Document:

exh_1024.htm

Execution

PREPARED BY:                                                      )

)

Anderson, McCoy & Orta, P.C.                                                      )

100 N. Broadway, Suite 2600                                                                )

Oklahoma City, Oklahoma 73102                                                                )

	
Attn: H. Anne Nicholson

	
)

	
Loan No. 35-8100147

	
)

 

 

ASSUMPTION AGREEMENT

This Assumption Agreement (“Assumption Agreement”) is made this _____ of September, 2011, by U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF J.P. MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORP., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-LDP2 (“Noteholder”), CALIFORNIA VALLEY ASSOCIATES, a New York limited partnership (“Borrower”), STEPHEN B. CEJNER, an individual
(“Original Guarantor”), NETREIT YUCCA VALLEY, LLC, a Delaware limited liability company (“Assumptor”), and NETREIT, INC., a Maryland corporation (“New Guarantor”).

RECITALS

	
A.

	
Noteholder’s predecessor in interest, Artesia Mortgage Capital Corporation, a Delaware corporation (“Original Lender”), made a loan to Borrower in the original principal amount of Three Million, Eight Hundred Fifty Thousand and no/100 Dollars ($3,850,000.00) (“Loan”), under the terms and provisions set forth in the following loan documents, all of which are dated as of February 21, 2005, unless otherwise noted:

	
  

	
1.

	
Fixed Rate Note (“Note”) in the original principal amount of the Loan, made by Borrower and payable to Original Lender;

	
  

	
2.

	
Commercial Deed of Trust, Security Agreement, Fixture Filing Financing Statement and Assignment of Rents, Leases, Income and Profits executed by Borrower to Commonwealth Land Title Insurance Company, as trustee, for the benefit of Original Lender which secures the Note and other obligations of Borrower (“Deed of Trust”), and which Deed of Trust was recorded on March 24, 2005, as Document No. 2005-0202686 with the San Bernardino County Recorder, State of  California (“Official Records”), the Original Lender’s interest under which was assigned to Noteholder by instruments
recorded on December 27, 2005 as Document No. 2005-0977314, and on February 4, 2010 as Document No. 2010-0047374, in the Official Records.  The land, improvements and other real property which are subject to the Deed of Trust are hereinafter referred to as the “Property” and the equipment, machinery and other personal property which are subject to the Deed of Trust are hereinafter referred to as the “Collateral”;

 

  

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3.

	
Assignment of Leases and Rents executed by Borrower, which was recorded on March 24, 2005, as Document No. Document No. 2005-202687, with the Official Records, the Original Lender’s interest under which was assigned to Noteholder by instruments recorded on December 27, 2005 as Document No. 2005-0977314, and on February 4, 2010 as Document No. 2010-0047374,  in the Official Records;

	
  

	
4.

	
Limited Recourse Obligations Guaranty executed by Original Guarantor (“Guaranty”);

	
5.  

	
Environmental Indemnification Agreement executed by Borrower and Original Guarantor (“Environmental Agreement”);

	
  

	
6.

	
Assignment and Subordination of Management Agreement, executed by Borrower and The REMM Group;

	
  

	 

	
  

	
7.

	
Reserve Agreement executed by Borrower (“Reserve Agreement”);

	
  

	
8.

	
UCC-1 Financing Statement filed on April 13, 2005, as Filing Number 200504130504029, with the New York Secretary of State   (“State UCC”).

The above documents and any other loan documents executed by Borrower, including, in each case, any prior amendments thereto, together with this Assumption Agreement are hereinafter collectively defined as the “Loan Documents”.

	
B.

	
As of September 13, 2011:

The principal balance outstanding under the Note was $3,328,700.13;

	
  

	
1.

	
Accrued interest on the Note has been paid through September 10, 2011;

	
  

	
2.

	
The balance in the Impound for the payment of Taxes (as such terms are defined in Section 1.04 of the Deed of Trust) was $68,951.50;

	
  

	
3.

	
The balance in the Impound for the payment of Insurance Premiums (as such terms are defined in Section 1.04 of the Deed of Trust) was $70,218.00;

	
  

	
4.

	
The balance in the On-Going Replacement Reserve (as defined in Section 2.1 of the Reserve Agreement) was $76,099.51;

	
  

	
5.

	
The balance in the TI & LC Reserve (as defined in Section 2.4 of the Reserve Agreement) was $151,624.87;

 

  

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6.

	
There is no balance in the Immediate Repairs Reserve (as defined in Section 2.2 of the Reserve Agreement); and

7.           There is no balance in the Post-Closing Obligations Reserve (as defined inSection 2.3 of the Reserve Agreement).

	
C.

	
Borrower has sold and conveyed the Property and the Collateral to Assumptor, or is about to sell and convey the Property and the Collateral to Assumptor, and both parties desire to obtain from Noteholder a waiver of any right Noteholder may have under the Loan Documents to accelerate the Maturity Date of the Note by virtue of such conveyance.

	
D.

	
Subject to the terms and conditions hereof, Noteholder is willing to consent to the sale and conveyance of the Property and the Collateral, and to waive any right of acceleration of the Maturity Date of the Note upon assumption by Assumptor of all obligations of Borrower under the Loan Documents.

NOW THEREFORE, FOR VALUABLE CONSIDERATION, including, without limitation, the mutual covenants and promises contained herein, the parties agree as follows:

	
  

	
1.

	
Incorporation. The foregoing recitals are incorporated herein by this reference.

	
  

	
2.

	
Assumption Fee. As consideration for Noteholder’s execution of this Assumption Agreement and in addition to any other sums due hereunder, Borrower and Assumptor agree to pay Noteholder or Noteholder’s servicer(s) (all as set forth in the escrow instructions to be executed in connection with the closing of this assumption) an assumption fee of $33,287.00 (representing 1% of the outstanding balance of the Loan as of the date of this Assumption Agreement).

	
  

	
3.

	
Conditions Precedent. The following are conditions precedent to Noteholder’s obligations under this Assumption Agreement:

	
  

	
a.

	
The irrevocable commitment of a successor to Commonwealth Land Title Insurance Company (“Title Company”) to issue CLTA 110.5, CLTA 104.8 and CLTA 111.4 (or local equivalent) endorsements to Title Company’s Title Policy No. 03205254, dated March 24, 2005 (“Existing Title Policy”), in each case in form and substance acceptable to Noteholder and without deletions or exceptions other than as expressly approved by Noteholder in writing, or the irrevocable commitment of a title company approved by Noteholder to issue a new policy identical to Existing Title Policy, insuring Noteholder that the priority and validity of the Deed of Trust has not been and will
not be impaired by this Assumption Agreement, the conveyance of the Property, or the transaction contemplated hereby;

 

 

  

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b.

	
Receipt by Noteholder of a termination or waiver of that certain Profits Participation and Right of First Offer Agreement and Assignment, originally executed by and among Borrower and Downey Savings and Loan Association, a California corporation (“Downey”), which shall be filed in the Official Records;

	
  

	
c.

	
Receipt and approval by Noteholder of: (i) the executed original of this Assumption Agreement; (ii) an executed original of a Memorandum of Assumption Agreement in the form attached hereto as EXHIBIT A and otherwise in form and substance acceptable to Noteholder (“Memorandum of Assumption Agreement”); and (iii) any other documents and agreements which are required pursuant to this Assumption Agreement, in form and content acceptable to Noteholder;

	
  

	
d.

	
Recordation in the Official Records of the Memorandum of Assumption Agreement, together with such other documents and agreements, if any, required pursuant to this Assumption Agreement or which Noteholder has requested to be recorded or filed;

	
  

	
e.

	
Delivery to Noteholder of UCC-1 Financing Statements in proper form for filing in the appropriate jurisdictions as determined by Noteholder, which Assumptor expressly authorizes Noteholder to file;

	
  

	
f.

	
Execution and delivery to Noteholder by New Guarantor of a Limited Recourse Obligations Guaranty (“New Guaranty”) in favor of Noteholder and in form and substance acceptable to Noteholder, pursuant to which New Guarantor irrevocably guarantees payment for certain matters under the Note as more specifically set forth in the New Guaranty;

	
  

	
g.

	
Execution and delivery to Noteholder by Assumptor and New Guarantor of Environmental Indemnification Agreement (“New Environmental Agreement”) in favor of Noteholder and in form and substance acceptable to Noteholder;

	
  

	
h.

	
Delivery to Noteholder of the organizational documents and evidence of good standing of Assumptor, its constituent parties, and of New Guarantor, together with such resolutions or certificates as Noteholder may require, in form and content acceptable to Noteholder, authorizing the assumption of the Loan and executed by the appropriate persons and/or entities on behalf of Assumptor and New Guarantor;

	
  

	
i.

	
The representations and warranties contained herein are true and correct;

 

 

  

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j.

	
Receipt by Noteholder of evidence of insurance acceptable in all respects to Noteholder, including certificates of insurance evidencing Assumptor’s casualty insurance policy (ACORD 27) and comprehensive liability insurance policy (ACORD 25) with respect to the Property, each in form and amount satisfactory to Noteholder, with the annual premium for same to be paid at closing;

	
  

	
k.

	
Receipt by Noteholder of a copy of the grant or warranty deed by which title to the Property will be conveyed to Assumptor, and the purchase and sale agreement documenting the sale of the Property to Assumptor;

	
  

	
l.

	
Receipt by Noteholder of an executed assignment of the purchaser’s interest in the purchase and sale agreement for the Property from the purchaser named therein to Assumptor;

	
  

	
m.

	
Receipt by Noteholder of an executed Form W-9 for Assumptor;

	
  

	
n.

	
Receipt by Noteholder of a copy of the new property management agreement for the Property in form and substance, and with CHG Properties, Inc., a California corporation (“Property Manager”), along with an executed assignment of management agreement acceptable to Noteholder;

	
  

	
o.

	
Noteholder shall have received such opinions of special counsel to Noteholder as may be required by Noteholder’s counsel or the Loan Documents, opining with respect to the compliance of this Assumption Agreement, the transfer to Assumptor, and the transactions referenced herein with the provisions of the Internal Revenue Code as the same pertain to real estate mortgage investment conduits;

	
  

	
p.

	
Noteholder shall have received opinions of counsel to Assumptor and New Guarantor opining with respect to (i) the validity and enforceability of this Assumption Agreement and the terms and provisions hereof, and any other agreement executed in connection with the transactions contemplated hereby, (ii) the authority of the Assumptor and New Guarantor (and any constituents thereof), to execute and deliver this Assumption Agreement and perform their obligations under the Note and other Loan Documents, which opinion may be provided by in-house counsel to Assumptor and New Guarantor, and (iii) such other matters as reasonably requested by the Noteholder;

	
  

	
q.

	
Payment of the assumption fee provided for in Section 2 above; and

	
  

	
r.

	
Borrower’s or Assumptor’s reimbursement to Noteholder of Noteholder’s costs and  expenses incurred in connection with this Assumption Agreement and the transactions contemplated hereby, including, without limitation, title insurance costs, escrow and recording fees, attorneys’ fees, appraisal, engineers’ and inspection fees and documentation costs and charges, whether such services are furnished by Noteholder’s employees, agents or independent contractors.

 

  

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4.

	
Effective Date.  The effective date of this Assumption Agreement shall be the date the Memorandum of Assumption Agreement is recorded in the Official Records (“Effective Date”).

	
  

	
5.

	
Assumption.  Assumptor hereby assumes and agrees to pay when due all sums due or to become due or owing under the Note, the Deed of Trust and the other Loan Documents and shall hereafter faithfully perform all of Borrower’s obligations under and be bound by all of the provisions of the Loan Documents and assumes all liabilities of Borrower under the Loan Documents as if Assumptor were an original signatory thereto.  The execution of this Assumption Agreement by Assumptor shall be deemed its execution of the Note, the Deed of Trust and the other Loan Documents.

	
  

	
6.

	
Partial Release of Borrower; Release of Noteholder.  Noteholder hereby releases (on the Effective Date) Borrower from liability under the Loan Documents other than this Assumption Agreement; provided however, that the parties hereby acknowledge and agree that Borrower is expressly not released from and nothing contained herein is intended to limit, impair, terminate or revoke, any of Borrower’s obligations with respect to the matters set forth in Section 10 of the Note, to the extent the same arise out of or in connection with any act or omission occurring on or before the Effective Date (the
“Retained Obligations”), and that such obligations shall continue in full force and effect in accordance with the terms and provisions thereof and hereof.  Borrower’s obligations under the Loan Documents with respect to the Retained Obligations shall not be discharged or reduced by any extension, amendment, renewal or modification to, the Note, the Deed of Trust or any other Loan Documents, including, without limitation, changes to the terms of repayment thereof, modifications, extensions or renewals of repayment dates, releases or subordinations of security in whole or in part, changes in the interest rate or advances of additional funds by Noteholder in its discretion for purposes related to those set forth in the Loan Documents.  Each
of Borrower, Original Guarantor, Assumptor and New Guarantor hereby fully releases (on the Effective Date) Noteholder and any servicer(s) of the Loan from any liability of any kind arising out of or in connection with the Loan or the Loan Documents other than this Assumption Agreement. Each of Borrower, Original Guarantor, Assumptor and New Guarantor after consultation with its respective attorney, hereby expressly waives the benefits of the provisions of applicable law, if any, which provides to the effect that:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release which, if known by him or her, must have materially affected his or her settlement with the debtor.”

 

  

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From time to time without first requiring performance on the part of Assumptor, Noteholder may look to and require performance by Borrower of all Retained Obligations.  Borrower waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest and notices of dishonor of all or any part of the indebtedness now existing or hereafter arising under the Loan Documents.

 

	
  

	
7.

	
Confirmation of Guaranty; Partial Release of Original Guarantor.  Nothing contained herein is intended to limit, impair, terminate or revoke Original Guarantor’s obligations under the Guaranty and Environmental Agreement to the extent the same arise out of or in connection with any act or omission occurring on or before the Effective Date and such obligations shall continue in full force and effect in accordance with the terms and provisions of the Guaranty and Environmental Agreement; provided, however, Noteholder hereby releases Original Guarantor from its obligations under the Guaranty and Environmental Agreement to the extent the same arise out of or in connection with any act or omission
occurring after the Effective Date.

	
  

	
8.

	
Post-Closing Obligation Regarding Parking Lot Repair.  Assumptor covenants and agrees that it will, within 180 days of the Effective Date, repair or cause to have repaired, in a good and workmanlike manner, fifty percent (50%) of the parking lot at the Property (“Parking Lot Repairs”).  The Parking Lot Repairs shall include repairs to the existing cracks and sealing the parking lot, as further described in the Property Condition Report dated June 11, 2011, issued by Partners Engineering & Science to Assumptor.  Assumptor further covenants and agrees that should the Parking Lot Repairs not be repaired as
provided herein, that an immediate Event of Default shall have occurred, and that Noteholder shall have all remedies available to it under the terms of the Loan Documents, including but not limited to the immediate right to accrue interest on the Loan at the Default Interest Rate.

	
  

	
9.

	
Post-Closing Obligation Regarding Other Deferred Maintenance.    Assumptor further covenants and agrees that it will, within 90 days of the Effective Date, repair or cause to have repaired, in a good and workmanlike manner, all items listed as deferred maintenance on that certain Standard Inspection Form dated June 7, 2011, issued by Strategic Asset Services, LLC (the “Deferred Maintenance”).  Assumptor
further covenants and agrees that should such items of Deferred Maintenance not be repaired as provided herein, that an immediate Event of Default shall have occurred, and that Noteholder shall have all remedies available to it under the terms of the Loan Documents, including but not limited to the immediate right to accrue interest on the Loan at the Default Interest Rate.

 

  

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10.

	
Amendment to Deed of Trust.  Section 1.15(h) of the Deed of Trust is hereby deleted.

	
  

	
11.

	
Amendments to Reserve Agreement. The Reserve Agreement is hereby amended as follows:

	
  

	
a.

	
Defined Terms:  The following terms are inserted in Section 1.1 of the

	
Reserve Agreement in the correct alphabetical order:

	
  

	
“Second Vons Non-Renewal Event” shall have the meaning given suchterm in Section 2.4(c)(i).

	
  

	
“Second Vons Non-Renewal Sweep Deposit” shall have the meaninggiven such term in Section 2.4(c).

	
  

	
“Second Vons Non-Renewal Sweep Release Criteria” shall have themeaning given such term in Section 2.4(c)(ii).

	
  

	
b.

	
Tenant Improvements and Leasing Commissions Reserve.  The following

	
language is inserted as Section 2.4(c)

	
to the Reserve Agreement, and the

	
remaining paragraphs shall be renumbered accordingly.

	
  

	
“(c)

	
Second Vons Lease Non-Renewal Sweep.  In addition to the foregoing Subsections 2.4(a)-(b) above, if the Second Vons Non-Renewal Event occurs, then (y) on the first date that a Monthly Payment is due under the Note after the occurrence of the Second Vons Non-Renewal Event (concurrently with and in addition to the Monthly Payment due under the Note), Borrower shall deposit with Lender an amount, to be held in the TI & LC Reserve, equal to the Free Cash Flow of the Property (each a “Second Vons Non-Renewal Sweep Deposit”) and Borrower shall continue making Second Vons Non-Renewal Sweep Deposits on each date that a Monthly Payment is due under the Note
thereafter for the subsequent seventeen (17) consecutive months (i.e., for a total of eighteen (18) Second Vons Non-Renewal Sweep Deposits). The Borrower’s foregoing obligations to make deposits to the TI & LC Reserve pursuant to this Section 2.4(c) shall in no manner affect the Borrower’s obligation to make any other deposits under this Agreement or to pay any other amounts due under the Loan Documents.

	
  

	
(i)

	
As used herein, the term “Second Vons Non-Renewal Event” shall mean the occurrence of the following: Vons does not exercise its option to extend the term of the Vons Lease at least five (5) years on or before August 19, 2014 (i.e., the date that is eighteen (18) months prior to the expiration of the Vons Lease).

 

 

  

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(ii)

	
Notwithstanding the foregoing, no further Vons Non-Renewal Sweep Deposits shall be required and the Borrower shall be entitled to a release of any remaining TI & LC Funds attributable to Second Vons Non-Renewal Sweep Deposits upon the satisfaction of the following (the “Second Vons Non-Renewal Sweep Release Criteria”):

	
  

	
1.

	
Either:

A.           (w) Vons renews or extends the Vons Lease for a lease term of at least five (5) years beginning on or after March 1, 2016, with an annual rental rate during such five (5) year term of at least the annual rental rate, as determined by Lender, due under the Vons Lease during the last lease year of the Vons Lease, (x) Lender has received complete copy(ies) of the executed document(s) by which Vons renews/extends the Vons Lease, (y) completion of any Tenant Improvements and payment of the costs therefor, and payment of any leasing commissions in connection with the Vons Lease and the renewal/extension thereof, or if applicable, a certification from
the Borrower to Lender that there are no Tenant Improvements costs or leasing commissions to be paid by Borrower in connection with the Vons Lease and the renewal/extension thereof, and (z) Lender has received from Vons a then current estoppel certificate (in form and substance acceptable to Lender) confirming, without limitation, (a) that Vons has no offsets or defenses under the Vons Lease and the renewal/extension thereof, (b) that Vons is then paying rent, (c) that Vons is in physical occupancy and open for business at the Vons Premises and (d) that there are no outstanding conditions remaining to be satisfied by Borrower under the Vons Lease and the renewal/extension thereof; or;

B. (x) Borrower enters into Replacement Lease(s) for the entire Vons Premises with tenant(s) approved by Lender, and each such Replacement Lease has a lease term of at least five (5) years beginning on or after March 1, 2016, with an annual rental rate during such five (5) year term of at least the annual rental rate, as determined by Lender, due under the Vons Lease during the last lease year of the Vons Lease, (y) completion of any Tenant Improvements and payment of the costs therefor and payment of any leasing commissions in connection with such Replacement Lease(s), or if applicable, a certification from the Borrower to Lender that there are no Tenant Improvements costs or leasing commissions to be paid by
Borrower in connection with such Replacement Lease(s), and (z) Lender has received from the tenant(s) under such Replacement Lease(s) a then current estoppel certificate (in form and substance acceptable to Lender) confirming, without limitation, (a) that such tenant(s) has no offsets or defenses under its lease, (b) that such tenant(s) is paying rent (Le., at least one (1) month’s rent in accordance with the terms of its lease), (c) that such tenant(s) is in physical occupancy and open for business at the Vons Premises, and (d) that there are no outstanding conditions remaining to be satisfied by Borrower under such Replacement Lease(s);

 

 

  

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2.

	
Borrower shall have provided Lender with documentation and evidence needed or requested by Lender to make the determination of whether the conditions described in this Subsection 2.4(c)(ii) have been fully satisfied, or to make any determinations to be made by Lender pursuant to this Subsection 2.4(c)(ii);

	
  

	
3.

	
No Event of Default under this Agreement or under the Note, Security Instrument or any of the other Loan Documents has occurred and is continuing and no event or condition exists which, but for the passage of time and/or the giving of notice, would result in an Event of Default under this Agreement or under the Note, Security Instrument or any of the other Loan Documents; and

	
  

	
4.

	
Borrower shall have paid all of Lender’s fees and expenses (including without limitation, reasonable attorneys’ fees) in connection with Lender’s review and determination of the matters referred to in this Subsection 2.4(c)(ii).

	
  

	
(iii)

	
The Borrower’s satisfaction of the Second Vons Non-Renewal Sweep Release Criteria shall in no manner affect the Borrower’s obligation to make any other deposits under this Agreement or to pay any other amounts due under the Loan Documents.”

	
  

	
12.

	
Representations and Warranties.

	
  

	
a.

	
Assignment.  Borrower and Assumptor each hereby represents and warrants to Noteholder that Borrower has irrevocably and unconditionally transferred and assigned to Assumptor all of Borrower’s right, title and interest in and to:

	
  

	
i.

	
The Property and the Collateral;

	
  

	
ii.

	
The Loan Documents;

	
  

	
iii.

	
All leases related to the Property or the Collateral;

 

 

  

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iv.

	
All rights as named insured under all casualty and liability insurance policies (and all endorsements in connection therewith) relating to the Property or the Collateral (unless, but only to the extent that, Assumptor is obtaining its own such insurance policies);

	
  

	
v.

	
All reciprocal easement agreements, operating agreements, and declarations of conditions, covenants and restrictions related to the Property;

	
  

	
vi.

	
All prepaid rents and security deposits, if any, held by Borrower in connection with leases of any part of the Property or the Collateral; and

	
  

	
vii.

	
All funds, if any, deposited in impound accounts held by or for the benefit of Noteholder pursuant to the terms of the Loan Documents.

Borrower and Assumptor each hereby further represents and warrants to Noteholder that no consent to the transfer of the Property and the Collateral to Assumptor is required under any agreement to which Borrower or Assumptor is a party, including, without limitation, under any lease, operating agreement, mortgage or security instrument (other than the Loan Documents), or if such consent is required, that the parties have obtained all such consents.

	
  

	
b.

	
No Defaults. Assumptor and Borrower each hereby represents and warrants, to the best of its respective knowledge, that no default, event of default, breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Documents, as modified by this Assumption Agreement, and all representations and warranties herein and in the other Loan Documents are true and correct.

	
  

	
c.

	
Loan Documents. Assumptor represents and warrants to Noteholder that Assumptor has actual knowledge of all terms and conditions of the Loan Documents, and agrees that Noteholder has no obligation or duty to provide any information to Assumptor regarding the terms and conditions of the Loan Documents.  Assumptor further agrees that all representations, agreements and warranties in the Loan Documents regarding Borrower, its status, authority, financial condition and business shall, from the Effective Date forward, apply to Assumptor, as though Assumptor were the borrower originally named in the Loan Documents.  Assumptor further understands and acknowledges that, except as expressly provided in a writing
executed by Noteholder, Noteholder has not waived any right of Noteholder or obligation of Borrower or Assumptor under the Loan Documents and Noteholder has not agreed to any modification of any provision of any Loan Document or to any extension of the Loan.

 

 

  

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d.

	
Financial Statements. Assumptor represents and warrants to Noteholder that the financial statements of Assumptor, of each member of Assumptor and of each New Guarantor, if any, previously delivered to Noteholder by or on behalf of Assumptor or New Guarantor: (i) are materially complete and correct; (ii) present fairly the financial condition of each of such parties; and (iii) have been prepared in accordance with generally accepted accounting principles consistently applied or other accounting standards approved by Noteholder.  Assumptor further represents and warrants to Noteholder that, since the date of such financial statements, there has been no material adverse change in the financial condition of any of such
parties, nor have any assets or properties reflected on such financial statements been sold, transferred, assigned, mortgaged, pledged or encumbered except as previously disclosed in writing by Assumptor to Noteholder and approved in writing by Noteholder.

	
  

	
e.

	
Reports. Assumptor represents and warrants to Noteholder that all reports, documents, instruments and information delivered to Noteholder in connection with Assumptor’s assumption of the Loan: (i) are correct and sufficiently complete to give Noteholder accurate knowledge of their subject matter; and (ii) do not contain any misrepresentation of a material fact or omission of a material fact which omission makes the provided information misleading.

	
  

	
f.

	
Assumptor Location.  Assumptor represents and warrants that its chief executive office (or principal residence, if applicable) is located at the following address: 1282 Pacific Oaks Place, Escondido, California 92029. Assumptor represents and warrants that its state of formation is Delaware.  All organizational documents of Assumptor delivered to Noteholder are complete and accurate in every respect.  Assumptor’s legal name is exactly as shown on page one of this Assumption Agreement.  Assumptor shall not change Assumptor’s name or, as applicable, Assumptor’s chief executive office, Assumptor’s principal residence or the jurisdiction in which Assumptor is
organized, without giving Noteholder at least 30 days’ prior written notice.

	
  

	
g.

	
No Adverse Change. Assumptor and New Guarantor represent and warrant to Noteholder that since the date of the financial statements for Assumptor and New Guarantor submitted by Assumptor in connection with its application to assume the Loan, there has occurred no adverse change in the financial condition of Assumptor or New Guarantor.

	
  

	
h.

	
No Pledge of Equity Interests.  Assumptor and New Guarantor represent and warrant to Noteholder that no equity interest in Assumptor or an entity that, directly or indirectly, owns an equity interest in Assumptor has been pledged, hypothecated or otherwise encumbered as security for any obligation, and that no portion of the capital contributed to Assumptor, directly or indirectly, in connection with Assumptor’s acquisition of the Property consists of borrowed funds.

 

 

  

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i.  

	
Embargoed Person.  Assumptor and New Guarantor represent and warrant that none of the funds or other assets of Assumptor or New Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the USA PATRIOT Act (including the anti-terrorism provisions thereof), the International Economic Powers Act, 50 U.S.C. §§ 1701, et. seq., the Trading with the Enemy Act, 50 U.S.C. App. 1 et. seq., and any Executive Orders or regulations promulgated thereunder, including those related to Specially Designated Nationals and
Specially Designated Global Terrorists (“Embargoed Person”) and further warrant and represent that no Embargoed Person has any interest of any nature whatsoever in Assumptor or New Guarantor with the result that the investment in Assumptor (whether directly or indirectly) is prohibited by law.

	
  

	
13.

	
Waiver of Acceleration.  Noteholder hereby consents to the sale and conveyance of the Property and Collateral and agrees that it shall not exercise its right to cause all sums secured by the Deed of Trust to become immediately due and payable because of the conveyance of the Property and the Collateral from Borrower to Assumptor; provided, however, Noteholder reserves its right under the terms of the Deed of Trust or any other Loan Document to accelerate all principal and interest in the event of any subsequent sale, transfer, encumbrance or other conveyance of the
Property, the Collateral or any interest in Assumptor, except as permitted by the Loan Documents.

	
  

	
14.

	
Hazardous Materials; CCP Section 726.5; Section 736.  Without in any way limiting any other provision of this Assumption Agreement, Assumptor and Borrower expressly reaffirm as of the date hereof, and Assumptor, to the best of its knowledge, reaffirms continuing hereafter:  (a) each and every representation and warranty in the Loan Documents respecting “Hazardous Materials”; and (b) each and every covenant and indemnity in the Loan Documents respecting “Hazardous Materials”.  In addition, Assumptor, Borrower and Noteholder agree that: (i) this
Section is intended as Noteholder’s written request for information (and Assumptor’s and Borrower’s response) concerning the environmental condition of the real property security under the terms of California Code of Civil Procedure Section 726.5; and (ii) each representation and/or covenant in this Assumption Agreement or any other Loan Document (together with any indemnity applicable to a breach of any such representation and/or covenant) with respect to the environmental condition of the real property security is intended by Noteholder, Assumptor and Borrower to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736.

 

  

13

  

 

	
  

	
15.

	
Multiple Parties.  If more than one person or entity has signed this Assumption Agreement as Assumptor or Borrower, then all references in this Assumption Agreement to Assumptor or Borrower shall mean each and all of the persons so signing, as applicable.  The liability of all persons and entities signing shall be joint and several with all others similarly liable.

	
  

	
16.

	
Confirmation of Security Interest.  Nothing contained herein shall affect or be construed to affect any lien, charge or encumbrance created by any Loan Document or the priority of that lien, charge or encumbrance.  All assignments and transfers by Borrower to Assumptor are subject to any security interest(s) held by Noteholder.

	
  

	
17.

	
Notices.  All notices to be given to Assumptor pursuant to the Loan Documents shall be addressed as follows:

NetREIT Yucca Valley, LLC

1282 Pacific Oaks Place

Escondido, CA  92029

Attn: Ken Elsberry

Telephone: 760-471-8536

Telecopy: 760-471-0399

	
  

	
18.

	
Integration; Interpretation.  The Loan Documents, including this Assumption Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated herein and supersede all prior negotiations.  The Loan Documents shall not be modified except by written instrument executed by Noteholder and Assumptor.  Any reference in any of the Loan Documents to the property or the Collateral shall include all or any parts of the Property or the Collateral.

	
  

	
19.

	
Successors and Assigns.  This Assumption Agreement is binding upon and shall inure to the benefit of the heirs, successors and assigns of the parties but subject to all prohibitions of transfers contained in any Loan Document.

	
  

	
20.

	
Attorneys’ Fees; Enforcement.  If any attorney is engaged by Noteholder to enforce,  construe or defend any provision of this Assumption Agreement, or as a consequence of any default under or breach of this Assumption Agreement, with or without the filing of any legal action or proceeding, Assumptor shall pay to Noteholder, upon demand, the amount of all attorneys’ fees and costs reasonably incurred by Noteholder in connection therewith, together with interest thereon from the date of such demand at the rate of interest applicable to the principal balance of the Note as specified therein.

 

  

14

  

 

 

	
  

	
21.

	
Right of Transfer of Property.  The parties acknowledge that Section 1.15 of the Deed of Trust provides that Noteholder may consent to the voluntary sale or exchange of all of the Property, subject, however, to the terms and conditions set forth therein.  The parties agree that this Assumption Agreement and the actions to be taken as contemplated herein shall constitute one such consent.

	
  

	
22.

	
Miscellaneous.

	
  

	
a.

	
This Assumption Agreement shall be governed and interpreted in accordance with the laws of the jurisdiction(s) specified in the other Loan Documents as governing the other Loan Documents.  In any action brought or arising out of this Assumption Agreement, Borrower and Assumptor, and general partners, members and joint venturers of them, hereby consent to the jurisdiction of any state or federal court having proper venue as specified in the other Loan Documents and also consent to the service of process by any means authorized by the law of such jurisdiction(s).  Except as expressly provided otherwise herein, all terms used herein shall have the meaning given to them in the Loan Documents.  Time is of the essence of each term of the Loan Documents, including
this Assumption Agreement.  If any provision of this Assumption Agreement or any of the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed therefrom and the remaining parts shall remain in full force as though the invalid, illegal, or unenforceable portion had not been a part thereof.

	
  

	
b.

	
Notwithstanding anything to the contrary herein, this Agreement is subject to the provisions of Section 10 of the Note as if such provisions were set forth at length herein.

	
  

	
23.

	
Counterparts.  This Assumption Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original and all of which taken together will be deemed to be one and the same instrument.

[SIGNATURE PAGES FOLLOW]

  

15

  

IN WITNESS WHEREOF, Noteholder, Assumptor, New Guarantor, Borrower, and Original Guarantor have caused this Assumption Agreement to be duly executed as of the date first above written.

NOTEHOLDER:

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF J.P. MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORP., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-LDP2

	
  

	
By:

	
Wells Fargo Bank, National Association, in its capacity as Master Servicer

	
  

	
By:

	
_________________________

Name: ___________________

Title: ____________________

  

  

  

Signature Page to Assumption Agreement

S-1

  

  

  

ASSUMPTOR:

	
  

	
NETREIT YUCCA VALLEY, LLC, a Delaware limited liability company

	
  

	
By:

	
NetREIT, Inc., a Maryland corporation,

	
its Managing Member

	
  

	
By:

	 

	
  

	
Name:

	 	 

	
  

	
Title:

	 

NEW GUARANTOR:

NETREIT, INC., a Maryland corporation

By:                                                                

Name:           

Title:                                           

 

 

Signature Page to Assumption Agreement

S-2

  

  

  

BORROWER:

	
  

	
CALIFORNIA VALLEY ASSOCIATES, a New York limited partnership

By:           Managers, Inc., a Pennsylvania corporation,its General Partner

By:  ______________________________

Name: ________________

Title: _________________

ORIGINAL GUARANTOR:

_______________________________________

STEPHEN B. CEJNER, an individual

Signature Page to Assumption Agreement

S-3

  

  

  

ACKNOWLEDGMENT OF NOTEHOLDER

	
STATE OF CALIFORNIA

	
)

)  ss

	
COUNTY OF ALAMEDA

	
)

On ___________, 2011, before me, __________________________, the undersigned Notary Public in and for said County and State, personally appeared _____________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

______________________________________

Notary Public

My Commission Expires:

______________________________

Signature Page to Assumption Agreement

S-4

  

  

  

ACKNOWLEDGMENT OF ASSUMPTOR

STATE OF CALIFORNIA                                                                )

)  ss

COUNTY OF _________________                                                                )

On ___________ before me, __________________________, the undersigned Notary Public in and for said County and State, personally appeared _________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

______________________________________

Notary Public

My Commission Expires:

______________________________

ACKNOWLEDGMENT OF NEW GUARANTOR

STATE OF CALIFORNIA                                                                )

)  ss

COUNTY OF _________________                                                                )

On ___________ before me, __________________________, the undersigned Notary Public in and for said County and State, personally appeared _________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

______________________________________

Notary Public

My Commission Expires:

______________________________

Signature Page to Assumption Agreement

S-5

  

  

  

ACKNOWLEDGMENT OF BORROWER

STATE OF CALIFORNIA                                                                )

)  ss

COUNTY OF _________________                                                                )

On ___________ before me, __________________________, the undersigned Notary Public in and for said County and State, personally appeared _________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

______________________________________

Notary Public

My Commission Expires:

______________________________

ACKNOWLEDGMENT OF ORIGINAL GUARANTOR

STATE OF CALIFORNIA                                                                )

)  ss

COUNTY OF _________________                                                                )

On ___________ before me, __________________________, the undersigned Notary Public in and for said County and State, personally appeared _________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

______________________________________

Notary Public

My Commission Expires:

______________________________

Signature Page to Assumption Agreement

S-6

  

  

  

EXHIBIT A

TO ASSUMPTION AGREEMENT

PREPARED BY AND                                                      )

WHEN RECORDED MAIL TO:                                                      )

)

Anderson, McCoy & Orta, P.C.                                                      )

100 N. Broadway, Suite 2600                                                                )

Oklahoma City, Oklahoma 73102                                                                )

Attn: H. Anne Nicholson                                                      )

Loan No. 35-8100147                                                                )

MEMORANDUM OF ASSUMPTION AGREEMENT

California Valley Associates, a New York limited partnership, with a mailing address at  1150 First Avenue Ste. 920, King of Prussia, PA 19406 (“Borrower”), Stephen B. Cejner, an individual, with a mailing address at 530 Riverside Drive, Ormond Beach, Florida  32176  (“Original Guarantor”), NetREIT Yucca Valley, LLC, a Delaware limited liability company,  with a mailing address at 1282 Pacific Oaks Place, Escondido, CA  92029 (“Assumptor”), NetREIT, Inc., a
Maryland corporation, with a mailing address at  1282 Pacific Oaks Place, Escondido, CA  92029 (“New Guarantor”), and U.S. Bank National Association, as  trustee for the registered holders of JP Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-LDP2, with a mailing address c/o Wells Fargo Bank, N. A., Commercial Mortgage Servicing, 1901 Harrison Street, 2nd Floor, Oakland, California 94612 (“Noteholder”), are parties to that certain ASSUMPTION AGREEMENT dated of even date herewith (“Assumption Agreement”).  The
undersigned parties agree that all obligations under that certain Fixed Rate Note (“Note”) dated February 21, 2005, in the original principal amount of Three Million, Eight Hundred Fifty Thousand and no/100 Dollars ($3,850,000.00), secured by that certain Commercial Deed of Trust, Security Agreement, Fixture Filing Financing Statement and Assignment of Rents, Leases, Income and Profits executed by Borrower and recorded on March 24, 2005, as Document No. 2005-0202686 with the San Bernardino County Recorder, State of California (“Official Records”), the Original Lender’s interest under which was assigned to Noteholder by instruments recorded on December 27, 2005 as Document No. 2005-0977314, and on February 4, 2010 as Document No. 2010-0047374, in
said Official Records; that certain Assignment of Leases and Rents executed by Borrower, which was recorded on March 24, 2005, as Document No. 2005-202687, with said Official Records, the Original Lender’s interest under which was assigned to Noteholder by instruments recorded on December 27, 2005 as Document No. 2005-0977314, and on February 4, 2010 as Document No. 2010-0047374, in said Official Records; and all other Loan Documents (as defined in the Assumption Agreement) securing the real property described on EXHIBIT A, have been assumed by Assumptor upon the terms and conditions set forth in the Assumption Agreement.  The Assumption Agreement is by this reference incorporated herein and made a part hereof.  This Memorandum of Assumption Agreement may be executed in any
number of counterparts, each of which when executed and delivered will be deemed an original and all of which taken together will be deemed to be one and the same instrument.

Dated:  September ___, 2011

Exh. A-1EXHIBIT 4.6

 

FIRST SUPPLEMENTAL INDENTURE

 

FIRST SUPPLEMENTAL INDENTURE, dated as of July 11, 2006, among The Neiman Marcus Group, Inc., a Delaware corporation (the “Company”), The Bank of New York Trust Company, N.A., a national banking association, as successor trustee (the “Trustee”), and Neiman Marcus, Inc., a Delaware corporation, as guarantor (the “Guarantor”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Trustee previously have entered into an indenture, dated as of May 27, 1998 (the “Base Indenture”), providing for the issuance of 7.125% Senior Debentures Due 2028 (the “2028 Debentures”) (the Base Indenture together with the terms of the 2028 Debentures as established as contemplated by Section 301 thereof is referred to herein as the “Original Indenture” and the Original Indenture as it may from time to time be supplemented or amended, including by this First Supplemental Indenture, is referred to herein as the “Indenture”);

 

WHEREAS, Section 901 of the Base Indenture permits the Company, when authorized by a Board Resolution, and the Trustee to enter into one or more indentures supplemental to the Indenture without the consent of holders of any securities issued thereunder to add to the rights of the holders of such securities;

 

WHEREAS, the Company received cash consideration for the issuance and initial sale of the 2028 Debentures on May 27, 1998;

 

WHEREAS, the Company is a wholly-owned subsidiary of the Guarantor;

 

WHEREAS, the Guarantor desires to provide and the Board of Directors of the Company has authorized the Guarantor to provide a guarantee of the outstanding 2028 Debentures;

 

WHEREAS, the Company has requested that the Trustee join in the execution of this First Supplemental Indenture; and

 

WHEREAS, all things necessary to make this First Supplemental Indenture a valid agreement of the parties and a valid supplement to the Indenture have been done.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained herein and in the Original Indenture and for other good and valuable consideration, the receipt and sufficiency of which are herein acknowledged, the Company and the Trustee hereby agree, for the equal and ratable benefit of all holders of the outstanding 2028 Debentures (the “Holders”), as follows:

 

1

 

ARTICLE ONE

DEFINITIONS

 

Section 1.01          Defined Terms.  All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Original Indenture, as supplemented and amended hereby.  All definitions in the Original Indenture shall be read in a manner consistent with the terms of this First Supplemental Indenture.

 

ARTICLE TWO

GUARANTEE

 

Pursuant to Section 901 of the Base Indenture, the Company and the Trustee hereby provide and the Guarantor hereby agrees as follows:

 

Section 2.01          The Guarantee.  The Guarantor hereby irrevocably and unconditionally guarantees (the “Guarantee”), as primary obligor and not merely as surety, the 2028 Debentures and obligations of the Company under the Indenture and the 2028 Debentures, and guarantees to each Holder of a 2028 Debenture authenticated and delivered by the Trustee, and to the Trustee for itself and on behalf of such Holder, that: (1) the principal of (and premium, if any) and interest on the 2028 Debentures shall be paid in full when due, whether at Stated Maturity, by acceleration or otherwise (including the amount that would become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Bankruptcy Code of 1978, as amended (the “Bankruptcy Law”)) together with interest on the overdue principal, if any, and interest on any overdue interest, to the extent lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be paid in full or performed, all in accordance with the terms hereof and thereof; and (2) in case of any extension of time of payment or renewal of any 2028 Debentures or of any such other obligations, the same shall be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.

 

(a)           The Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the 2028 Debentures or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor.

 

(b)           The Guarantor hereby waives (to the extent permitted by law) the benefits of diligence, presentment, demand for payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company or any other Person, protest, notice and all demands whatsoever and covenants that the Guarantee shall not be discharged as to any 2028 Debenture except by complete performance of the obligations contained in such 2028 Debenture, the Indenture and the Guarantee.  The

 

2

 

Guarantor acknowledges that the Guarantee is a guarantee of payment, performance and compliance when due and not of collection.  The Guarantor hereby agrees that, in the event of a default in payment of principal (or premium, if any) or interest on such 2028 Debenture, whether at its Stated Maturity, by acceleration, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such 2028 Debenture, subject to the terms and conditions set forth in the Indenture, directly against the Guarantor to enforce the Guarantee without first proceeding against the Company.  The Guarantor agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are prevented by applicable law from exercising their respective rights to accelerate the Maturity of the 2028 Debentures, to collect interest on the 2028 Debentures, or to enforce or exercise any other right or remedy with respect to the 2028 Debentures, the Guarantor shall pay to the Trustee for the account of the Holder, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

 

(c)           If any Holder or the Trustee is required by any court or otherwise to return to the Company or the Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantor, any amount paid by any of them to the Trustee or such Holder, the Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.  The Guarantor further agrees that, as between the Guarantor, on one hand, and the Holders and the Trustee on the other hand, (1) subject to the provisions of the Guarantee, the Maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five of the Base Indenture for the purposes of the Guarantee notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any acceleration of such obligation as provided in Article Five of the Base Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of the Guarantee.

 

(d)           The Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the 2028 Debentures are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the 2028 Debentures, whether as a “voidable preference”, “fraudulent transfer” or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the 2028 Debentures shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

Section 2.02          Severability.  In case any provision of the Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby to the extent permitted by applicable law.

 

3

 

Section 2.03          Subrogation.  The Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by the Guarantor pursuant to the provisions of Section 2.01 of this First Supplemental Indenture; provided, however, that, if a Default or Event of Default has occurred and is continuing, the Guarantor shall not be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under the Indenture or the 2028 Debentures shall have been paid in full.

 

Section 2.04          Reinstatement.  The Guarantor hereby agrees that the Guarantee provided for in Section 2.01 of this First Supplemental Indenture shall continue to be effective or be reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligations or interest thereon is rescinded or must otherwise be restored by a Holder to the Company upon the bankruptcy or insolvency of the Company or the Guarantor.

 

Section 2.05          Release.  The Guarantee shall automatically and unconditionally be released and discharged, and no further action by the Guarantor, the Company or the Trustee is required for the release of the Guarantee, upon exercise by the Company of its defeasance of the Notes under Section 403(a) or (b) the Base Indenture or if the Company’s obligations under this Indenture are discharged in accordance with Section 401 of the Base Indenture.

 

ARTICLE THREE

MISCELLANEOUS

 

Section 3.01          Effect of This First Supplemental Indenture.  This First Supplemental Indenture supplements the Original Indenture and shall be a part, and subject to all the terms, thereof.  The Original Indenture, as supplemented and amended by this First Supplemental Indenture, is in all respects ratified and confirmed, and the Original Indenture and this First Supplemental Indenture shall be read, taken and construed as one and the same instrument.  All provisions included in this First Supplemental Indenture supersede any conflicting provisions included in the Original Indenture unless not permitted by law.

 

Section   3.02        Governing Law.  This First Supplemental Indenture shall be governed by, and construed in accordance with and governed by the laws of the State of New York, without regard to conflicts of laws principles thereof.

 

Section 3.03          Effect of Headings.  The section headings herein are for convenience only and shall not affect the construction of this First Supplemental Indenture.

 

Section 3.04          Counterparts.  The parties may sign multiple counterparts of this First Supplemental Indenture.  Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement.

 

Section 3.05          Trustee.  The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture; the recitals and statements herein are deemed to be those of the Company and Guarantor and not of the Trustee.

 

4

 

IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed, all as of the date and year first written above.

 

 

	
 
    	
THE   NEIMAN MARCUS GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nelson A. Bangs
    
	
 
    	
 
    	
Name:   Nelson A. Bangs
    
	
 
    	
 
    	
Title:   Senior Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
NEIMAN   MARCUS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nelson A. Bangs
    
	
 
    	
 
    	
Name:   Nelson A. Bangs
    
	
 
    	
 
    	
Title:   Senior Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE   BANK OF NEW YORK TRUST COMPANY, N.A.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John C. Stuhlmann
    
	
 
    	
 
    	
Name:   John C. Stuhlmann
    
	
 
    	
 
    	
Title:   Vice President
    

 

5

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