exhibit4_6.htm


    
      

      

    

    

      FIRST
SUPPLEMENTAL INDENTURE

       

      THIS
FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
dated as of February 3, 2009 (the "Effective Date"), is entered
into by and among VESTIN REALTY MORTGAGE II, INC., a Maryland corporation (the
"Company"), THE BANK OF
NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, a national banking
association, as successor trustee to The Bank of New York Trust Company,
National Association (the "Trustee"), and, solely as to
the provisions of Article III, TABERNA PREFERRED FUNDING VIII, LTD. ("TPF VIII"), TABERNA PREFERRED
FUNDING IX, LTD. ("TPF
IX") and VESTIN II CAPITAL TRUST I ("Vestin Capital").

       

       

      RECITALS

       

      WHEREAS,
reference is made to the Junior Subordinated Indenture, dated as of June 22,
2007 (the "Original
Indenture"), by and between the Company and the
Trustee.  Capitalized terms used herein and not defined herein shall
have the meanings given to such terms under the Indenture.  The term
"Indenture" as used
herein shall refer to the Original Indenture, as modified, amended and
supplemented by this Supplemental Indenture.

       

      WHEREAS,
the parties hereto desire to, among other things, amend the Original Indenture
as of the Effective Date upon the terms and conditions set forth herein to,
among other things: (a) amend Sections 2.1 and 11.1(a) of the Original
Indenture, and amend the form of Junior Subordinated Note, to delete the
restriction on the Company's ability to redeem the Securities prior to July 30,
2012 under the Original Indenture; (b) amend Section 5.1 of the Original
Indenture to provide that all notice and cure periods of thirty (30) days or
greater shall be reduced to fifteen (15) days; (c) amend certain
financial covenants as set forth in Section 10.9(a) and Section 10.9(b) of the
Original Indenture; (d) amend Section 11.2 of the Original Indenture to provide
that any Special Event Redemption be at par; (e) add additional Section 10.12 to
the Original Indenture to provide for delivery to Trustee of a letter of credit
in the aggregate amount of Five Million Dollars ($5,000,000.00) as additional
security for all payment obligations under the Preferred Securities, which
letter of credit and any draw thereon and application of the proceeds thereof
shall not be subordinated or subject to the terms of any Senior Debt; and (f)
amend Section 10.11 of the Original Indenture to provide the holders of the
Preferred Securities, including Taberna Capital Management, LLC ("Taberna"), in its capacity as
collateral manager for such Holders, with certain broader rights to inspect
books and records of the Company and its Affiliates, and the right to meet with
management representatives of the Company in connection with the business of the
Company and its Affiliates.

       

      WHEREAS,
the execution and delivery by the Company of this Supplemental Indenture has
been duly authorized by all requisite company action and all other action
required to make this Supplemental Indenture a valid and binding instrument has
been duly taken and performed.

       

      NOW,
THEREFORE, in consideration of the foregoing, the Trustee and the Company are
entering into this Supplemental Indenture pursuant to Section 9.2 of the
Indenture as follows:

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


       

      ARTICLE
I

       

      


       

      AMENDMENTS
TO INDENTURE

       

      Section
1.                      Section 1.1 of the
Indenture is amended by adding the following defined terms:

       

       

      "Eligible
Institution"  mean a depository institution insured by the
Federal Deposit Insurance Corporation the short term unsecured debt obligations
or commercial paper of which are rated at least "A-1" by Standard & Poor's
Ratings Group, "P-1" by Moody's Investors Service, Inc. and "F-1+" by Fitch
IBCA, Inc. in the case of accounts in which funds are held for thirty (30) days
or less (or, in the case of letters of credit or accounts in which funds are
held for more than thirty (30) days, the long term unsecured debt obligations of
which are rated at least "AA" by Fitch IBCA, Inc. and Standard & Poor's
Ratings Group and "Aa2" by Moody's Investors Service, Inc.).

       

      "Letter of Credit" means an
evergreen, irrevocable, unconditional, transferable, clean sight draft letter of
credit in form and substance acceptable to Taberna in favor of the Trustee and
entitling the Trustee to draw thereon in either New York, New York or Houston,
Texas (whether in person or by facsimile), issued in U.S. Dollars by a domestic
Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution.

       

      Section
2.                      Additional
Event of Default.  Section 5.1 of the
Indenture is amended to add an additional Event of Default by (a) deleting the
"or" at the end of Section 5.1(e), (b)
replacing the "." at the end of Section 5.1(f) with "; or" and
(c)  adding the following thereafter:

       

      "(g)           the
Company shall have failed in the performance of, or breached, any covenant,
warrant or obligation set forth in Section
10.12."

       

      Section
3.                      Notice
and Cure Periods.  Sections 5.1 and
5.3 of the
Indenture are hereby amended to provide that: (a) the thirty (30) day notice and
cure periods set forth in each of Sections 5.1(a), 5.1(c)(i) and Section
5.3(a)(i) of the Indenture and (b) the forty-five (45) day notice and cure
period set forth in Section 5.1(c)(ii) of the Indenture, are each hereby amended
to substitute such thirty (30) day and/or forty-five (45) day notice and cure
period with a fifteen (15) day notice and cure period.

       

      Section
4.                      Financial
Covenants.  Each of Section 10.9(a) and
Section 10.9(b)
of the Indenture is hereby deleted in its entirety and replaced with the
following:

       

      "SECTION
10.9.  Financial
Covenants.

       

      (a)  The
Company shall not permit Tangible Net Worth, at any time from and after
September 30, 2008 until Maturity, to be less than the lesser of (i)
$150,000,000 or
(ii) 2.5 times the then aggregate outstanding principal balance of the Preferred
Securities.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


       

      (b)  The
Company shall not permit, at any time from and after September 30, 2008 until
Maturity, 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 1.50 to 1 (the "Minimum Coverage"); provided,
however, the Minimum Coverage requirement shall be reduced to 1.20 to 1 for the
period ending June 30, 2009."

       

       For
the avoidance of doubt, Section 10.9(c) of the Original Indenture shall remain
unchanged and the Company shall remain obligated thereunder.

       

      Section
5.                         Inspection
Rights.  Section 10.11 of the Indenture is hereby deleted in its
entirety and replaced with the following:

       

      SECTION
10.11.  Inspection of Books and
Records.   Upon the request of the holders of the Preferred
Securities and/or Taberna Capital Management, LLC, the Company shall (a) permit
the holders of the Preferred Securities and/or Taberna Capital Management, LLC
to examine the books and records of the Company and its Subsidiaries and
Affiliates (and to make copies thereof and extracts therefrom) during normal
business hours, (b) make management representatives of the Company and its
Subsidiaries and Affiliates available to the holders of the Preferred Securities
and/or Taberna Capital Management, LLC during normal business hours to discuss
such books and records and any other business affairs of the Company and its
Subsidiaries and Affiliates as the holders of the Preferred Securities and/or
Taberna Capital Management, LLC may reasonably request, and (c) deliver such
other instruments and documents with respect to the Company and its Subsidiaries
and Affiliates as the holders of the Preferred Securities and/or Taberna Capital
Management, LLC may reasonably request.  All requests made by the
holders of the Preferred Securities and Taberna Capital Management, LLC pursuant
to this Section
10.11
shall provide for reasonable notice under the circumstances, and in any event at
least one (1) Business Day's notice.

       

      Section
6.                      Additional
Covenant - Letter of Credit.  The following Section 10.12 is
hereby added to Article X of the Indenture:

       

       

      SECTION
10.12.                                           Provisions Regarding Letters of
Credit.

       

      (a)           Delivery
of Letters of Credit.

       

      (i)           On
or prior to the Effective Date, the Company shall deliver to the Trustee a
Letter of Credit in the amount of the Five Million Dollars ($5,000,000.00), of
which $3,750,000 shall be available to be drawn down at any time after the
issuance thereof and the entire remaining balance thereof may be drawn at any
time after April 12, 2009.  Subject to the foregoing, the Trustee
shall have the right to draw down such Letter of Credit in full or in part as
set forth herein.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


       

      (ii)           In
no event shall (i) the Company be entitled to draw upon any Letter of Credit
delivered pursuant to this Indenture or (ii) any Person (including, without
limitation, any implied or other third-party beneficiary) other than the
Trustee, on behalf of the holders of the Preferred Securities, have any title,
right or interest in any Letter of Credit or any proceeds of a draw upon any
Letter of Credit.  Upon no less than thirty (30) days' prior written
notice to the Trustee, the holders of the Preferred Securities or Taberna
Capital Management, LLC may request that the Company replace any Letter of
Credit delivered pursuant to this Section 10.12 with one or more substitute
Letters of Credit of an equal notional amount from another Eligible Institution;
provided, however, that during the first calendar year following the date
hereof, if the Company has used all commercially reasonable, good faith efforts
to but has been unable to obtain such a replacement Letter of Credit, the
Company shall have an additional thirty (30) days to replace the Letter of
Credit.

       

      (iii)           Under
no circumstances shall the Trustee as beneficiary under any Letter of Credit for
the benefit of the holders of the Preferred Securities be required to transfer
any Letter of Credit to a second beneficiary.  In the event that the
holders of not less than a majority in aggregate principal amount of the
outstanding Preferred Securities determine that (i) the bank issuing any Letter
of Credit shall cease to be an Eligible Institution or (ii) the Trustee should
no longer hold any Letter of Credit, either the holders of not less than a
majority in aggregate principal amount of the outstanding Preferred Securities
or the Trustee may require that the existing Letter of Credit be cancelled and
that, upon such cancellation or return of the existing Letter of Credit to the
Company, one or more new Letters of Credit be issued as directed by the holders
of not less than a majority in aggregate principal amount of the outstanding
Preferred Securities by giving to each of the other parties hereto no less than
fifteen (15) days written notice of such requirement.

       

      (b)           Any
Letter of Credit delivered under this Indenture shall be security for all
payments due and to become due with respect to the Preferred
Securities.  Notwithstanding anything to the contrary contained in
this Indenture or any documents executed in connection herewith, each Letter of
Credit is collateral solely for the benefit of the holders of the Preferred
Securities, and no other Person shall have any right, title or interest in any
Letter of Credit or any proceeds drawn thereon.  The Trustee shall,
notwithstanding any contrary requirement or direction arising or given hereunder
(including pursuant to Article XII) or under any documents executed in
connection herewith, follow the written direction of the holders of a majority
in aggregate principal amount of the outstanding Preferred Securities as set
forth herein with respect to any draw on any Letter of Credit and application of
any proceeds of such draw and the Trustee shall not have any duty, obligation or
right to determine when and if a draw is to be made on any Letter of Credit or
how the proceeds of any Letter of Credit will be applied.  Upon notice
to Trustee from the holders of a majority in aggregate principal amount of the
outstanding Preferred Securities, which notice may be given upon the occurrence
of an Event of Default or event that with the giving of notice or passage of
time would constitute an Event of Default , the Trustee shall have the right to
draw on any Letter of Credit in full or in part, as directed by the holders of a
majority in aggregate principal amount of the outstanding Preferred
Securities,

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


       

       and
to apply all or any part thereof to any amounts then due and owing and/or to
become due and owing with respect to the Preferred Securities, as directed
solely by the holders of a majority in the aggregate principal amount of the
outstanding Preferred Securities.  The Trustee shall give the Company
written notice of any such application of funds.

       

      (c)           In
addition, the Trustee shall, as directed by the holders of a majority in
aggregate principal amount of the outstanding Preferred Securities, draw in full
any Letter of Credit:  (i) if the Trustee has received a notice from
the issuing bank or the Company that the applicable Letter of Credit will not be
renewed and a substitute Letter of Credit is not provided at least five (5)
Business Days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (ii) upon receipt of notice from the issuing bank or the
Company that the applicable Letter of Credit will be terminated (except if the
termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Indenture or a substitute Letter of Credit is provided no
later than five (5) Business Days prior to such termination); or (iii) if the
Trustee has received notice from either the issuing bank or the Company that the
bank issuing any Letter of Credit shall cease to be an Eligible Institution and
the Company has not replaced the outstanding Letters of Credit with substitute
Letters of Credit from an Eligible Institution within five (5) Business Days of
notice to the Company by the holders of a majority in aggregate principal amount
of the Preferred Securities.  The Company agrees that it will promptly
notify, in writing, the Trustee and the holders of a majority in aggregate
principal amount of the Preferred Securities of the occurrence of any event set
forth in clause (i), (ii) or (iii) of the preceding sentence. The Trustee shall
apply all or any part of the proceeds drawn on any Letter of Credit pursuant to
Section
10.12(b).  Notwithstanding anything to the contrary contained
in the above, the Trustee shall not be liable for any losses sustained by any
Person due to the insolvency of the bank issuing any Letter of
Credit.

       

      (d)           Notwithstanding
anything to the contrary contained herein, including Article XII, the
Company covenants and agrees that (i) each Letter of Credit shall be the
independent obligation of the Eligible Institution issuing such Letter of Credit
and that the Company has no right, title, or interest in any Letter of Credit
whatsoever and (ii) the Trustee shall have the right to draw upon any Letter of
Credit as set forth in this Section 10.12 and may
apply such proceeds to any amounts then due and owing and/or to become due and
owing with respect to the Preferred Securities, as directed by the holders of a
majority in aggregate principal amount of the outstanding Preferred Securities
and any such draw and application by the Trustee and/or the holders of the
Preferred Securities as set forth in this Section 10.12 hereof
shall (i) not be subordinate or subject in right of payment to the prior payment
in full of any Senior Debt, (ii) be permitted to be made prior to the payment of
any Senior Debt even if (A) a default has occurred and is continuing (whether at
maturity, by acceleration or otherwise) with respect to any Senior Debt, (B) any
Proceeding has been commenced or (C) any other condition exists pursuant to
Article XII or
otherwise in this Indenture or any other document executed in connection with
this Indenture that would, but for this Section 10.12(d),
prohibit such draw or application.

       

      Section
7.                      Redemption
Provisions.   Each Section 11.1 and Section 11.2 of the Original
Indenture is hereby deleted in its entirety and replaced with the
following:

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


       

       "SECTION
11.1.  Optional
Redemption and Mandatory Redemption.

       

      (a)  The
Company may, at its option, on any Interest Payment Date, redeem the Securities
in whole at any time or in part from time to time, at a Redemption Price equal
to one hundred percent (100%) of the principal amount thereof (or of the
redeemed portion thereof, as applicable), together, in the case of any such
redemption, with accrued and unpaid interest, including any Additional Interest,
through but excluding the date fixed as the Redemption Date (the "Optional Redemption
Price").

       

      (b)  The
Company shall, upon receipt of a Change of Control Election with respect to a
Change of Control which occurs after the Interest Payment Date in July 2012,
redeem the Electing Securities in whole on a date no more than thirty (30) days
after receipt of the Change of Control Election, at a Redemption Price equal to
one hundred percent (100%) of the outstanding principal amount thereof,
together, in the case of any such redemption, with accrued and unpaid interest,
including any Additional Interest, to but excluding the date fixed as the
Redemption Date (the "Mandatory Redemption
Price").

       

      SECTION
11.2. Reserved.

       

      Section
8.                      Special
Event Redemption Deleted. All references in the Indenture to the terms Special
Event and Special Redemption Price are hereby deemed deleted from the
Indenture.

       

       

      Section
9.                      Prepayment.  The
last sentence of Section 3.1(a) of the Original Indenture, which required that
the Company pay to the Holders all Breakage Costs, less Breakage Gains,
resulting from any prepayment of principal amount of the Securities prior to the
expiration of the Fixed Rate Period, is hereby deleted in its entirety and
replaced with the following:

       

      "The Company may, at its option,
prepay the principal amount of the Securities in whole at any time or in part
from time to time without any prepayment penalties in accordance with the
redemption provisions of Article XI." 

       

      Section
10.                                Conforming
Changes to Form of Security.  The third, fourth and fifth paragraphs
of the Form of Reverse of Security set forth in Section 2.1 of the Original
Indenture are hereby deleted in their entirety and replaced with the
following:

       

      "The
Company may, on any Interest Payment Date, at its option, upon not less than
thirty (30) days' nor more than sixty (60) days' written notice to the Holders
of the Securities (unless a shorter notice period shall be satisfactory to the
Trustee) and subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time at a Redemption Price equal to one hundred


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      percent
(100%) of the principal amount hereof, together, in the case of any such
redemption, with accrued interest, including any Additional Interest, through
but excluding the date fixed as the Redemption Date."

       

                  Further,
the Company shall, upon receipt of a Change of Control Election with respect to
a Change of Control which occurs after the Interest Payment Date in July 2012,
redeem the Securities in whole on a date no more than thirty (30) days after
receipt of the Change of Control Election, at a Redemption Price equal to one
hundred percent (100%) of the principal amount thereof, together, in the case of
any such redemption, with accrued and unpaid interest, including any Additional
Interest, to but excluding the date fixed as the Redemption Date."

       

      ARTICLE
II

       

      


       

      WAIVER
AND CONSENT

       

      Section
1.                      Waiver
and Consent.  By execution of this Supplemental Indenture, each of
Vestin Capital, as Holder of 100% of the Outstanding Securities, TPF VIII, as
Holder of approximately 50% of the aggregate principal amount of the Preferred
Securities, and TPF IX, as Holder of approximately 50% of the aggregate
principal amount of the Preferred Securities, hereby (a) waives any existing
default under Section 10.9(a) and Section 10.9(b) of the Original Indenture
prior to the date of this Supplemental Indenture and any such default shall be
deemed to have been cured for every purpose under the Indenture and (b) in
accordance with Section 9.2 of the Indenture, (i) consents to the Trustee and
the Company executing and delivering this Supplemental Indenture, (ii) directs
the Trustee to execute and deliver this Supplemental Indenture and (iii) agrees
to and does hereby release the Trustee for any action taken or to be taken by
the Trustee in connection with its execution and delivery of this Supplemental
Indenture and for any liability or responsibility arising in connection
herewith.

       

      Section
2.                      Representations
and Warranties.

       

      (a)           Taberna
hereby represents and warrants for the benefit of the Company and the Trustee
that (i) Taberna has been duly appointed as collateral manager for TPF VIII and
TPF IX; (ii) TPF VIII and TPF IX collectively own and are the Holders of all
Preferred Securities; (iii) as collateral manager, Taberna has the authority on
behalf of the Holders of the Preferred Securities to execute and deliver this
Supplemental Indenture and to perform or caused to be performed the obligations
of the Holders of the Preferred Securities under this Article II; and (iv) this
Supplemental Indenture has been duly and validly executed and delivered by TPF
VIII and TPF IX pursuant to all necessary action on their respective parts and
is legal, valid and binding upon and enforceable against TPF VIII and TPF IX in
accordance with its terms.

       

      (b)           The
Company hereby represents and warrants for the benefit of Taberna and the
Trustee that this Supplemental Indenture has been duly and validly executed and
delivered by the Company and is legal, valid and binding upon and enforceable
against the Company in accordance with its terms.

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


       

      Section
3.                      Each
of the Company, TPF VIII and TPF IX agrees that this Supplemental Indenture
contains the entire agreement among the Company, TPF VIII and TPF IX set forth
in that certain Letter Agreement, dated November 7, 2008 (the "Letter
Agreement"), and the entire Letter Agreement is hereby superseded by the terms
and conditions of this Supplemental Indenture.

       

      ARTICLE
III

       

      


       

      MISCELLANEOUS

       

      Section
1.                      The
Trustee accepts the trust in this Supplemental Indenture declared and provided
upon the terms and conditions set forth in the Indenture.  The Trustee
shall not be responsible in any manner whatsoever for the validity or
sufficiency of this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals and statements contained herein,
all of which recitals and statements are made solely by the
Company.

       

      Section
2.                      Except
as hereby expressly modified, the Indenture and the Securities issued thereunder
are ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect.

       

      Section
3.                      This
Supplemental Indenture, including the amendments to the Original Indenture
effected hereby, shall become effective as of the Effective Date only upon the
satisfaction of the following conditions:  (i) the delivery of a
counterpart of this Supplemental Indenture duly executed by the Company, Vestin
Capital, the Trustee and TPF VIII and TPF IX, (ii) the delivery of an Opinion of
Counsel relating to this Supplemental Indenture in accordance with Sections 1.2
and 9.3 of the Indenture, (iii) the delivery of an Officer's Certificate
relating to this Supplemental Indenture in accordance with Sections 1.2 and 9.3
of the Indenture; (iv) delivery of a Letter of Credit meeting the requirements
of this Indenture, (v) the Company shall have paid the reasonable costs and
expenses (including but not limited to legal fees of the Trustee, the holders of
the Preferred Securities and Taberna not to exceed Fifty Thousand Dollars
($50,000)) in connection with this Supplemental Indenture and the closing
deliveries contemplated herein.

       

      Section
4.                      This
Supplemental Indenture may be executed in any number of counterparts, each of
which shall be deemed to be an original for all purposes; but such counterparts
shall together be deemed to constitute but one and the same
instrument.  The executed counterparts may be delivered by facsimile
transmission or by scanned and emailed transmission, which facsimile or scanned
copies shall be deemed original copies with originals to follow via overnight
courier.

       

      Section
5.                      The
laws of the State of New York shall govern this Supplemental Indenture without
regard to the conflict of law principles thereof (other than Section 5-1401 of
the General Obligations Law).

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


       

      Section
6.                      In
the event of any inconsistency between the terms and provisions of this
Supplemental Indenture and the Indenture, the terms and provisions of this
Supplemental Indenture shall prevail.

       

       [Signature
pages follow.]


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


       

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

       

      VESTIN
REALTY MORTGAGE II, INC.,

      as
Company

       

      By:           

      Name:

      Title:

       

      VESTIN II
CAPITAL TRUST I

      (as to
Article II only)

       

      By:           

      Name:

      Title:

       

       [Signature
Pages to First Supplemental Indenture - Vestin]

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      THE BANK
OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

      as
Trustee

       

      By:           

      Name:

      Title:

       

       [Signature
Pages to First Supplemental Indenture - Vestin]

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


      TABERNA
PREFERRED FUNDING VIII, LTD.

      (as to
Article II only)

       

      TABERNA
PREFERRED FUNDING IX, LTD.

      (as to
Article II only)

       

      
        	
                 
      

              	
                By:

              	
                TABERNA
      CAPITAL MANAGEMENT, LLC, as Collateral
Manager

              


      

      


      By:                                                      

      Name:                                                                

      Title:                                                                

       

       [Signature
Pages to First Supplemental Indenture - Vestin]