MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

EXHIBIT 10.4

Prepared by and after recording
return document to:

Stoel Rives LLP
600 University Street, Suite 3600
Seattle, Washington 98101

Attention: Virginia M. Pedreira

Loan No. 700218 & 700218A

Mortgage, Security Agreement, Assignment of Leases
and Rents, and Fixture Filing
(Kane County, Illinois)

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

1.

RECITALS

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

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

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

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

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

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

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

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

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

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

The Borrower represents to the Lender as follows:

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

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

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

6.

COVENANTS

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

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

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

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

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

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

6.19

Estoppel Statements

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

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

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

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

7.1

Required Coverages

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

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

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

appropriateness or enforceability of any insurance contract, including, without limitation, changes in the ownership or occupancy of the Real Property, any hazard to the Real Property and any matters that may give rise to any claim. Prior to expiration of any policy required under this Section, the Borrower shall provide either (a) an original or certified copy of the renewed policy, or (b) a “binder,” an Acord 28 (real property), Acord 27 (personal property) or Acord 25 (liability) certificate, or another document satisfactory to the Lender conferring on the Lender the rights and privileges of mortgagee. If the Borrower meets the foregoing requirement under clause (b), the Borrower shall supply an original or certified copy of the original policy within ninety (90) days. All binders, c