Document:

exv10w2

 

EXHIBIT 10.2

SECURITY AGREEMENT

     This SECURITY AGREEMENT (this “Agreement”), dated as of February 7, 2008, among JOHN
B. SANFILIPPO & SON, INC. (“JBSS”) and those additional entities that hereafter become
parties hereto by executing the form of Supplement attached hereto as Annex 1
(collectively, jointly and severally, the “Grantors” and each, individually, a
“Grantor”), and WELLS FARGO FOOTHILL, LLC, in its capacity as administrative agent for the
Lender Group and the Bank Product Provider (together with its successors, the “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented, or otherwise modified from time to time, including all schedules thereto,
the “Credit Agreement”) among JBSS, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make certain
financial accommodations available to Borrower from time to time pursuant to the terms and
conditions thereof, and

     WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank
Product Provider in connection with the transactions contemplated by the Credit Agreement and this
Agreement, and

     WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other
Loan Documents and to induce the Lender Group to make financial accommodations to Borrower as
provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest
in and to the Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, the Secured Obligations, and

     NOW, THEREFORE, for and in consideration of the recitals made above and other good and
valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

     1. Defined Terms. All capitalized terms used herein (including in the preamble and
recitals hereof) without definition shall have the meanings ascribed thereto in the Credit
Agreement. Any terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement;
provided, however, that if the Code is used to define any term used herein and if
such term is defined differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in
this Agreement, as used in this Agreement (including the Exhibits hereto), the following terms
shall have the following meanings:

          (a) “Account” means an account (as that term is defined in the Code).

          (b) “Account Debtor” means an account debtor (as that term is defined in the Code).

          (c) “Agent’s Lien” has the meaning specified therefor in the Credit Agreement.

          (d) “Bank Product Obligations” has the meaning specified therefor in the Credit
Agreement.

 

 

          (e) “Bank Product Provider” has the meaning specified therefor in the Credit
Agreement.

          (f) “Books” means books and records (including each Grantor’s Records indicating,
summarizing, or evidencing such Grantor’s assets (including the Collateral) or liabilities, each
Grantor’s Records relating to such Grantor’s business operations or financial condition, and each
Grantor’s goods or General Intangibles related to such information).

          (g) “Borrower” has the meaning specified therefor in the recitals to this Agreement.

          (h) “Cash Equivalents” has the meaning specified therefor in the Credit Agreement.

          (i) “Chattel Paper” means chattel paper (as that term is defined in the Code) and
includes tangible chattel paper and electronic chattel paper.

          (j) “Code” means the Illinois Uniform Commercial Code, as in effect from time to time;
provided, however, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien
on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of Illinois, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority, or remedies.

          (k) “Collateral” has the meaning specified therefor in Section 2.

          (l) “Commercial Tort Claims” means commercial tort claims (as that term is defined in
the Code), and includes those commercial tort claims listed on Schedule 1 attached hereto
(“Commercial Tort Claims”).

          (m) “Copyrights” means copyrights and copyright registrations, and also includes (i)
the copyright registrations and recordings thereof and all applications in connection therewith
listed on Schedule 2 attached hereto and made a part hereof, (ii) all reissues,
continuations, extensions or renewals thereof, (iii) all income, royalties, damages and payments
now and hereafter due or payable under and with respect thereto, including payments under all
licenses entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (vi) all of each Grantor’s rights corresponding thereto
throughout the world.

          (n) “Copyright Security Agreement” means each Copyright Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit A attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Copyrights.

          (o) “Credit Agreement” has the meaning specified therefor in the recitals to this
Agreement.

          (p) “Deposit Account” means a deposit account (as that term is defined in the Code).

          (q) “Equipment” means equipment (as that term is defined in the Code).

          (r) “Excluded Collateral” means the personal and real property of the Borrower set
forth on Exhibit D hereto.

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          (s) “Event of Default” has the meaning specified therefor in the Credit Agreement.

          (t) “General Intangibles” means general intangibles (as that term is defined in the
Code) and, in any event, includes payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action, goodwill (including
the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights,
URLs and domain names, industrial designs, other industrial or Intellectual Property or rights
therein or applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports, catalogs, pension
plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund
claims, interests in a partnership or limited liability company which do not constitute a security
under Article 8 of the Code, and any other personal property other than Commercial Tort Claims,
money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction.

          (u) “Grantor” and “Grantors” have the meanings specified therefor in the
recitals to this Agreement.

          (v) “Guaranty” has the meaning specified therefor in the Credit Agreement.

          (w) “Insolvency Proceeding” has the meaning specified therefor in the Credit
Agreement.

          (x) “Intellectual Property” means Patents, Copyrights, Trademarks, the goodwill
associated with such Trademarks, trade secrets and customer lists, and Intellectual Property
Licenses.

          (y) “Intellectual Property Licenses” means rights under or interests in any patent,
trademark, copyright or other intellectual property, including software license agreements with any
other party, whether the applicable Grantor is a licensee or licensor under any such license
agreement, including the license agreements listed on Schedule 3 attached hereto and made a
part hereof.

          (z) “Inventory” means inventory (as that term is defined in the Code).

          (aa) “Investment Related Property” means investment property (as that term is defined
in the Code), other than Stock of any Grantor.

          (bb) “Lender Group" has the meaning specified therefor in the Credit Agreement.

          (cc) “Loan Document" has the meaning specified therefor in the Credit Agreement.

          (dd) “Negotiable Collateral” means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts, and documents.

          (ee) “Obligations” has the meaning specified therefor in the Credit Agreement.

          (ff) “Patents” means patents and patent applications, and also includes (i) the
patents and patent applications listed on Schedule 4 attached hereto and made a part
hereof, (ii) all renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future infringements or
dilutions thereof, (iv) the right to sue for past, present and future infringements and dilutions
thereof, and (v) all of each Grantor’s rights corresponding thereto throughout the world.

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          (gg) “Patent Security Agreement” means each Patent Security Agreement among Grantors,
or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Provider, in
substantially the form of Exhibit B attached hereto, pursuant to which Grantors have
granted to Agent, for the benefit of the Lender Group and the Bank Product Provider, a security
interest in all their respective Patents.

          (hh) “Permitted Liens” has the meaning specified therefor in the Credit Agreement.

          (ii) “Person” has the meaning specified therefor in the Credit Agreement.

          (jj) “Proceeds” has the meaning specified therefor in Section 2.

          (kk) “Records” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

          (ll) “Security Interest” has the meaning specified therefor in Section 2.

          (mm) “Secured Obligations” means each and all of the following: (a) all of the present
and future obligations of Grantors arising from this Agreement, the Credit Agreement and the other
Loan Documents (including any Guaranty), (b) all Bank Product Obligations, and (c) all Obligations
of Borrower, including, in the case of each of clauses (a), (b) and (c), all Lender Group Expenses.

          (nn) “Securities Account” means a securities account (as that term is defined in the
Code).

          (oo) “Supporting Obligations” means supporting obligations (as such term is defined in
the Code).

          (pp) “Trademarks” means trademarks, trade names, trademark applications, service
marks, service mark applications, and also includes (i) the trade names, trademarks, trademark
applications, service marks, and service mark applications listed on Schedule 5 attached
hereto and made a part hereof, and (ii) all renewals thereof, (iii) all income, royalties, damages
and payments now and hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (v) all of each Grantor’s rights corresponding thereto
throughout the world.

          (qq) “Trademark Security Agreement” means each Trademark Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit C attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Trademarks.

          (rr) “URL” means “uniform resource locator,” an internet web address.

     2. Grant of Security. Each Grantor hereby unconditionally grants, collaterally
assigns, and pledges to Agent, for the benefit of the Lender Group and the Bank Product Provider, a
continuing security interest (herein referred to as the “Security Interest”) in such
Grantor’s right, title, and interest in and to the following, whether now owned or hereafter
acquired or arising and wherever located (the “Collateral”):

          (a) all of such Grantor’s Accounts;

          (b) all of such Grantor’s Books;

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          (c) all of such Grantor’s Chattel Paper;

          (d) all of such Grantor’s Deposit Accounts;

          (e) all of such Grantor’s Equipment;

          (f) all of such Grantor’s General Intangibles;

          (g) all of such Grantor’s Inventory;

          (h) all of such Grantor’s Investment Related Property;

          (i) all of such Grantor’s Negotiable Collateral;

          (j) all of such Grantor’s rights in respect of Supporting Obligations;

          (k) all of such Grantor’s Commercial Tort Claims;

          (l) all of such Grantor’s money, Cash Equivalents, or other assets of each such Grantor that
now or hereafter come into the possession, custody, or control of Agent or any other member of the
Lender Group; and

          (m) all of the proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance or Commercial Tort Claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes or otherwise, and
all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds
thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured
or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty
payable by reason of loss or damage to, or otherwise with respect to any of the foregoing (the
“Proceeds”). Without limiting the generality of the foregoing, the term “Proceeds”
includes whatever is receivable or received when Investment Related Property or proceeds are sold,
exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes proceeds of any indemnity or guaranty payable to any Grantor or Agent
from time to time with respect to any of the Investment Related Property;

provided, however, in no event shall the Collateral include the Excluded
Collateral.

     3. Security for Obligations. This Agreement and the Security Interest created hereby
secure the payment and performance of the Secured Obligations, whether now existing or arising
hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of
all amounts which constitute part of the Secured Obligations and would be owed by Grantors, or any
of them, to Agent, the Lender Group, the Bank Product Provider or any of them, in each case
pursuant to the Loan Documents, but for the fact that they are unenforceable or not allowable due
to the existence of an Insolvency Proceeding involving any Grantor.

     4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each
of the Grantors shall remain liable under the contracts and agreements included in the Collateral
to perform all of the duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by Agent or any other member of the Lender Group of any of the
rights hereunder shall not release

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any Grantor from any of its duties or obligations under such contracts and agreements included
in the Collateral, and (c) none of the members of the Lender Group shall have any obligation or
liability under such contracts and agreements included in the Collateral by reason of this
Agreement; nor shall any of the members of the Lender Group be obligated to perform any of the
obligations or duties of any Grantors thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.

     5. Representations and Warranties. Each Grantor hereby represents and warrants as
follows:

          (a) The exact legal name of each of the Grantors is set forth on the signature pages of this
Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit
Agreement.

          (b) As of the Closing Date, no Grantor has any interest in, or title to, any Copyrights,
Intellectual Property Licenses, Patents, or Trademarks except as set forth on Schedules 2,
3, 4, and 5, respectively, attached hereto. This Agreement is effective to
create a valid and continuing Lien on such Copyrights, Intellectual Property Licenses, Patents and
Trademarks and, upon filing of the Copyright Security Agreement with the United States Copyright
Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the
United States Patent and Trademark Office, and the filing of appropriate financing statements in
the jurisdictions listed on Schedule 6 hereto, all action necessary or desirable to protect
and perfect the Security Interest in and to on each Grantor’s Patents, Trademarks, or Copyrights
has been taken and such perfected Security Interest is enforceable as such as against any and all
creditors of and purchasers from any Grantor. No Grantor has any interest in any Copyright that is
necessary in connection with the operation of such Grantor’s business, except for those Copyrights
identified on Schedule 2 attached hereto which have been registered with the United States
Copyright Office.

          (c) This Agreement creates a valid security interest in the Collateral of each of Grantors, to
the extent a security interest therein can be created under the Code, securing the payment of the
Secured Obligations. Except to the extent a security interest in the Collateral cannot be
perfected by the filing of a financing statement under the Code, all filings and other actions
necessary or desirable to perfect and protect such security interest have been duly taken or will
have been taken upon the filing of financing statements listing each applicable Grantor, as a
debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on
Schedule 6 attached hereto. Upon the making of such filings, Agent shall have a first
priority (subject only to Permitted Liens of the type described in clause (b) of the
definition thereof) perfected security interest in the Collateral of each Grantor to the extent
such security interest can be perfected by the filing of a financing statement. All action by any
Grantor necessary to protect and perfect such security interest on each item of Collateral has been
duly taken.

          (d) Subject to Section 6.12 of the Credit Agreement, all actions necessary or desirable to
perfect, establish the first priority (subject only to Permitted Liens of the type described in
clauses (b) and (n) of the definition thereof) of, or otherwise protect, Agent’s
Liens in the Investment Related Collateral, and the proceeds thereof, have been duly taken, (A)
upon the execution and delivery of this Agreement; and (B) with respect to any Securities Accounts,
upon the delivery of Control Agreements with respect thereto.

          (e) No consent, approval, authorization, or other order or other action by, and no notice to
or filing with, any Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the
execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by
Agent of the voting or other rights provided for in this Agreement with respect to the Investment
Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except as
may be required in connection with such disposition of Investment Related Property by laws
affecting the offering and sale of securities generally.

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     6. Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent
that from and after the date of this Agreement and until the date of termination of this Agreement
in accordance with Section 20 hereof:

          (a) Possession of Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel
Paper, and if and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of
Agent, shall execute such other documents and instruments as shall be requested by Agent or, if
applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment
Related Property, or Chattel Paper to Agent, together with such undated powers endorsed in blank as
shall be requested by Agent;

          (b) Chattel Paper.

               (i) Each Grantor shall take all steps reasonably necessary to grant Agent control of all
electronic Chattel Paper in accordance with the Code and all “transferable records” as that term is
defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal
Electronic Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction;

               (ii) If any Grantor retains possession of any Chattel Paper or instruments (which retention of
possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly
upon the request of Agent, such Chattel Paper and instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are subject to the Security
Interest of Wells Fargo Foothill, LLC, as Agent for the benefit of the Lender Group and the Bank
Product Provider”;

          (c) Control Agreements.

               (i) Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain an authenticated Control Agreement from each bank maintaining a Deposit Account for such
Grantor;

               (ii) Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain authenticated Control Agreements from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial assets or commodities to
or for any Grantor;

          (d) Letter-of-Credit Rights. Each Grantor that is or becomes the beneficiary of a
letter of credit shall promptly (and in any event within 2 Business Days after becoming a
beneficiary) notify Agent thereof and, upon the request by Agent, enter into a tri-party agreement
with Agent and the issuer or confirmation bank with respect to letter-of-credit rights assigning
such letter-of-credit rights to Agent and directing all payments thereunder to Agent’s Account, all
in form and substance satisfactory to Agent;

          (e) Commercial Tort Claims. Each Grantor shall promptly (and in any event within 2
Business Days of receipt thereof) notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof and, upon request of Agent, promptly amend Schedule
1 to this Agreement to describe such after-acquired Commercial Tort Claim in a manner that
reasonably identifies such Commercial Tort Claim, and hereby authorizes the filing of additional
financing statements or amendments to existing financing statements describing such Commercial Tort
Claims, and agrees to do such other acts or things deemed necessary or desirable by Agent to give
Agent a first priority, perfected security interest in any such Commercial Tort Claim;

          (f) [Reserved.];

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          (g) Intellectual Property.

               (i) Upon request of Agent, in order to facilitate filings with the United States Patent and
Trademark Office and the United States Copyright Office, each Grantor shall execute and deliver to
Agent one or more Copyright Security Agreements, Trademark Security Agreements, or Patent Security
Agreements to further evidence Agent’s Lien on such Grantor’s Patents, Trademarks, or Copyrights,
and the General Intangibles of such Grantor relating thereto or represented thereby;

               (ii) Each Grantor shall have the duty, to the extent necessary or economically desirable in
the operation of such Grantor’s business, (A) to promptly sue for infringement, misappropriation,
or dilution and to recover any and all damages for such infringement, misappropriation, or
dilution, (B) to prosecute diligently any trademark application or service mark application that is
part of the Trademarks pending as of the date hereof or hereafter until the termination of this
Agreement, (C) to prosecute diligently any patent application that is part of the Patents pending
as of the date hereof or hereafter until the termination of this Agreement, and (D) to take all
reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents,
Copyrights, Intellectual Property Licenses, and its rights therein, including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings. Each Grantor shall promptly file an application with
the United States Copyright Office for any Copyright that has not been registered with the United
States Copyright Office if such Copyright is necessary in connection with the operation of such
Grantor’s business. Any expenses incurred in connection with the foregoing shall be borne by the
appropriate Grantor. Each Grantor further agrees not to abandon any Trademark, Patent, Copyright,
or Intellectual Property License that is necessary or economically desirable in the operation of
such Grantor’s business;

               (iii) Grantors acknowledge and agree that the Lender Group shall have no duties with respect
to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the
generality of this Section 6(g), Grantors acknowledge and agree that no member of the
Lender Group shall be under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but
Agent or its designee may do so at its option from and after the occurrence and during the
continuance of an Event of Default, and all Lender Group Expenses incurred in connection therewith
shall be for the sole account of Borrower and shall be chargeable to the Loan Account;

               (iv) In no event shall any Grantor, either itself or through any agent, employee, licensee, or
designee, file an application for the registration of any Patent, Trademark, or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency without giving Agent prior written notice thereof. Promptly upon any such filing, each
Grantor shall comply with Section 6(g)(i) hereof;

          (h) Investment Related Property.

               (i) All sums of money and property paid or distributed in respect of the Investment Related
Property which are received by any Grantor shall be held by the Grantors in trust for the benefit
of Agent segregated from such Grantor’s other property, and such Grantor shall deliver it forthwith
to Agent’s in the exact form received;

               (ii) Each Grantor agrees that it will cooperate with Agent in obtaining all necessary
approvals and making all necessary filings under federal, state, local, or foreign law in
connection with the Security Interest on the Investment Related Property or any sale or transfer
thereof;

          (i) Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except expressly

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permitted by the Credit Agreement, or (ii) create or permit to exist any Lien upon or with
respect to any of the Collateral of any of Grantors, except for Permitted Liens. The inclusion of
Proceeds in the Collateral shall not be deemed to constitute Agent’s consent to any sale or other
disposition of any of the Collateral except as expressly permitted in this Agreement or the other
Loan Documents; and

          (j) Other Actions as to Any and All Collateral. Each Grantor shall promptly (and in
any event within 2 Business Days of acquiring or obtaining such Collateral) notify Agent in writing
upon (i) acquiring or otherwise obtaining any Collateral after the date hereof consisting of
Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment Related Property,
Chattel Paper (electronic, tangible or otherwise), documents (as defined in Article 9 of the
Code), promissory notes (as defined in the Code, or instruments (as defined in the Code) or (ii)
any amount payable under or in connection with any of the Collateral being or becoming evidenced
after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of Agent, promptly execute such other documents, or if applicable,
deliver such Chattel Paper, other documents or certificates evidencing any Investment Related
Property and do such other acts or things deemed necessary or desirable by Agent to protect Agent’s
Security Interest therein.

     7. Relation to Other Security Documents. The provisions of this Agreement shall be
read and construed with the other Loan Documents referred to below in the manner so indicated.

          (a) Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall
control.

          (b) Patent, Trademark, Copyright Security Agreements. The provisions of the Copyright
Security Agreements, Trademark Security Agreements, and Patent Security Agreements are supplemental
to the provisions of this Agreement, and nothing contained in the Copyright Security Agreements,
Trademark Security Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder.

     8. Further Assurances.

          (a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or that Agent may reasonably request, in order to perfect and protect the Security
Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Collateral.

          (b) Each Grantor authorizes the filing by Agent of financing or continuation statements, or
amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or
notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve
the Security Interest granted or purported to be granted hereby.

          (c) Each Grantor authorizes Agent at any time and from time to time to file, transmit, or
communicate, as applicable, financing statements and amendments (i) describing the Collateral as
being of equal or lesser scope or with greater detail, or (ii) that contain any information
required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance. Each
Grantor also hereby ratifies any and all financing statements or amendments previously filed by
Agent in any jurisdiction.

          (d) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement filed in connection with
this Agreement without the prior written consent of Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the Code.

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     9. Agent’s Right to Perform Contracts, Exercise Rights, Etc. Upon the occurrence and
during the continuance of an Event of Default, upon prior written notice to the Borrower, Agent (or
its designee) (a) may proceed to perform any and all of the obligations of any Grantor contained in
any contract, lease, or other agreement, in any case constituting Collateral, and exercise any and
all rights of any Grantor therein contained as fully as such Grantor itself could, and (b) shall
have the right to use any Grantor’s rights under Intellectual Property Licenses in connection with
the enforcement of the Agent’s rights hereunder, including the right to prepare for sale and sell
any and all Inventory and Equipment now or hereafter owned by any Grantor and now or hereafter
covered by such licenses.

     10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent
its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, only at such time as an Event of Default has occurred and is continuing
under the Credit Agreement, to take any action and to execute any instrument which Agent may
reasonably deem necessary or advisable to accomplish the purposes of this Agreement including:

          (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with the Accounts or any other
Collateral of such Grantor;

          (b) to receive and open all mail addressed to such Grantor and to notify postal authorities to
change the address for the delivery of mail to such Grantor to that of Agent;

          (c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable
Collateral or Chattel Paper;

          (d) to file any claims or take any action or institute any proceedings which Agent may deem
necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to
enforce the rights of Agent with respect to any of the Collateral;

          (e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;

          (f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual property rights, in
advertising for sale and selling Inventory and other Collateral and to collect any amounts due
under Accounts, contracts or Negotiable Collateral of such Grantor; and

          (g) Agent on behalf of the Lender Group shall have the right, but shall not be obligated, to
bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual Property
Licenses and, if Agent shall commence any such suit, the appropriate Grantor shall, at the request
of Agent, do any and all lawful acts and execute any and all proper documents reasonably required
by Agent in aid of such enforcement.

     To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.

     11. Agent May Perform. Upon the occurrence, and during the continuation, of an Event
of Default, upon prior written notice to the Borrower, if any of Grantors fails to perform any
agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and
the reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and
severally, by Grantors.

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     12. Agent’s Duties. The powers conferred on Agent hereunder are solely to protect
Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank Product
Provider, and shall not impose any duty upon Agent to exercise any such powers. Except for the
safe custody of any Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights pertaining to any
Collateral. Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Agent accords its own property.

     13. Collection of Accounts, General Intangibles and Negotiable Collateral. At any
time upon the occurrence and during the continuation of an Event of Default, upon prior written
notice to the Borrower, Agent or Agent’s designee may (a) notify Account Debtors of any Grantor
that the Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned
to Agent, for the benefit of the Lender Group and the Bank Product Provider, or that Agent has a
security interest therein, and (b) collect the Accounts, General Intangibles and Negotiable
Collateral directly, and any collection costs and expenses shall constitute part of such Grantor’s
Secured Obligations under the Loan Documents.

     14. Remedies. Upon the occurrence and during the continuance of an Event of Default,
upon prior written notice to the Borrower:

          (a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other applicable law. Without
limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event,
Agent without demand of performance or other demand, advertisement or notice of any kind (except a
notice specified below of time and place of public or private sale) to or upon any of Grantors or
any other Person (all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to, and each Grantor
hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or
part of the Collateral as directed by Agent and make it available to Agent at one or more locations
where such Grantor regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at
any of Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as Agent may
deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 days notice to any of Grantors of the time and place of any public
sale or the time after which any private sale is to be made shall constitute reasonable
notification and specifically such notice shall constitute a reasonable “authenticated notification
of disposition” within the meaning of Section 9-611 of the Code. Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it was so adjourned.

          (b) Agent is hereby granted a license or other right to use, without liability for royalties
or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, trade
secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names,
industrial designs, other industrial or intellectual property or any property of a similar nature,
whether owned by any of Grantors or with respect to which any of Grantors have rights under
license, sublicense, or other, as it pertains to the Collateral, in preparing for sale, advertising
for sale and selling any Collateral, and each Grantor’s rights under all licenses and all franchise
agreements shall inure to the benefit of Agent.

          (c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of
any sale of, collection from, or other realization upon all or any part of the Collateral shall be
applied against the Secured Obligations in the order set forth in the Credit Agreement. In the
event the

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proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full,
each Grantor shall remain jointly and severally liable for any such deficiency.

          (d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial
transaction, and agrees that if an Event of Default shall occur and be continuing Agent shall have
the right to an immediate writ of possession without notice of a hearing. Agent shall have the
right to the appointment of a receiver for the properties and assets of each of Grantors, and each
Grantor hereby consents to such rights and such appointment and hereby waives any objection such
Grantors may have thereto or the right to have a bond or other security posted by Agent.

     15. Remedies Cumulative. Each right, power, and remedy of Agent as provided for in
this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or
by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude
the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.

     16. Marshaling. Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

     17. Indemnity and Expenses.

          (a) Each Grantor agrees to indemnify Agent and the other members of the Lender Group from and
against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of
or resulting from this Agreement (including enforcement of this Agreement) or any other Loan
Document to which such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as determined by a
final non-appealable order of a court of competent jurisdiction. This provision shall survive the
termination of this Agreement and the Credit Agreement and the repayment of the Secured
Obligations.

          (b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to
the Loan Account) all the Lender Group Expenses which Agent or the Lenders may incur in connection
with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of,
or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the
Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of Agent hereunder or (iv) the failure by any of Grantors to
perform or observe any of the provisions hereof.

     18. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS 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
AGREEMENTS BETWEEN THE

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PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by any
of Grantors herefrom, shall in any event be effective unless the same shall be in writing and
signed by Agent, and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment of any provision of this Agreement
shall be effective unless the same shall be in writing and signed by Agent and each of Grantors to
which such amendment applies.

     19. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agent at its address specified in
the Credit Agreement, and to any of the Grantors at their respective addresses specified in the
Credit Agreement or any Guaranty, as applicable, or, as to any party, at such other address as
shall be designated by such party in a written notice to the other party.

     20. Continuing Security Interest: Assignments under Credit Agreement. This Agreement
shall create a continuing security interest in the Collateral and shall (a) remain in full force
and effect until the Obligations have been paid in full in cash in accordance with the provisions
of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding
upon each of Grantors, and their respective successors and assigns, and (c) inure to the benefit
of, and be enforceable by, Agent, and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Lender may, in accordance with the provisions of
the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such the Lender herein or otherwise. Upon
payment in full in cash of the Obligations in accordance with the provisions of the Credit
Agreement and the expiration or termination of the Commitments, the Security Interest granted
hereby shall terminate and all rights to the Collateral, if any, that have been transferred to
Agent or any Lender, shall revert to Grantors or any other Person entitled thereto. At such time,
Agent will authorize the filing of appropriate termination statements to terminate such Security
Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of
the Credit Agreement, any other Loan Document, or any other instrument or document executed and
delivered by any Grantor to Agent or any additional Advances or other loans made by any the Lender
to Borrower, or the taking of further security, or the retaking or re-delivery of the Collateral to
Grantors, or any of them, by Agent, or any other act of the Lender Group or the Bank Product
Provider, or any of them, shall release any of Grantors from any obligation, except a release or
discharge executed in writing by Agent in accordance with the provisions of the Credit Agreement.
Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder, unless such waiver is in writing and signed by Agent and then only to
the extent therein set forth. A waiver by Agent of any right or remedy on any occasion shall not
be construed as a bar to the exercise of any such right or remedy which Agent would otherwise have
had on any other occasion.

     21. Governing Law.

          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.

          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF

13

 

ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
AGENT AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE
TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 21(b).

          (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH GRANTOR HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH
GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     22. New Subsidiaries. Pursuant to Section 5.16 of the Credit Agreement,
certain new direct or indirect Subsidiaries (whether by acquisition or creation) of Grantor are
required to enter into this Agreement by executing and delivering in favor of Agent a supplement to
this Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of
Annex 1 by each such new Subsidiary, such Subsidiary shall become a Grantor hereunder with
the same force and effect as if originally named as a Grantor herein. The execution and delivery
of any instrument adding an additional Grantor as a party to this Agreement shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

     23. Agent. Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group
and the Bank Product Provider.

     24. Miscellaneous.

          (a) This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method
of transmission shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each
other Loan Document mutatis mutandis.

          (b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such provision in any
other jurisdiction.

          (c) Headings used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.

14

 

          (d) The pronouns used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform thereto.

          (e) Unless the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the singular include the
plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that are not required by
the provisions of the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person’s successors and assigns. Any requirement
of a writing contained herein or in any other Loan Document shall be satisfied by the transmission
of a Record and any Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

[Signature Page Follows]

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     IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through
their duly authorized officers, as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	GRANTOR:	 	 	 	JOHN B. SANFILIPPO & SON, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Michael J. Valentine	 	 
	 

	 	 	 	Name:
	 	Michael J. Valentine
	 	 
	 

	 	 	 	Title:
	 	Chief
Financial Officer and Group President
	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	AGENT:	 	 	 	WELLS FARGO FOOTHILL, LLC, as Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Samantha Alexander	 	 
	 

	 	 	 	Name:
	 	Samantha Alexander
	 	 
	 

	 	 	 	Title:
	 	Vice
President
	 	 
	 

	 	 	 	 	 	 

	 	 

16exv10w3

 

			
	Loan No. 700218 and 700218A
	 	EXHIBIT 10.3

LOAN AGREEMENT

     THIS LOAN AGREEMENT (the “Agreement”) is made as of this 7th day of February, 2008, by and
among JOHN B. SANFILIPPO & SON, INC., a Delaware corporation (the “Borrower”), JBSS PROPERTIES,
LLC, an Illinois limited liability company (“JBSS”), and TRANSAMERICA LIFE INSURANCE COMPANY, an
Iowa corporation, its successors and assigns (the “Lender”).

RECITALS

     A. Under the terms of that certain Second Revised Agricultural Mortgage Loan
Application/Commitment dated January 31, 2008 (the “Commitment"), AEGON USA Realty Advisors, Inc.
(“AEGON”), as agent for Lender, agreed to fund a loan to the Borrower in the aggregate original
principal amount of Forty-Five Million and 00/100 Dollars ($45,000,000.00) to be apportioned in two
(2) separate tranches (the “Loan”).

     B. Pursuant to the Commitment, and to evidence the Loan, the Borrower has executed and
delivered to Lender (i) a Promissory Note in the original principal amount of Thirty-Six Million
and 00/100 Dollars ($36,000,000.00) (the “Tranche A Note”), and (ii) a Promissory Note in the
original principal amount of Nine Million and 00/100 Dollars ($9,000,000.00) (the “Tranche B
Note”), each dated as of even date herewith (the Tranche A Note and Tranche B Note are collectively
hereinafter referred to as the “Notes”).

     C. In accordance with the terms of the Commitment, the Notes are secured by the following
instruments dated as of even date herewith (each, a Mortgage” and collectively, the “Mortgages”):

	 	(1)	 	Deed of Trust, Security Agreement, Assignment of Leases and
Rents and Fixture Filing executed by Borrower for the benefit of Lender and
encumbering certain property situated in Merced County, California;
	 
	 	(2)	 	Deed of Trust, Security Agreement, Assignment of Leases and
Rents and Fixture Filing executed by Borrower for the benefit of Lender and
encumbering certain property situated in Northampton County, North Carolina;
	 
	 	(3)	 	Mortgage, Security Agreement, Assignment of Leases and Rents,
and Fixture Filing executed by Borrower for the benefit of Lender and
encumbering certain property situated in Kane County, Illinois; and

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	 	(4)	 	Mortgage, Security Agreement, Assignment of Leases and Rents,
and Fixture Filing executed by JBSS for the benefit of Lender and encumbering
certain property situated in Kane County, Illinois (the “JBSS Mortgage”).

The Mortgages collectively encumber or convey as security for the Loan certain real property
identified in Exhibit A attached hereto (each such parcel being referred to as a “Parcel,”
and all such Parcels being referred to collectively as the “Real Property”), together with certain
fixtures and other personal property used in connection therewith or located thereon, as more
particularly described in the Mortgages.

     D. Borrower owns all of the issued and outstanding membership interests in JBSS.

     E. This Agreement is executed pursuant to the Commitment, is secured by each of the Security
Instruments defined herein and sets forth various terms, covenants, conditions and understandings
of the Borrower, JBSS and the Lender with regard to the Loan.

     NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, JBSS and
the Lender hereby agree as follows.

AGREEMENT

1. DEFINITIONS

     “Closing Date” means the date the Lender initiates the transfer of funds in
disbursement of the Loan.

     “Collateral” means any real, personal or intangible property that is encumbered to
secure the Loan at the time any particular reference to that term is made.

     “Default or “Event of Default” shall have the meaning given such term in Section
7.2 hereof.

     “Excess Elgin Property” means the real property, improvements and personal property
encumbered by the JBSS Mortgage.

     “Indebtedness” means all sums that are owed or become due from Borrower or JBSS to
Lender pursuant to the terms of the Notes or any of the other Loan Documents to which Borrower or
JBSS is a party.

     “Liabilities” means any debt or obligation of the Borrower as defined and calculated
under generally accepted accounting principles.

2

 

     “Loan Documents” means this Agreement, the Notes, the Mortgages, assignments,
indemnities and other documents executed by the Borrower or JBSS in connection with or to evidence
or secure the Indebtedness, as amended or modified in writing from time to time.

     “Maturity Date” means March 1, 2023.

     “Net Worth Requirement” means a minimum net worth of One Hundred Ten Million and
00/100 Dollars ($110,000,000.00).

     “Notice” means a notice given in accordance with the provisions of Section 7.3
of this Agreement.

     “Security Instruments” means the Mortgages and other documents encumbering any
Collateral as security for the Indebtedness.

     Any capitalized term in this Agreement not otherwise defined in this Section or in the
recitals or any other Section of this Agreement shall have the meaning given to it in the
Mortgages.

2. AGREEMENTS REGARDING THE LOAN

     2.1 Agreements to Borrow and Repay. The Borrower agrees to borrow the proceeds of the
Loan in accordance with the terms of this Agreement and the other Loan Documents. The Borrower
agrees to pay the monthly installments of principal and interest on the Loan by making payments
under the Notes as more specifically provided therein.

     2.2 Cross Default. Any Default or Event of Default under and as such terms are used
in any of the Loan Documents entered into by the Borrower or JBSS shall constitute a Default under
this Agreement. Any Default under this Agreement shall constitute a Default or Event of Default,
as applicable, under each of the Notes and the respective Loan Documents entered into by the
Borrower or JBSS.

3

 

     2.3 Cross Collateralization. The Borrower and JBSS agree that the Security
Instruments executed and delivered by it in connection with the making of the Loan secure the
Indebtedness under both of the Notes.

     2.4 Deposit Account. Prior to the Closing Date, and as a condition to the
disbursement of the Loan, the Borrower shall establish a demand deposit account with a bank
reasonably acceptable to Lender (the “Deposit Account”), as required and for the purposes set forth
in the Mortgages. Within five (5) business days following the Closing Date, Borrower shall cause
the security interest granted by Borrower in the Deposit Account pursuant to the Mortgages to be
perfected by affording Lender control of the Deposit Account within the meaning of Section 9104 of
the Uniform Commercial Code in effect in the jurisdiction under which perfection is governed.

3. CONSEQUENCES OF LOAN STRUCTURE

     3.1 Cross Collateralization and Default. The Borrower and JBSS understand and agree
that:

          (a) unless and to the extent otherwise released by the Lender in writing, the Collateral
pledged by the Borrower and JBSS will secure the entire amount of the Loan under the Notes and,
except as otherwise stated therein, the other Loan Documents;

          (b) a Default or Event of Default by the Borrower under either of the Notes or by the Borrower
or JBSS under any of the Security Instruments or other Loan Documents evidencing or securing any
portion of the Loan will also constitute a Default or Event of Default, as applicable, under all of
the Loan Documents and each of the Notes;

          (c) a result of the cross-collateralization and cross-default of each of the Notes evidencing
the Loan is that all of the Collateral, regardless of the form by which it is encumbered, shall be
security for the repayment of the Notes, and shall be available to satisfy the obligations incurred
in connection with the entire Loan and each Note; and

          (d) a Default or Event of Default under either of the Notes or Security Instruments evidencing
or securing the Loan could result in the judicial or nonjudicial sale of some or all of the
Collateral for the Loan, and the application of the proceeds from such sale to complete or only
partial satisfaction of the obligations of the Borrower under either of the Notes or Security
Instruments.

     3.2 Equivalent Value. Because of the business relationship and common ownership among
the Borrower and JBSS there is a community of interests among the parties such that the benefits of
the Loan and each of the Notes evidencing the Loan also benefits JBSS. The benefit of the Loan to
JBSS constitutes the reasonably equivalent value of the aggregate transfers made and the aggregate
obligations incurred by either the Borrower or JBSS in connection with the Loan.

4

 

     3.3 Use of Loan Proceeds. The proceeds of the Loan will be used solely for business
or commercial purposes.

     3.4 Loan and Collateral Structure. After diligent inquiry, the Borrower and JBSS have
determined:

          (a) the interest rate and repayment terms of the Loan are more favorable than those any could
have obtained without the cross-collateral and cross-default features of the Loan; and

          (b) the Loan and Collateral structure is beneficial to the Borrower’s interest and the
interests of JBSS.

     3.5 Solvency. Neither the Borrower nor JBSS is insolvent as of the date of this
Agreement. Neither the Borrower nor JBSS will become insolvent as a result of the obligations
incurred by Borrower and JBSS under this Agreement, the Notes and the other Loan Documents.
Neither the Borrower nor JBSS is, nor are the Borrower or JBSS about to be, engaged in a business
or transaction for which the Borrower or JBSS will have an unreasonably small amount of capital
after the closing of the Loan. Neither the Borrower nor JBSS have incurred, or contemplates
incurring, debts beyond its ability to pay as such debts become due.

     3.6 Intent. The liens and security interests granted and obligations incurred by the
Borrower and JBSS pursuant to the Loan Documents in connection with the Loan are not made with the
intent to hinder, delay or defraud any person to which the Borrower nor JBSS was, is, or
hereinafter will become, indebted.

4. REPRESENTATIONS AND COVENANTS

     4.1 Borrower’s Representations and Warranties. The Borrower represents and warrants
as follows:

          (a) The Loan Documents, when delivered hereunder, are the legal, valid, and binding
obligations of Borrower enforceable against Borrower in accordance with their respective terms.

          (b) All financial statements, and the related statements of income Borrower has furnished to
Lender, are complete and correct and fairly present in all material respects the Borrower’s
financial condition as of the dates and the periods covered by such statements. To the best of its
knowledge, Borrower has no fixed Liabilities, or contingent material Liabilities other than those
reflected in the financial statements or in the footnotes thereto.

          (c) No factual information, exhibit, or report that Borrower has furnished to Lender in
connection with the negotiation of the Loan Documents or the issuance of the Commitment contains
any material misstatement of fact or omits any material fact or any fact necessary to make the
statement contained therein not materially misleading.

5

 

          (d) Borrower has filed all required tax returns (federal, state, and local) and has paid all
taxes, assessments, governmental charges and levies due thereon, including interest and penalties,
except (i) to the extent Borrower is currently contesting in good faith any such tax, assessment,
charge or levy; or (ii) to the extent the failure to file such returns or pay the related taxes,
assessments, governmental charges and levies due thereon does not create any lien on the Property
and does not and will not materially adversely affect the financial condition, operations or
business of the Borrower or the ability of the Borrower to perform its obligations under this
Agreement or the Loan Documents.

          (e) Borrower is not in default in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument to which Borrower is
a party which in any one case or in the aggregate, materially adversely affect the financial
condition, operations, properties or business of the Borrower or the ability of the Borrower to
perform its obligations under this Agreement or the Loan Documents.

          (f) To the Borrower’s knowledge after due inquiry, there is no pending or threatened action or
proceeding against or affecting Borrower before any court, governmental authority, or arbitrator
which may, in any one case or in the aggregate, materially adversely affect the financial
condition, operations, properties, or business of the Borrower or the ability of Borrower to
perform its obligations under this Agreement or the Loan Documents.

          (g) None of the Collateral is subject to any leases, subleases, rental contracts or rental
agreements except as reflected in the rent roll certified by Borrower to Lender as of the date of
this Agreement.

          (h) The Property and the uses to be made thereof are in material compliance with all
applicable building codes, zoning ordinances and other laws, ordinances and regulations, and
Borrower is unaware of any pending or threatened action to change, alter or amend the existing
zoning or land use entitlements in effect with respect to the Property.

     4.2 JBSS’ Representations and Warranties. JBSS represents and warrants as follows:

          (a) The Loan Documents to which JBSS is a party, when delivered hereunder, are the legal,
valid, and binding obligations of JBSS enforceable against JBSS in accordance with their respective
terms.

          (b) JBSS is not in default in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument to which JBSS is a
party which in any one case or in the aggregate, materially adversely affect the operation of the
Excess Elgin Property or the ability of JBSS to perform its obligations under this Agreement or the
Loan Documents.

          (c) To JBSS’ knowledge after due inquiry, there is no pending or threatened action or
proceeding against or affecting JBSS before any court, governmental authority, or arbitrator which
may, in any one case or in the aggregate, materially adversely affect the

6

 

operation of the Excess Elgin Property or the ability of JBSS to perform its obligations under
this Agreement or the Loan Documents.

          (d) None of the Excess Elgin Property is subject to any leases, subleases, rental contracts or
rental agreements.

          (e) The Excess Elgin Property and the uses to be made thereof are in material compliance with
all applicable building codes, zoning ordinances and other laws, ordinances and regulations, and
JBSS is unaware of any pending or threatened action to change, alter or amend the existing zoning
or land use entitlements in effect with respect to the Excess Elgin Property, other than as
anticipated in that certain Purchase and Sale Agreement dated January 11, 2008 executed between
JBSS and Shorewood Property Investments, LLC (the “Elgin Purchase Contract”).

     4.3 Borrower’s Additional Agreements.
The Borrower agrees that it will not make or
incur any liability to make any distributions and/or dividends if a Default or Event of Default
exists under the Loan Documents or if such distributions would give rise to an Event of Default.

     4.4 Net Worth Covenant. At all times during the term of the Loan, Borrower shall
maintain a net worth at least equal to the Net Worth Requirement.

5. PARTIAL RELEASES

     Borrower may request up to four (4) partial releases of portions of the Property (each, a
“Partial Release”), during the term of the Loan in connection with the non-collusive, arms-length
cash sale of such parcel to a bona fide third party (each, herein, a “Release Parcel”) subject to
the prior satisfaction of the following terms and conditions:

     5.1 Request. Borrower shall submit a formal written request for a Partial Release
(the “Request”) not less than thirty (30) days prior to the date upon which Borrower desires to
close on the Partial Release. The Request shall be sufficiently detailed so as to allow Lender to
evaluate the merits of the Partial Release and allow Lender adequate time to process the Partial
Release.

     5.2 No Default. No Default or Event of Default shall exist under any of the Loan
Documents, either at the time of the request for the Partial Release or the closing of the Partial
Release, and the Partial Release will not cause an Event of Default under any of the Loan
Documents.

     5.3 Remaining Property. Borrower shall provide, at Borrower’s sole expense, title
insurance endorsements which insure the continued first priority lien of the applicable Mortgages
on the property remaining after the Partial Release (the “Remaining Property”), and which insure
that the Remaining Property is comprised of separate legal lot or lots. Lender shall have the
right to require updated appraisals of the Remaining Property to support the necessary valuation,
at Borrower’s cost.

7

 

     5.4 Costs and Expenses. Borrower shall pay all of Lender’s reasonable outside counsel
fees and other costs, if any, in processing and documenting the Partial Release (including any
necessary amendments to the Loan Documents and title endorsement premiums).

     5.5 Consent of Other Lenders. The written consent to the Partial Release from the
holder of any other liens or security interests against the Collateral subject to such Partial
Release shall be obtained prior to the Partial Release.

     5.6 Independence of Remaining Property. Borrower, at its sole cost and expense, shall
provide updated surveys showing any new easements created for the benefit of the Remaining Property
(with the parcel to be released and the Remaining Property consisting of separate and independent
legal and tax parcels approved by the responsible taxing and zoning authorities), and such other
information or reports as Lender may reasonably require to document that there has been no other
impairment to the use, operation or value of the Remaining Property.

     5.7 Functionality. The Remaining Property must have legal, insurable access for
ingress, egress and functionality and meet all applicable legal requirements following the Partial
Release. The release of the Partial Release property shall not otherwise impair the use, operation
or value of the Remaining Property

     5.8 Servicing Fee. Borrower shall pay Lender a servicing fee of Five Thousand and
00/100 Dollars ($5,000.00) to process each Partial Release. This fee is fully earned regardless
of whether or not the Partial Release closes. The fee must accompany the Request.

     5.9 Proceeds of Release. Concurrently with the Partial Release, Borrower shall pay to
Lender from the proceeds of the applicable Partial Release (the “Partial Release Proceeds”), for
application to the outstanding principal balance of the Loan, in cash, an amount equal to the
greater of: (a) fifty percent (50%) of the net proceeds from the sale of the property subject to
the Partial Release, and (b) sixty-five percent (65%) of the original appraised value of the
property subject to the Partial Release. Any applicable prepayment premium under the terms of the
Tranche A Note shall also be paid to Lender.

     5.10 Application of Prepayment Proceeds. The Partial Release Proceeds shall be
applied first to the applicable prepayment premium calculated in accordance with the Note, if any,
with respect to the principal reduction of the Loan and then to the principal balance of the Loan.
No Partial Release or prepayment shall affect the regularly scheduled installments of principal and
interest then due under the Notes. All prepayments made in connection with the Loan shall be
applied first (i) to the Tranche B Note, and (ii) then to the Tranche A Note and the applicable
prepayment premium.

     5.11 Partial Release of Excess Elgin Property. Any release of the Excess Elgin
Property prior to January 1, 2009 or as a result of the conveyance under the Elgin Purchase
Contract shall not be considered one of the Partial Releases subject to this Section 5 and shall be
governed by the provisions of Section 6 below. If the conditions to the release of the Excess

8

 

Elgin Property set forth in Section 6 have not been satisfied by January 1, 2009 or if the Elgin
Purchase Contract is terminated prior to January 1, 2009, then Lender shall be entitled to request
JBSS to obtain an independent full narrative appraisal report estimating the market value of the
Excess Elgin Property. The appraisal shall be prepared by an independent appraiser certified in
the state of Illinois and a member of a national appraisal organization that has adopted the
Uniform Standards of Professional Appraisal Practice established by The Appraisal Standards Board
of the Appraisal Foundation. Such appraiser will be required to use the procedure for the
appraisal of the Excess Elgin Property as that used for the balance of the Real Property at the
time of the origination of the Loan, including the required assumptions and limiting conditions.

6. PARTIAL RELEASE OF EXCESS ELGIN PROPERTY/ESCROW ACCOUNT

     6.1 Partial Release of Excess Elgin Property. JBSS may request the release of the
Excess Elgin Property (the “JBSS Release”) in connection with the sale of the Excess Elgin Property
under the Elgin Purchase Contract prior to January 1, 2009, and Lender will provide such release,
subject to the prior satisfaction of the following terms and conditions:

               (a) JBSS shall submit a formal written request for the JBSS Release (the “JBSS Request”) not
less than five (5) days prior to the date upon which JBSS desires to close on the JBSS Release.
The JBSS Request shall be sufficiently detailed so as to allow Lender adequate time to process the
JBSS Release.

               (b) JBSS or Borrower shall pay all of Lender’s reasonable outside counsel fees and other
costs, if any, in processing and documenting the JBSS Release (including any necessary amendments
to the Loan Documents and title endorsement premiums).

               (c) Concurrently with the JBSS Release, JBSS shall pay to Lender from the proceeds of the
JBSS Release or otherwise (the “JBSS Release Price”), for deposit in cash, in the Cash Collateral
Account defined below, an amount equal to the sum of Nine Million Dollars ($9,000,000). Lender
shall be entitled to instruct the escrow holder in the sale of the Excess Elgin Property to remit
the JBSS Release Price directly to Lender from escrow.

Any request for the release of the Excess Elgin Property submitted to Lender other than in
connection with the sale of the Excess Elgin Property under the Elgin Purchase Contract shall be
subject to the satisfaction of the conditions set forth in Section 5 above.

     6.2 Funding of Escrow Account. In the event that the Excess Elgin Property is sold by
JBSS pursuant to the Elgin Purchase Contract prior to January 1, 2009, the Borrower and JBSS shall
cause the JBSS Release Price (the “Proceeds”) to be deposited with Lender concurrently with the
JBSS Release to be held in an account (the “Cash Collateral Account”) maintained by Lender or an
affiliate of Lender. The Cash Collateral Account may be maintained as an accounting entry and may
or may not be commingled with Lender’s or such affiliate’s general funds. So long as the Cash
Collateral Account is retained by Lender or an affiliate of Lender, and until the earlier of such
time as the Proceeds are (a) disbursed to JBSS, or (b)

9

 

applied against the Loan pursuant to this Agreement, the Proceeds shall bear interest at a rate
equal to the yield of a 3-month U.S. Government Securities/Treasury Constant Maturities for the
week before the commencement of the interest accrual period, as reported by the Federal Reserve
statistical release H.15 (519), and such interest shall accrue for the benefit of JBSS (the
“Account Interest”).

     6.3 Application or Disbursement of Escrow Funds. As of January 1, 2009, the Lender
shall have the right, in its sole and absolute discretion, to apply the Proceeds or any portion
thereof to the outstanding principal balance of the Loan. Such funds shall be applied to the
Tranche B Note until it is fully paid. In such event, and so long as no Default exists, the
Account Interest and any remaining portion of the Proceeds shall be paid to JBSS. If Lender does
not elect to apply the Proceeds to the Loan, it may elect to retain the Proceeds and the Account
Interest in the Cash Collateral Account for such additional period of time as deemed prudent in its
sole and absolute discretion. Following the occurrence of a Default, Lender shall be entitled to
apply the Proceeds and the Account Interest to the Loan in such order as Lender may determine in
its discretion.

     6.4 Security Interest. As additional security for the Loan and Borrower’s and JBSS’
performance of their obligations under this Agreement, Borrower and JBSS hereby grant to Lender
exclusive control of and a first priority security interest in the Cash Collateral Account, the
Proceeds and Account Interest and all interest thereon and proceeds thereof, whether characterized
as accounts, deposit accounts, chattel paper, securities accounts, instruments, investment
property, general intangibles, proceeds or money as those terms are used in Article 9 of the
Uniform Commercial Code in effect in the State of Illinois, as amended from time to time, and all
of Borrower’s and JBSS’ tangible and intangible rights and interests related thereto, and the
proceeds thereof.

7. MISCELLANEOUS

     7.1 Applicable Law. This Agreement shall be interpreted, construed, applied, and
enforced according to, and will be governed by, the laws of the State of Illinois, without regard
to any choice of law principles which, but for this provision, would require the application of the
law of another jurisdiction and regardless of where executed or delivered, where any given Parcel
is located, where the Notes are payable or paid, where any cause of action accrues in connection
with this transaction, where any action or other proceeding involving this Agreement is instituted
or pending, and whether the laws of any jurisdiction in which a Parcel is located would otherwise
apply the laws of another jurisdiction, except as otherwise set forth in the Loan Documents.

     7.2 Default. A Default or Event of Default shall exist under this Agreement (i) if a
“Default” (as defined in the Mortgages) has occurred under either of the Notes, the Mortgages or
any of the other Loan Documents; (ii) if the Lender discovers that the Borrower or JBSS has
unintentionally made any material misrepresentation that is capable of being cured, unless the
Borrower or JBSS promptly commences and diligently pursues a cure of the misrepresentation

10

 

approved by the Lender, and completes the cure within one hundred twenty (120) days, with any
such cure placing the Lender in the risk position that would have existed had the false
representation been true when made; or (iii) if the Borrower or JBSS fails to observe any promise
or covenant made in this Agreement, unless the failure results in a Default described in Section
9.1 or 9.2 of the Mortgages, 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 or JBSS 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 the date it is given Notice. The
Lender shall afford the Borrower or JBSS, as applicable, an additional period of one hundred twenty
(120) days 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 and JBSS have 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 Agreement shall run concurrently with any notice or cure periods
provided by law and in any of the other Loan Documents. This Agreement is secured by each of the
Security Instruments and all of the Collateral.

     7.3 Notices. In order for any demand, consent, approval or other communication to be
effective under the terms of this Agreement, Notice must be provided to the address and in the
manner stated in the Mortgages.

     7.4 Successors and Assigns. The terms, covenants, conditions and warranties contained
herein and the powers granted hereby shall inure to the benefit of and bind the parties hereto and
their respective successors and assigns.

     7.5 Severability. In the event that any one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable, in whole or in
part, or in any respect, or in the event that any one or more of the provisions of this Agreement
shall operate, or would prospectively operate, to invalidate this Agreement, then, and in any such
event, such provision or provisions only shall be deemed to be null and void and of no force or
effect, and shall not affect any other provision of this Agreement which other provisions shall
remain operative and in full force and effect and shall in no way be affected, prejudiced or
disturbed thereby.

     7.6 Entire Agreement. This Agreement and the other Loan Documents embody the entire
agreement and understanding among Lender, Borrower and JBSS and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and thereof, including
the Commitment. Accordingly, the Loan Documents 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.

11

 

     7.7 Amendment. This Agreement may be amended, revised, waived, discharged, released
or terminated only by a written instrument or instruments executed by Borrower, JBSS and Lender.
Any alleged amendment, revision, waiver, discharge, release or termination that is not so
documented shall be null and void.

     7.8 Liability of JBSS. The parties hereto acknowledge and agree that the liability of
JBSS for the obligations arising under the Loan is limited to the interest of JBSS in the Excess
Elgin Property, the Proceeds and the related assets encumbered by the JBSS Mortgage. The release
of the JBSS Mortgage shall also release JBSS from any further liability to Lender under the Loan
Documents.

     7.9 Suretyship Waivers. JBSS hereby waives and releases any suretyship waivers or
defenses available under applicable law, including without limitation (i) until such time as the
Loan has been indefeasibly paid in full or the JBSS Mortgage has been released, all rights of
subrogation, reimbursement, indemnification and contribution, (ii) all rights and defenses with
respect to its obligations under the Loan Documents by reason of any election of remedies by
Lender, and (iii) all rights and defenses arising because the Loan is secured by real property
owned by Borrower. JBSS’ obligations under the Loan Documents shall not be impaired or affected by:
(a) any renewal, extension, modification, agreement, or stipulation between Lender and Borrower,
or their respective successors and assigns, with respect to the Loan Documents; (b) Lender’s
waiver of or failure to enforce any of the terms, covenants, or conditions contained in the Loan
Documents or any modification of the Loan Documents; and/or (c) any release of any real or personal
property or other security then held by Lender for the payment of the Indebtedness or performance
of the obligations set forth in the Loan Documents. The liability of JBSS under the Loan Documents
is not conditional or contingent on the genuineness, validity, regularity or enforceability of the
Loan Documents or the pursuit by Lender of any remedies Lender now has or may hereafter acquire
with respect to the Loan Documents. JBSS waives any duty on the part of Lender to disclose to JBSS
any facts it may now or hereafter know about Borrower, regardless of whether Lender has reason to
believe any such facts materially increase the risk beyond that which JBSS intends to assume, or
has reason to believe that such facts are unknown to JBSS, or has a reasonable opportunity to
communicate such facts to JBSS; it being understood and agreed that JBSS is fully responsible for
being and keeping informed of the financial condition of Borrower and of all circumstances bearing
on the risk of nonpayment of the Indebtedness. Until such time as either the Indebtedness is paid
in full or the Excess Elgin Property released from the JBSS Mortgage, JBSS subordinates any
liability or indebtedness of Borrower held by JBSS to the obligations of Borrower to Lender under
any of the Loan Documents.

     7.10 Sole Benefit. This Agreement and the other Loan Documents have been executed for
the sole benefit of the Borrower, JBSS 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. Neither the Borrower nor JBSS shall have any right to assign any of its rights
under the Loan Documents to any other person.

12

 

     7.11 Interpretation/Headings and General Application. The section, subsection,
paragraph and subparagraph headings of this Agreement 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.

     7.12 Reference to Particulars. 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.”

     7.13 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which taken together shall constitute one and the
same agreement.

13

 

     IN WITNESS WHEREOF, the Borrower, JBSS and the Lender have caused this Agreement 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 	 
	 
	 	JBSS:

JBSS PROPERTIES, LLC, an Illinois limited

liability company

 	 
	 	By:  	/s/
Michael J. Valentine
 	 
	 	 	Michael J. Valentine 	 
	 	 	Its Duly Authorized Signatory 	 
	 
	 	LENDER:

TRANSAMERICA LIFE INSURANCE

COMPANY, an Iowa corporation

 	 
	 	By:  	/s/ Thomas J. Schefler
 	 
	 	 	Printed Name: 	Thomas J. Schefler 	 
	 	 	Title:  Vice President	 
	 

14

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