exhibit4_5.htm


    
      

      

    

    

      Exhibit
4.5

      


      VESTIN
REALTY MORTGAGE II, INC.

      6149 S.
RAINBOW BLVD.

      LAS
VEGAS, NV 89118

      


      


      November
7, 2008

      


      


      Michael
A. Fralin

      Managing
Director

      Taberna
Capital Management, LLC

      450 Park
Avenue

      Floor
11

      New York,
New York 10022

      


      


      Dear Mr.
Fralin:

      


      


      Reference
is hereby made to that certain Junior Subordinated Indenture, dated as of June
22, 2007, by and between Vestin Realty Mortgage II, Inc. (the “Company”) and The
Bank of New York Mellon Trust Company, National Association (as successor to
JPMorgan Chase Bank, National Association, the “Trustee”) (the
“Indenture”).  All capitalized terms used herein and not defined
herein shall have the meaning ascribed to such terms in the
Indenture.

      


      Section
5.1(c) of the Indenture substantially provides that a “default in the
performance, or breach, of any covenant of the Company under Section 10.9 of
this Indenture and continuance of such default or breach for a period of thirty
(30) days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least twenty-five percent (25%) in aggregate principal amount of the Outstanding
Securities a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a “Notice of Default” hereunder”
shall constitute an Event of Default.

      


      Pursuant
to Section 10.9 of the Indenture, the Company covenanted that it
would:

      


      (a) not
permit Tangible Net Worth, at any time, to be less than the sum of (i)
$225,000,000
and (ii) 50% of all proceeds of Equity Interests issued by the Company
after the date hereof;

      


      (b) not
permit, at any time, the ratio of (i) EBITDA for the period consisting of the
preceding four (4) fiscal quarters ending on, or most recently ended prior to,
such time to (ii) Interest Expense for such period, to be less than 2.50 to 1;
and


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


      (c) not
permit, at any time, the ratio of (i) Total Debt to (ii) Tangible Net Worth, to
exceed 0.5 to 1.

      


      (collectively,
the “Original Covenants”)

      


      Based on
the Company’s projections, the Company will breach the covenant set forth in
Section 10.9(a) of the Indenture as of September 30, 2008 and the covenant set
forth in Section 10.9(b) of the Indenture as of December 31,
2008.  Given these facts, the Company requests the relief specified
herein.

      


      Taberna
Capital Management, LLC (“Taberna”) has represented to the Company that, as the
collateral manager for certain collateral debt obligation vehicles that
collectively own and are the Holders of all of the Preferred Securities, it, has
the authority to (on behalf of the Holders of the Preferred Securities) to agree
to the terms of this letter and to perform (or cause to be performed) the
obligations of Taberna hereunder.  In order to avoid a breach or
violation by the Company under Section 10.9, the Company proposes to deposit
with the Trustee the amount of $5,000,000 (the “Reserve”) for the purpose of
securing the obligations of the Company under the Indenture.

      


      The
Reserve shall take the form of one or more letters of credit made in favor of
the Holders of the Preferred Securities in form and substance reasonably
satisfactory to Taberna (each, a “Letter of Credit”).  The Borrower
shall post a Letter of Credit (a) in the amount of $3,750,000 on or before
November 12, 2008 and (b) in the amount of $1,250,000 on or before April 12,
2009.  The
Company agrees that the Letter of Credit shall not be subordinated or subject in
any respect, including in right of payment, to any Senior
Debt.

      


      The
Trustee will call the Letter of Credit in the event of a default and disburse
the Reserve promptly after notice from the Collateral Manager, which notice the
Collateral Manager shall be entitled to deliver upon the occurrence of any event
that with the giving of notice or the passage of time would give rise to an
Event of Default of the Company under the Indenture.  The Reserve
shall be used for the payment of principal or interest in the sole discretion of
Taberna.  In consideration for the above-referenced credit
enhancement, Taberna agrees to modify Section 10.9 of the Indenture
substantially as follows:

      


      From and
after the date here until Maturity the Company shall:

      


      (a) not
permit Tangible Net Worth, at any time, to be less than the lesser of
$150,000,000 or 2.5 times the then outstanding principal balance of Preferred
Securities;

      


      (b) not
permit, at any time, the ratio of (i) EB1TDA for the period consisting of the
preceding four (4) fiscal quarters ending on, or most recently ended prior to,
such time to (ii) Interest Expense for such period, to be less than 1.50 to 1
(“Minimum Coverage”); provided, however, the Minimum Coverage shall be deemed to
be 1.20 to 1 (for one quarter only) for the period ending June 30,
2009.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      Section
10.9(c) shall not be modified.  The “No Call” provisions set forth in
the Indenture together with any prepayment penalties set forth therein shall be
removed.  All notice and cure periods of thirty (30) days or more set
forth in the Indenture shall be hereafter reduced to fifteen (15)
days.

      


      Subject
to a reasonable notice period, the Company will (a) permit Taberna to examine
the books and records of the company and its affiliates, (b) make management
representatives of the company and its affiliates available to Taberna to
discuss such books and records and any other business affairs of the company and
its affiliates, and (c) deliver such other instruments and documents with
respect to the company and its affiliates as Taberna may reasonably
request.

      


      The
Company shall be responsible for all costs and expenses (legal and otherwise),
not to exceed $50,000, incurred by Taberna in connection with the execution of
this letter agreement and any Supplemental Indenture entered into by the parties
hereto (the “Expenses”).  The Company agrees to deposit $50,000 with
Taberna in immediately available funds to cover the Expenses.  Please
confirm your agreement with the foregoing by signing and returning to the
undersigned a duplicate copy of this Agreement.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


       

      
        
          	
                  Sincerely,

                
	 
      
	
                  VESTIN
      REALTY MORTGAGE II, INC.

                
	 
      
	
                  By:
      __________________

                
	
                  Name:
      Michael V.
      Shustek

                
	
                  Title:
      President,
      CEO

                


        



      


      


      


      ACCEPTED
AS OF THE DATE FIRST

      WRITTEN:

      


      


      TABERNA
PREFERRED FUNDING VIII, LTD.

      


      TABERNA
PREFERRED FUNDING IX, LTD.

      


      By:           TABERNA
CAPITAL MANAGEMENT,

      LLC, as
Collateral Manager

      


      By:           ______________________________

      Name:
Michael A. Fralin

      Title:
Managing Director