in the Act to the full extent
permitted by law.
	 
	 	17.4	 	Expenses included in Indebtedness
	 
	 	 	 	Without limiting the generality of the foregoing, all expenses incurred by the
Mortgagee to the extent reimbursable under Section 15-1512 of the Act, whether
incurred before or after any decree or judgment of foreclosure, and whether
enumerated in this Mortgage, shall be added to the Indebtedness secured by this
Mortgage or by the judgment of foreclosure.

	18.	 	WAIVERS
	 
	 	 	To the maximum extent permitted by applicable law, the Mortgagor irrevocably and
unconditionally WAIVES and RELEASES any present or future rights (a) of reinstatement or
redemption pursuant to 735 ILSC 5/15-1601 or similar reinstatement or redemption rights now
or hereafter available to the Lender following a Default, (b) that may exempt the Property
from any civil process, (c) to appraisal or valuation of the Property, (d) to extension of
time for payment, (e) that may subject the Lender’s exercise of its remedies to the
administration of any decedent’s estate or to any partition or liquidation action, (f) to
any homestead and exemption rights provided by the Constitution and laws of the United
States and of Illinois, (g) to notice of acceleration or notice of intent to accelerate
(other than as expressly stated herein) following a Default, and (h) that in any way would
delay or defeat the right of the Lender to cause the sale of the Real Property for the
purpose of satisfying the Indebtedness following a Default,. The Mortgagor agrees that the
price paid at a lawful foreclosure sale, whether by the Lender or by a third party, and
whether paid through cancellation of all or a portion of the Indebtedness or in cash, shall
conclusively establish the value of the Real Property.
	 
	 	 	The foregoing waivers shall apply to and bind any party assuming the Obligations of the
Mortgagor under this Mortgage.
	 
	19.	 	SECURITY AGREEMENT AND FIXTURE FILING

	 	19.1	 	Definitions
	 
	 	 	 	“Account” shall have the definition assigned in the UCC.
	 
	 	 	 	“Account Collateral” means all Accounts that arise from the sale or other
disposition of the Property or the leasing, licensing or use by third parties of the
Property, from the commencement of the Loan term through the satisfaction of all of
the Obligations.
	 
	 	 	 	“Chattel Paper” shall have the definition assigned in the UCC.
	 
	 	 	 	“Chattel Paper Collateral” means all Chattel Paper arising from the sale or
other disposition of all or part of the Property.

27

 

	 	 	 	“Control Agreement” means a Deposit Account or Securities Account control
agreement by and among the Borrower, the Lender and the relevant depository or
securities intermediary providing the Lender with “control” of such Deposit Account
or Securities Account within the meaning of Articles 8 and 9 of the UCC.
	 
	 	 	 	“Deposit Account” shall have the definition assigned in the UCC.
	 
	 	 	 	“Deposit Account Collateral” means all Deposit Accounts and/or Securities
Accounts over which Lender has obtained a Control Agreement or that are held by
Lender into which Rents , Insurance Proceeds, Condemnation Proceeds or Proceeds of
the Property are deposited or held at any time from the commencement of the Loan
term through the satisfaction of all of the Obligations and shall include all funds
in such Deposit Accounts. Deposit Account Collateral shall specifically include all
Deposit Accounts into which the sales proceeds payable under the terms of the Elgin
Purchase Contract are paid regardless of whether Lender has a Control Agreement with
respect to such Deposit Account.
	 
	 	 	 	“Document” shall have the definition assigned in the UCC.
	 
	 	 	 	“Document Collateral” means all Documents that evidence title to all or any
part of the Goods Collateral.
	 
	 	 	 	“Equipment” shall have the definition assigned in the UCC.
	 
	 	 	 	“Equipment Collateral” means all Equipment that relates to the Real Property
arising from the sale or other disposition of all or part of the Property.
	 
	 	 	 	“Financing Statements” shall have the definition assigned in the UCC.
	 
	 	 	 	“General Intangibles” shall have the definition assigned in the UCC.
	 
	 	 	 	“General Intangible Collateral” means all General Intangibles that have
arisen or that arise in the future in connection with the Mortgagor’s ownership,
sale, operation or leasing of the Real Property as commercial real estate (but not
any General Intangibles arising from the specific business operations of Mortgagor
and/or its subsidiaries), at any time from the commencement of the Loan term through
the satisfaction of all of the Obligations, and shall specifically include any
General Intangibles that arise with respect to the sale of the Property pursuant to
the Elgin Purchase Contract (including the Elgin Purchase Contract itself).
	 
	 	 	 	“Goods” shall have the definition assigned in the UCC. “Goods” include all
detached Fixtures, items of Personal Property that may become Fixtures, property
management files, accounting books and records, reports of consultants relating to
the Real Property, site plans, test borings, environmental or geotechnical surveys,
samples and test results, blueprints, construction and shop drawings, and plans and
specifications.
	 
	 	 	 	“Goods Collateral” means all Goods that relate to the Real Property as
commercial real estate and are used in the operation of the Real Property as
commercial real estate.
	 
	 	 	 	“Instrument” shall have the definition assigned in the UCC.

28

 

	 	 	 	“Instrument Collateral” means all Instruments received as Rents or
identifiable Proceeds of Property or purchased by the Mortgagor with Rents or
identifiable Proceeds, including any Instruments received as proceeds of the sale of
the Property under the Elgin Purchase Contract.
	 
	 	 	 	“Investment Property” shall have the definition assigned in the UCC.
	 
	 	 	 	“Investment Property Collateral” means all the Investment Property purchased
using Rents or identifiable Proceeds of Property, or received in respect of Account
Collateral.
	 
	 	 	 	“Money Collateral” means all money received in respect of Rents, Insurance
Proceeds, Condemnation Proceeds or the Proceeds of the sale of the Property.
	 
	 	 	 	“Personal Property” means Account Collateral, Chattel Paper Collateral,
Commercial Tort Claim Collateral, Deposit Account Collateral, Document Collateral,
Equipment Collateral, General Intangibles Collateral, Goods Collateral, Instrument
Collateral, Investment Property Collateral, and Money Collateral.
	 
	 	 	 	 “Proceeds” mean all proceeds (as defined in the UCC) of any Property.
	 
	 	 	 	 “UCC” means the Uniform Commercial Code as adopted in Illinois.
	 
	 	19.2	 	Creation of Security Interest
	 
	 	 	 	This Mortgage shall be self-operative and shall constitute a security agreement
pursuant to the provisions of the UCC with respect to the Personal Property. The
Mortgagor, as debtor, hereby grants the Lender, as secured party, for the purpose of
securing the Indebtedness, a security interest in the Account Collateral, Chattel
Paper Collateral, Commercial Tort Claim Collateral, Deposit Account Collateral,
Document Collateral, Equipment Collateral, General Intangible Collateral, Goods
Collateral, Instrument Collateral, Investment Property Collateral, and Money
Collateral, in the accessions, additions, replacements, substitutions and Proceeds
of any of the foregoing items of collateral. Upon Default, the Lender shall have the
rights and remedies of a secured party under the UCC as well as all other rights and
remedies available at law or in equity, and, at the Lender’s option, the Lender may
also invoke the remedies provided elsewhere in this Mortgage as to such Property.
The Mortgagor and the Lender agree that the rights granted to the Lender as secured
party under this Section 19 are in addition to rather than a limitation on
any of the Lender’s other rights under this Mortgage with respect to the Property.
	 
	 	19.3	 	Filing Authorization
	 
	 	 	 	The Mortgagor irrevocably authorizes the Lender to file, in the appropriate
locations for filings of UCC financing statements in any jurisdictions as the Lender
in good faith deems appropriate, such financing statements and amendments as the
Lender may require in order to perfect or continue this security interest, or in
order to prevent any filed financing statement from becoming misleading or from
losing its perfected status.
	 
	 	19.4	 	Additional Searches and Documentation

29

 

	 	 	 	Mortgagor shall provide to Lender upon request, certified copies of any searches of
UCC records deemed necessary or appropriate by Lender to confirm the first priority
status of its security interest in the Personal Property, together with copies of
all documents or records evidencing security interests disclosed by such searches.
	 
	 	19.5	 	Costs
	 
	 	 	 	The Mortgagor shall pay all filing fees and costs and all reasonable costs and
expenses of any record searches (or their continuations) as the Lender may require.
	 
	 	19.6	 	Representations, Warranties and Covenants of the Mortgagor

	 	(a)	 	Ownership of the Personal Property
	 
	 	 	 	All of the Personal Property is owned by the Mortgagor and is not the
subject matter of any lease, control agreement or other instrument,
agreement or transaction whereby any ownership, security or beneficial
interest in the Personal Property is held by any person or entity other than
the Mortgagor, subject only to (1) the Lender’s security interest, (2) the
Permitted Encumbrances, and (3) the Elgin Purchase Contract.
	 
	 	(b)	 	No Other Identity
	 
	 	 	 	The Mortgagor represents and warrants that the Mortgagor has not used or
operated under any other name or identity for at least five (5) years. The
Mortgagor covenants and agrees that Mortgagor will furnish Lender with
notice of any change in its name, form of organization, or state of
organization within thirty (30) days prior to the effective date of any such
change.
	 
	 	(c)	 	Location of Equipment
	 
	 	 	 	All Equipment Collateral is located upon the Land.
	 
	 	(d)	 	Removal of Goods
	 
	 	 	 	The Mortgagor will not remove or permit to be removed any detached Fixtures
or Goods that may become Fixtures from the Land, unless the same is replaced
immediately with unencumbered assets (1) of a quality and value equal or
superior to that which it replaces and (2) which is located on the Land. All
such replacements, renewals, and additions shall become and be immediately
subject to the security interest of this Mortgage.
	 
	 	(e)	 	Proceeds
	 
	 	 	 	The Mortgagor shall not, without the Lender’s prior written consent, dispose
of any Personal Property in any other manner, except in compliance with
Subsection 19.6(d) above, and except as set forth in the Elgin
Purchase Contract.

	 	19.7	 	Fixture Filing
	 
	 	 	 	This Mortgage constitutes a financing statement filed as a fixture filing in the
Official Records of the County Recorder of Kane County, Illinois with respect to any
and all fixtures comprising Property. The “debtor” is JBSS Properties, LLC, a
limited liability company organized under Illinois law, the “secured party” is
Transamerica Life Insurance Company, the collateral is as described in
Subsection 19.1 above and the granting clause of this Mortgage, and the
addresses of the debtor and secured party are the addresses stated in Subsection
21.13 of this Mortgage for Notices to such parties. The

30

 

organizational identification number of the debtor is 01731432. The owner of record
of the Real Property is JBSS Properties, LLC.

	20.	 	ENVIRONMENTAL MATTERS

	 	20.1	 	Representations
	 
	 	 	 	The Mortgagor represents as follows:

	 	(a)	 	No Hazardous Substances
	 
	 	 	 	To the best of the Mortgagor’s knowledge, and except as disclosed in the
ESA, no release of any Hazardous Substance has occurred on or about the Real
Property in a quantity or at a concentration level that (i) violates any
Environmental Law, or (ii) requires reporting to any regulatory authority or
may result in any obligation to remediate under any Environmental Law.
	 
	 	(b)	 	Absence of Mold Contamination
	 
	 	 	 	To the best of Mortgagor’s knowledge, there are no mold issues present in
the Improvements that result in a violation of Environmental Laws.
Mortgagor has received no mold-related tenant complaint or notice of any
legal proceeding relating to mold affecting the Improvements.
	 
	 	(c)	 	Compliance with Environmental Laws
	 
	 	 	 	The Real Property and its current use and presently anticipated uses comply
with all Environmental Laws, including those requiring permits, licenses,
authorizations, and other consents and approvals.
	 
	 	(d)	 	No Actions or Proceedings
	 
	 	 	 	To the best of Mortgagor’s knowledge, no governmental authority or agency
has commenced any action, proceeding or investigation based on any suspected
or actual violation of any Environmental Law on or about the Real Property.
To the best of the Mortgagor’s knowledge, no such authority or agency has
threatened to commence any such action, proceeding, or investigation.

	 	20.2	 	Environmental Covenants
	 
	 	 	 	The Mortgagor covenants as follows:

	 	(a)	 	Compliance with Environmental Laws
	 
	 	 	 	The Mortgagor shall, and the Mortgagor shall cause all employees, agents,
contractors, and tenants of the Mortgagor to, keep and maintain the Real
Property in compliance with all Environmental Laws.
	 
	 	(b)	 	Notices, Actions and Claims
	 
	 	 	 	The Mortgagor shall immediately advise the Lender in writing of (i) any
written notices from any governmental or quasi-governmental agency or
authority of violation or potential violation of any Environmental Law
received by the Mortgagor, (ii) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
pursuant to any Environmental Law about which Mortgagor has received written
notice, (iii) all

31

 

	 	 	 	claims made or threatened by any third party against the Mortgagor or the
Real Property relating to damage, contribution, cost recovery, compensation,
loss or injury resulting from any Hazardous Substances, and (iv) discovery
by the Mortgagor of any occurrence or condition on any real property
adjoining or in the vicinity of the Real Property that creates a foreseeable
risk of contamination of the Real Property by or with Hazardous Substances.

	 	20.3	 	The Lender’s Right to Control Claims
	 
	 	 	 	The Lender shall have the right (but not the obligation) to join and participate in,
as a party if it so elects, any legal proceedings or actions initiated in connection
with any Hazardous Substances and to have its related and reasonable attorneys’ and
consultants’ fees paid by the Mortgagor upon demand.

	 	20.4	 	Indemnification
	 
	 	 	 	The Mortgagor shall be solely responsible for, and shall indemnify, defend, and hold
harmless the Lender and its directors, officers, employees, agents, successors and
assigns, from and against, any claim, judgment, loss, damage, demand, cost, expense
or liability of whatever kind or nature, known or unknown, contingent or otherwise,
directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence (whether
prior to or after the date of this Mortgage) of Hazardous Substances on, in, under
or about the Real Property (whether by the Mortgagor, a predecessor in title, any
tenant, or any employees, agents, contractor or subcontractors of any of the
foregoing or any third persons at any time occupying or present on the Real
Property), including: (i) personal injury; (ii) death; (iii) damage to property;
(iv) all consequential damages; (v) the cost of any required or necessary repair,
cleanup or detoxification of the Real Property, including the soil and ground water
thereof, and the preparation and implementation of any closure, remedial or other
required plans; (vi) damage to any natural resources; and (vii) all reasonable costs
and expenses incurred by the Lender in connection with clauses (i) through (vi),
including reasonable attorneys’ and consultants’ fees; provided, however,
that nothing contained in this Section shall be deemed to preclude the Mortgagor
from seeking indemnification from, or otherwise proceeding against, any third party
including any tenant or predecessor in title to the Real Property, and further
provided that this indemnification will not extend to matters caused by the
Lender’s gross negligence or willful misconduct, or arising from a release of
Hazardous Substances which occurs after the Lender has taken possession of the Real
Property, so long as the Mortgagor has not caused the release through any act or
omission. The covenants, agreements, and indemnities set forth in this Section shall
be binding upon the Mortgagor and its successors and assigns, and shall survive
repayment of the Indebtedness, foreclosure of the Real Property, and the Mortgagor’s
granting of a deed to the Real Property in lieu of foreclosure. Payment shall not be
a condition precedent to this indemnity. Any costs or expenses incurred by the
Lender for which the Mortgagor is responsible or for which the Mortgagor has
indemnified the Lender shall be paid to the Lender on demand, with interest at the
Default Rate from the date incurred by the Lender until paid in full, and shall be
secured by this Mortgage. Without the prior written consent of the Lender, which
consent shall not be unreasonably withheld, the Mortgagor shall not enter into any
settlement agreement, consent decree, or other compromise in respect to any claims
relating to Hazardous Substances. The Lender agrees that it shall not unreasonably
delay its

32

 

	 	 	 	consideration of any written request for its consent to any such settlement
agreement, consent decree, or other compromise once all information, reports,
studies, audits, and other documentation have been submitted to the Lender.

	 	20.5	 	Environmental Audits
	 
	 	 	 	If a Default exists, or the Lender has a reasonable basis to believe that a release
of Hazardous Substances may have occurred, the Lender may require that the Mortgagor
retain, or the Lender may retain directly, at the sole cost and expense of the
Mortgagor, a licensed geologist, industrial hygienist or an environmental consultant
acceptable to the Lender to conduct an environmental assessment or audit of the Real
Property. In the event that the Lender makes a reasonable determination of the need
for an environmental assessment or audit, the Lender shall inform the Mortgagor in
writing that such a determination has been made and, if requested to do so by the
Mortgagor, give the Mortgagor a written explanation of that determination before the
assessment or audit is conducted. The Mortgagor shall afford any person conducting
an environmental assessment or audit access to the Real Property and all materials
reasonably requested; provided that such person shall not unreasonably interfere
with the use and operation of the Real Property. Except as set forth below, the
Mortgagor shall pay on demand the cost and expenses of any environmental consultant
engaged by the Lender under this Subsection. The Mortgagor shall, at the Lender’s
request and at the Mortgagor’s sole cost and expense, take such investigative and
remedial measures determined by the geologist, hygienist or consultant to be
necessary to address any condition discovered by the assessment or audit so that (i)
the Real Property shall be in compliance with all Environmental Laws, (ii) the
condition of the Real Property shall not constitute any identifiable risk to human
health or to the environment, and (iii) the value of the Real Property shall not be
affected by the presence of Hazardous Substances. Notwithstanding the foregoing,
the Mortgagor shall not be required to pay for the costs of such audit or assessment
if it reasonably disagrees with the Lender’s determination that there is a
reasonable basis that a release of a Hazardous Substance has occurred, the Lender
proceeds with such audit or assessment and the audit or assessment does not reveal
any material violation of Environmental Laws that were not identified on the ESA.

	21.	 	MISCELLANEOUS

	 	21.1	 	Successors and Assigns
	 
	 	 	 	All of the terms of the Loan Documents shall apply to, be binding upon and inure to
the benefit of the successors and assigns of the Obligors, or to the holder of the
Notes, as the case may be.
	 
	 	21.2	 	Survival of Obligations
	 
	 	 	 	Each and all of the Obligations shall continue in full force and effect until the
latest of (a) the date the Indebtedness has been paid in full and the Obligations
have been performed and satisfied in full, (b) the last date permitted by law for
bringing any claim or action with respect to which the Lender may seek payment or
indemnification in connection with the Loan Documents, and (c) the date on which any
claim or action for which the

33

 

	 	 	 	Lender seeks payment or indemnification is fully and finally resolved and, if
applicable, any compromise thereof of judgment or award thereon is paid in full.

	 	21.3	 	Further Assurances
	 
	 	 	 	The Mortgagor, upon the request of the Lender, shall complete, execute, acknowledge,
deliver and record or file such further instruments and do such further acts as may
be reasonably necessary to carry out more effectively the purposes of this Mortgage,
to subject any property intended to be covered by this Mortgage to the liens and
security interests it creates, to place third parties on notice of those liens and
security interests, or to correct any defects which may be found in any Loan
Document.
	 
	 	21.4	 	Right of Inspection
	 
	 	 	 	The Lender shall have the right from time to time, upon reasonable advance notice to
the Mortgagor, to enter onto the Real Property during regular business hours for the
purpose of inspecting and reporting on its physical condition, tenancy and
operations; provided the Lender shall not unreasonably interfere with the use and
operation of the Real Property.
	 
	 	21.5	 	Expense Indemnification
	 
	 	 	 	The Mortgagor shall pay all filing and recording fees, documentary stamps,
intangible taxes, and all expenses incident to the execution and acknowledgment of
this Mortgage, or any of the other Loan Documents, any supplements, amendments,
renewals or extensions of any of them, or any instrument entered into under
Subsection 21.3. The Mortgagor shall pay or reimburse the Lender, upon
demand, for all costs and expenses, including appraisal and reappraisal costs of the
Property and reasonable attorneys’ and legal assistants’ fees, which the Lender may
incur in connection with enforcement proceedings under this Mortgage, or any of the
other Loan Documents (including all fees and costs incurred in enforcing or
protecting this Mortgage, or any of the other Loan Documents in any bankruptcy
proceeding), and reasonable attorneys’ and legal assistants’ fees incurred by the
Lender in any other suit, action, legal proceeding or dispute of any kind in which
the Lender is made a party or appears as party plaintiff or defendant, affecting the
Indebtedness, this Mortgage, any of the other Loan Documents, or the Property, or
required to protect or sustain the lien of this Mortgage. The Mortgagor
shall be obligated to pay (or to reimburse the Lender) for such fees, costs and
expenses and shall indemnify and hold the Lender harmless from and against any and
all loss, cost, expense, liability, damage and claims and causes of action,
including reasonable attorneys’ fees, incurred or accruing by reason of the
Mortgagor’s failure to promptly repay any such fees, costs and expenses. If any suit
or action is brought to enforce or interpret any of the terms of this Mortgage
(including any effort to modify or vacate any automatic stay or injunction, any
trial, any appeal, any petition for review or any bankruptcy proceeding), the Lender
shall be entitled to recover all expenses reasonably incurred in preparation for or
during the suit or action or in connection with any appeal of the related decision,
whether or not taxable as costs. Such expenses include reasonable attorneys’ fees,
witness fees (expert or otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including the costs of searching records, obtaining title reports, appraisals,
environmental assessments, surveying costs, title insurance premiums, and reasonable
attorneys’ fees,

34

 

	 	 	 	incurred by the Lender that are necessary at any time in the Lender’s opinion for
the protection of its interest or enforcement of its rights shall become a part of
the Indebtedness payable on demand and shall bear interest from the date of
expenditure until repaid at the applicable interest rate as provided in each of the
Notes.
	 
	 	21.6	 	General Indemnification
	 
	 	 	 	The Mortgagor shall indemnify, defend and hold the Lender harmless against: (i) any
and all claims for brokerage, leasing, finder’s or similar fees which may be made
relating to the Real Property or the Indebtedness and (ii) any and all liability,
obligations, losses, damages, penalties, claims, actions, suits costs and expenses
(including the Lender’s reasonable attorneys’ fees, together with reasonable
appellate counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by the Lender in connection with the Indebtedness,
this Mortgage, the Real Property or any part thereof, or the operation, maintenance
and/or use thereof, or the exercise by the Lender of any rights or remedies granted
to it under this Mortgage or pursuant to applicable law; provided, however, that
nothing herein shall be construed to obligate the Mortgagor to indemnify, defend and
hold harmless the Lender from and against any of the foregoing which is imposed on
or incurred by the Lender by reason of the Lender’s willful misconduct or gross
negligence.
	 
	 	21.7	 	Recording and Filing
	 
	 	 	 	The Mortgagor shall cause this Mortgage and all amendments, supplements, and
substitutions to be recorded, filed, re-recorded and re-filed in such manner and in
such places as the Lender may reasonably request. The Mortgagor will pay all
recording filing, re-recording and re-filing taxes, fees and other charges.
	 
	 	21.8	 	No Waiver
	 
	 	 	 	No deliberate or unintentional failure by the Lender to require strict performance
by the Mortgagor of any Obligation shall be deemed a waiver, and the Lender shall
have the right at any time to require strict performance by the Mortgagor of any
Obligation.
	 
	 	21.9	 	Covenants Running with the Land
	 
	 	 	 	All Obligations are intended by the parties to be and shall be construed as
covenants running with the Land.

35

 

	 	21.10	 	Severability
	 
	 	 	 	The Loan Documents are intended to be performed in accordance with, and only to the
extent permitted by, all applicable Legal Requirements. Any provision of the Loan
Documents that is prohibited or unenforceable in any jurisdiction shall nevertheless
be construed and given effect to the extent possible. The invalidity or
unenforceability of any provision in a particular jurisdiction shall neither
invalidate nor render unenforceable any other provision of the Loan Documents in
that jurisdiction, and shall not affect the validity or enforceability of that
provision in any other jurisdiction. If a provision is held to be invalid or
unenforceable as to a particular person or under a particular circumstance, it shall
nevertheless be presumed valid and enforceable as to others, or under other
circumstances.
	 
	 	21.11	 	Usury
	 
	 	 	 	The parties intend that no provision of either of the Notes or the Loan Documents be
interpreted, construed, applied, or enforced so as to permit or require the payment
or collection of interest in excess of the Maximum Permitted Rate. In this regard,
the Mortgagor and the Lender each stipulate and agree that it is their common and
overriding intent to contract in strict compliance with applicable usury laws.
Accordingly, none of the terms of this Mortgage, either of the Notes or any of the
other Loan Documents shall ever be construed to create a contract to pay, as
consideration for the use, forbearance or detention of money, interest at a rate in
excess of the Maximum Permitted Rate, and the Mortgagor shall never be liable for
interest in excess of the Maximum Permitted Rate. Therefore, (a) in the event that
the Indebtedness and Obligations are prepaid or the maturity of the Indebtedness and
Obligations is accelerated by reason of an election by the Lender, unearned interest
shall be canceled and, if theretofore paid, shall either be refunded to the
Mortgagor or credited on the Indebtedness, as the Lender may elect; (b) the
aggregate of all interest and other charges constituting interest under applicable
laws and contracted for, chargeable or receivable under either of the Notes and the
other Loan Documents or otherwise in connection with the transaction contemplated
thereby shall never exceed the maximum amount of interest, nor produce a rate in
excess of the Maximum Permitted Rate; and (c) if any excess interest is provided for
or received, it shall be deemed a mistake, and the same shall, at the option of the
Lender, either be refunded to the Borrower and/or the Mortgagor or credited on the
unpaid principal amount (if any), and the Indebtedness shall be automatically
reformed so as to permit only the collection of the interest at the Maximum
Permitted Rate. Furthermore, if any provision of either Note or any of the other
Loan Documents is interpreted, construed, applied, or enforced, in such a manner as
to provide for interest in excess of the Maximum Permitted Rate, then the parties
intend that such provision automatically shall be deemed reformed retroactively so
as to require payment only of interest at the Maximum Permitted Rate. If, for any
reason whatsoever, interest paid or received during the full term of the applicable
Indebtedness produces a rate which exceeds the Maximum Permitted Rate, then the
amount of such excess shall be deemed credited retroactively in reduction of the
then outstanding principal amount of the Indebtedness, together with interest at
such Maximum Permitted Rate. The Lender shall credit against the principal of such
Indebtedness (or, if such Indebtedness shall have been paid in full, shall refund to
the payor of such interest) such portion of said interest as shall be necessary to
cause the interest paid to produce a rate equal to the Maximum Permitted Rate. All
sums paid or agreed to be paid to the Lender for the use, forbearance or detention
of money shall, to

36

 

	 	 	 	the extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of the applicable Indebtedness, so that the
interest rate is uniform throughout the full term of such Indebtedness. In
connection with all calculations to determine the Maximum Permitted Rate, the
parties intend that all charges be excluded to the extent they are properly
excludable under applicable usury laws, as they from time to time are determined to
apply to this transaction. The provisions of this Section shall control all
agreements, whether now or hereafter existing and whether written or oral, between
the Mortgagor and the Lender.

	 	21.12	 	Entire Agreement
	 
	 	 	 	The Loan Documents contain the entire agreements between the parties relating to the
financing of the Real Property, and all prior agreements which are not contained in
the Loan Documents, other than the unsecured Environmental Indemnity Agreement, are
terminated. The Loan Documents represent the final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties. The Loan Documents may be amended, revised, waived, discharged, released or
terminated only by a written instrument or instruments executed by the party against
whom enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge, release
or termination that is not so documented shall be null and void.
	 
	 	21.13	 	Notices
	 
	 	 	 	In order for any demand, consent, approval or other communication to be effective
under the terms of this Mortgage, “Notice” must be provided under the terms of this
Subsection. All Notices must be in writing. Notices may be (a) delivered by hand,
(b) transmitted by facsimile (with a duplicate copy sent by first class mail,
postage prepaid), (c) sent by certified or registered mail, postage prepaid, return
receipt requested, or (d) sent by reputable overnight courier service, delivery
charges prepaid. Notices shall be addressed as set forth below:

If to the Lender:

Transamerica Life Insurance Company

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E.

Cedar Rapids, Iowa 52499-5443

Attn: Mortgage Loan Department

Reference: Loan No. 700218 & 700218A

Fax Number: (319) 369-2277

If to the Mortgagor:

JBSS Properties, LLC

1703 North Randall Road

Mail Code — 2NW-EX

Elgin, Illinois 60123

37

 

Attn: Michael J. Valentine

Fax Number: (866) 610-1294

	 	 	 	Notices delivered by hand or by overnight courier shall be deemed given when
actually received or when refused by their intended recipient. Notices sent by
facsimile will be deemed delivered when a legible copy has been received (provided
receipt has been verified by telephone confirmation or one of the other permitted
means of giving Notices under this Subsection). Mailed Notices shall be deemed given
on the date of the first attempted delivery (whether or not actually received).
Either the Lender or the Mortgagor may change its address for Notice by giving at
least fifteen (15) Business Days’ prior Notice of such change to the other party.
	 
	 	21.14	 	Counterparts
	 
	 	 	 	This Mortgage may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute but one instrument.
	 
	 	21.15	 	Choice of Law
	 
	 	 	 	This Mortgage shall be interpreted, construed, applied, and enforced according to,
and will be governed by, the laws of Illinois, without regard to any choice of law
principle which, but for this provision, would require the application of the law of
another jurisdiction and regardless of where executed or delivered, where payable or
paid, where any cause of action accrues in connection with this transaction, where
any action or other proceeding involving the Loan is instituted, or whether the laws
of Illinois otherwise would apply the laws of another jurisdiction.
	 
	 	21.16	 	Forum Selection
	 
	 	 	 	The Mortgagor and Lender (by acceptance hereof) agree that the sole and exclusive
forum for the determination of any action relating to the validity and
enforceability of Notes, this Mortgage and the other Loan Documents, and any other
instruments securing the Notes shall be either in an appropriate court of the State
of Illinois or the applicable United States District Court, except as otherwise set
forth in the Loan Documents.
	 
	 	21.17	 	Sole Benefit
	 
	 	 	 	This Mortgage and the other Loan Documents have been executed for the sole benefit
of the Borrower, the Mortgagor and the Lender and the successors and assigns of the
Lender. No other party shall have rights thereunder or be entitled to assume that
the parties thereto will insist upon strict performance of their mutual obligations
hereunder, any of which may be waived from time to time. The Mortgagor shall have no
right to assign any of its rights under the Loan Documents to any party whatsoever.
	 
	 	21.18	 	Release of Claims
	 
	 	 	 	The Mortgagor hereby RELEASES, DISCHARGES and ACQUITS forever the Lender and its
officers, directors, trustees, agents, employees and counsel (in each case, past,
present or future) from any and all Claims existing as of the date hereof (or the
date of actual execution hereof by the Mortgagor, if later). As used herein, the
term “Claim” shall mean any and all liabilities, claims, defenses, demands, actions,
causes of action,

38

 

	 	 	 	judgments, deficiencies, interest, liens, costs or expenses (including court costs,
penalties, attorneys’ fees and disbursements, and amounts paid in settlement) of any
kind and character whatsoever, including claims for usury, breach of contract,
breach of commitment, negligent misrepresentation or failure to act in good faith,
in each case whether now known or unknown, suspected or unsuspected, asserted or
unasserted or primary or contingent, and whether arising out of written documents,
unwritten undertakings, course of conduct, tort, violations of laws or regulations
or otherwise.
	 
	 	21.19	 	No Partnership
	 
	 	 	 	Nothing contained in the Loan Documents is intended to create any partnership, joint
venture or association between the Mortgagor and the Lender, or in any way make the
Lender a co-principal with the Mortgagor with reference to the Property.
	 
	 	21.20	 	Payoff Procedures
	 
	 	 	 	If the Borrower pays or causes to be paid to the Lender all of the Indebtedness,
then Lender’s interest in the Real Property shall cease, and upon receipt by the
Lender of such payment, the Lender shall either (a) release this Mortgage or (b)
assign the Loan Documents and endorse the Notes (in either case without recourse or
warranty of any kind) to a takeout lender, upon payment (in the latter case) of an
administrative fee of Seven Hundred Fifty Dollars ($750).
	 
	 	21.21	 	Future Advances
	 
	 	 	 	Under this Mortgage, “Indebtedness” is defined to include certain advances made by
the Lender in the future. Such advances include any additional disbursements to the
Borrower (unless in connection with another, independent mortgage financing) and any
obligations under agreements which specifically provide that such obligations are
secured by this Mortgage. In addition, Indebtedness is defined to include any
amounts advanced to pay Impositions, to cure Defaults, or to pay the costs of
collection and receivership. Accordingly, all such advances and obligations shall be
equally secured with, and shall have the same priority as, the Indebtedness, and
shall be subject to all of the terms and provisions of this Mortgage. The Borrower
or the Mortgagor, as applicable, shall pay any taxes that may be due in connection
with any such future advance. Notwithstanding anything to the contrary contained
herein, the total unpaid balance so secured at any one time by this Mortgage shall
not exceed the maximum principal amount of Ninety Million and 00/100 Dollars
($90,000,000.00), which includes the principal of the Loan, interest, any
disbursements made under the Mortgage for the payment of impositions, taxes,
assessments, levies, insurance, or otherwise, with interest on such disbursements,
and any other costs set forth in the Loan Documents.
	 
	 	21.22	 	Interpretation

	 	(a)	 	Headings and General Application
	 
	 	 	 	The section, subsection, paragraph and subparagraph headings of this
Mortgage are provided for convenience of reference only and shall in no way
affect, modify or define, or be used in construing, the text of the
sections, subsections, paragraphs or subparagraphs. If the text requires,
words used in the singular shall be read as including the plural, and
pronouns of any gender shall include all genders.
	 
	 	(b)	 	Result of Negotiations

39

 

	 	 	 	This Mortgage results from negotiations between the Borrower and the Lender
and from their mutual efforts. Therefore, it shall be so construed, and not
as though it had been prepared solely by the Lender.
	 
	 	(c)	 	Reference to Particulars
	 
	 	 	 	The scope of a general statement made in this Mortgage or in any other Loan
Document shall not be construed as having been reduced through the inclusion
of references to particular items that would be included within the
statement’s scope. Therefore, unless the relevant provision of a Loan
Document contains specific language to the contrary, the term “include”
shall mean “include, but shall not be limited to” and the term “including”
shall mean “including, without limitation.”

	 	21.23	 	Joint and Several Liability
	 
	 	 	 	If there is more than one individual or entity executing this Mortgage as the
Mortgagor, liability of such individuals and entities under this Mortgage shall be
joint and several.
	 
	 	21.24	 	Time of Essence
	 
	 	 	 	Time is of the essence of each and every covenant, condition and provision of this
Mortgage to be performed by the Mortgagor.
	 
	 	21.25	 	Jury Waiver
	 
	 	 	 	The Mortgagor and by its acceptance hereof, the Lender, hereby waive any right to a
trial by jury in any action or proceeding to enforce or defend any rights (i) under
this Mortgage or any other Loan Document or (ii) arising from any lending
relationship existing in connection with this Mortgage or any other Loan Document,
and the Mortgagor and by its acceptance hereof, the Lender, agree that any such
action or proceeding shall be tried before a judge and not before a jury.
	 
	 	21.26	 	Renewal, Extension, Modification and Waiver
	 
	 	 	 	The Lender may enter into a modification of any Loan Document or of the
Environmental Indemnity Agreement without the consent of any person not a party to
the document being modified. The Lender may waive any covenant or condition of any
Loan Document or of the Environmental Indemnity Agreement, in whole or in part, at
the request of any person then having an interest in the Property or in any way
liable for any part of the Indebtedness. The Lender may take, release, or resort to
any security for the Notes and the Obligations and may release any party primarily
or secondarily liable on any Loan Document or on the Environmental Indemnity
Agreement, all without affecting any liability not expressly released in writing by
the Lender.
	 
	 	21.27	 	Cumulative Remedies
	 
	 	 	 	Every right and remedy provided in this Mortgage shall be cumulative of every other
right or remedy of the Lender, whether conferred by law or by grant or contract, and
may be enforced concurrently with any such right or remedy. The acceptance of the
performance of any obligation to cure any Default shall not be construed as a waiver
of any rights with respect to any other past, present or future Default. No waiver
in a particular instance of the requirement that any Obligation be performed shall
be construed as a waiver with respect to any other Obligation or instance.

40

 

	 	21.28	 	No Obligation to Marshal Assets
	 
	 	 	 	No holder of any mortgage, security interest or other encumbrance affecting all or
any portion of the Real Property, which encumbrance is inferior to the lien and
security interest of this Mortgage, shall have any right to require the Lender to
marshal assets.
	 
	 	21.29	 	Transfer of Ownership
	 
	 	 	 	The Lender may, without notice to the Mortgagor, deal with any person in whom
ownership of any part of the Real Property has vested, without in any way vitiating
or discharging the Mortgagor from liability for any of the Obligations.
	 
	 	21.30	 	Suretyship Waivers
	 
	 	 	 	The liability of Mortgagor hereunder is limited to its interest in the Property. To
the extent the Mortgagor is construed or held to be a guarantor of the Borrower’s
obligations to Lender, Mortgagor hereby waives any defense it may now or hereafter
have that relates to or is founded on: (a) any disability or other defense of the
Borrower; (b) the cessation, from any cause other than full performance, of the
obligations of the Borrower; (c) the application of the proceeds of any Obligation,
by the Borrower, for purposes other than the purposes represented to the Mortgagor,
or otherwise intended or understood by the Mortgagor; (d) any act or omission by
Lender which directly or indirectly results in or contributes to the release of the
Borrower or any collateral for any Obligation; (e) the unenforceability or
invalidity of any collateral assignment (other than this Mortgage) or guaranty with
respect to any Obligation, or the lack of perfection or continuing perfection or
lack of priority of any lien (other than the lien hereof) which secures any
Obligation; (f) any failure of Lender to marshal assets in favor of the Borrower or
the Mortgagor; (g) any modification of any Obligation, including any renewal,
extension, acceleration or increase in interest rate; (h) any election of remedies
by Lender that impairs any subrogation or other right of Mortgagor to proceed
against Borrower, including any loss of rights resulting from the foreclosure of
real property or other laws limiting, qualifying or discharging obligations or
remedies; (i) any law which provides that the obligation of a surety or guarantor
must neither be larger in amount nor in other respects more burdensome than that of
the principal or which reduces a surety’s or guarantor’s obligation in proportion to
the principal obligation; (j) any failure of Lender to file or enforce a claim in
any bankruptcy or other proceeding with respect to any person; (k) the election by
Lender, in any bankruptcy proceeding of any person, of the application or
non-application of Section 1111(b)(2) of the United States Bankruptcy Code; (l) any
extension of credit or the grant of any lien under Section 364 of the United States
Bankruptcy Code; (m) any use of cash collateral under Section 363 of the United
States Bankruptcy Code; (n) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any person; or (o)
any other rights or defenses afforded under the laws of the State of Illinois
pertaining to sureties.
	 
	 	21.31	 	Elgin Purchase Contract
	 
	 	 	 	Notwithstanding anything to the contrary contained in any Loan Document, nothing set
forth herein or in any other Loan Document is intended to prohibit Mortgagor and its
purchaser from consummating the sale of the Property in accordance with the terms of
the Elgin Purchase Contract. However, Mortgagor shall not modify or amend the Elgin
Purchase Contract in any material respect absent the Lender’s prior written consent
which

41

 

	 	 	 	shall not be unreasonably withheld. By its acceptance hereof, Lender agrees to
promptly provide any written consent reasonably requested by Mortgagor in order for
the parties to proceed with development and entitlement approvals as required to
consummate the sale in accordance with the terms of the Elgin Purchase Contract,
including, without limitation, the consent to a replatting or rezoning of the
Property, so long as such consent is consistent with the terms of the Loan Agreement
and does not subject Lender to any cost, expense or liability.

IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed as of the date first
above written.

	 	 	 	 	 	 	 
	 	 	MORTGAGOR:	 	 
	 
	 	 	 	 	 	 
	 	 	JBSS PROPERTIES, LLC, an Illinois	 	 
	 	 	limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael J. Valentine
 

      Michael J. Valentine
	 	 
	 

	 	 	 	      Its Duly Authorized Signatory	 	 

42

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]