exhibit10_1.htm


    
      

      

    

    

      SECOND
SUPPLEMENTAL INDENTURE

       

      THIS
SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of May
27, 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 II, 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, as amended by the First Supplemental Indenture dated as of February 3,
2009 (as so amended, and as amended by this Supplemental Indenture, the “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.

       

      WHEREAS,
the parties hereto desire to, among other things, amend the Indenture as of the
Effective Date upon the terms and conditions set forth herein to, among other
things:  (a) delete all provisions added by the First Supplemental
Indenture relating to the Letter of Credit, including (i) deleting the
definitions of “Eligible Institution” and “Letter of Credit” from Section 1.1 of the
Indenture, (ii) deleting the Event of Default relating to the Letter of Credit
and (iii) deleting Section 10.12 of the
Indenture which set forth the covenant regarding the Letter of Credit, and (b)
adding a provision in Section 3.1(a) of the
Indenture that requires the Company to pay modification payments with respect to
the Securities.

       

      WHEREAS,
the Holders have agreed to waive all defaults and Events of Default under Section 10.9 of the
Indenture for the period commencing as of December 31, 2008 and continuing
through the fiscal quarter ending June 30, 2009.

       

      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.                                Additions and Deletions of
Definitions.  Section 1.1 of the
Indenture is amended as follows:

       

      (a)           by
deleting the defined terms “Eligible Institution” and “Letter of
Credit”

       


      
        
           


        

        
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      (b)           by
adding a defined term “Modification Payment” which shall read in its entirety as
follows:

       

      “Modification
Payment” has the meaning specified in Section
3.1(a)(ii).

       

      Section
2.                                Addition of Requirement to
Pay Modification Payment.  Section 3.1 of the
Indenture is amended and restated to read in its entirety as
follows:

       

      “SECTION
3.1                                Payment
of Principal, Interest and Fees.

       

      (a)           (i)           The
unpaid principal amount of the Securities shall bear interest at a fixed rate
equal to 8.75% per annum through the interest payment date in July 2012 and
thereafter at a variable rate of LIBOR plus 3.50% per annum until paid or duly
provided for, such interest to accrue from the Original Issue Date or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, and any overdue principal, premium, if any, or Additional Tax Sums
and any overdue installment of interest shall bear Additional Interest at the
rate equal to a fixed rate equal to 8.75% per annum through the interest payment
date in July 2012 and thereafter at a
variable rate of
LIBOR plus 3.50% per annum compounded
quarterly from the dates such amounts are due until they are paid or funds for
the payment thereof are made available for payment.  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.

       

      (ii)           Commencing
as of April 30, 2009 and so long as any of the Securities are outstanding, the
Company shall pay a fee of $250,000 per annum payable quarterly in the amount of
$62,500 on each Interest Payment Date (the “Modification Payment”), which shall
be paid to the applicable Holders pro rata for the benefit of the holders of the
Preferred Securities based on the amount of Preferred Securities owned by such
holders.  Any overdue Modification Payment shall bear Additional
Interest at a fixed rate equal to 8.75% per annum through the interest payment
date in July 2012 and thereafter at a
variable rate of
LIBOR plus 3.50% per annum compounded
quarterly from the dates such amounts are due until they are paid or funds for
the payment thereof are made available for payment.

       

      (b)           Interest,
Additional Interest and the Modification Payment, on any Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, except that interest, any Additional Interest and
any Modification Payment payable on the Stated Maturity (or any date of
principal repayment upon early maturity) of the principal of a Security or on a
Redemption Date shall be paid to the Person to whom principal is
paid.  The initial payment of interest on any Security that is issued
between a Regular

       


      
        
           


        

        
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      Record
Date and the related Interest Payment Date shall be payable as provided in such
Security.

       

      (c)           Any
interest or Modification Payment on any Security that is due and payable, but is
not timely paid or duly provided for, on any Interest Payment Date for
Securities (herein called “Defaulted Interest”) shall forthwith cease to be
payable to the registered Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in paragraph (i) or (ii)
below:

       

      (i)           The
Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities (or their respective Predecessor Securities) are
registered at the close of business on a special record date for the payment of
such Defaulted Interest (a “Special Record Date”), which shall be fixed in the
following manner.  At least thirty (30) days prior to the date of the
proposed payment, the Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest.  Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest, which shall be not more
than fifteen (15) days and not less than ten (10) days prior to the date of the
proposed payment and not less than ten (10) days after the receipt by the
Trustee of the notice of the proposed payment.  The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first
class, postage prepaid, to each Holder of a Security at the address of such
Holder as it appears in the Securities Register not less than ten (10) days
prior to such Special Record Date.  Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered on such
Special Record Date; or

       

      (ii)           The
Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange or automated
quotation system on which the Securities may be listed, traded or quoted and,
upon such notice as may be required by such exchange or automated quotation
system (or by the Trustee if the Securities are not listed), if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
clause, such payment shall be deemed practicable by the Trustee.

       


      
        
           


        

        
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      (d)           Payments
of interest on the Securities shall include interest accrued to but excluding
the respective Interest Payment Dates.  During the Fixed Rate Period,
the amount of interest payable shall be computed on the basis of a 360-day year
of twelve 30-day months and the amount payable for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of twelve
30-day months.  Upon expiration of the Fixed Rate Period, the amount
of interest payable for any interest payment period will be computed on the
basis of a 360-day year and the actual number of days elapsed in the relevant
interest period.  The amount of the Modification Fee payable for any
period less than a full calendar quarter shall be computed on the basis of a
360-day year of twelve 30-day months.

       

      (e)           Payment
of principal of, premium, if any, interest and Modification Payments on the
Securities shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.  Payments of principal, premium, if any, interest and
Modification Payments due at the Maturity of such Securities shall be made at
the Place of Payment upon surrender of such Securities to the Paying Agent and
payments of interest and Modification Payments shall be made subject to such
surrender where applicable, by wire transfer at such place and to such account
at a banking institution in the United States as may be designated in writing to
the Paying Agent at least ten (10) Business Days prior to the date for payment
by the Person entitled thereto unless proper written transfer instructions have
not been received by the relevant record date, in which case such payments shall
be made by check mailed to the address of such Person as such address shall
appear in the Security Register.  Notwithstanding the foregoing, so
long as the holder of a Security is the Property Trustee, the payment of the
principal of (and premium, if any), interest (including any overdue installment
of interest and Additional Tax Sums, if any) and Modification Payments on such
Security will be made at such place and to such account as may be designated by
the Property Trustee.

       

      (f)           The
parties hereto acknowledge and agree that the holders of the Preferred
Securities have certain rights to direct the Company to modify the Interest
Payment Dates and corresponding Redemption Date and Stated Maturity of the
Securities or a portion of the Securities pursuant to the Purchase
Agreement.  In the event any such modifications are made to the
Securities or a portion of the Securities, appropriate changes to the form of
Security set forth in Article II hereof
shall be made prior to the issuance and authentication of new or replacement
Securities.  Any such modification of the Interest Payment Date and
corresponding Redemption Date and Stated Maturity with respect to any Securities
or tranche of Securities shall not require or be subject to the consent of the
Trustee.

       

      (g)           Subject
to the foregoing provisions of this Section 3.1, each
Security delivered under this Indenture upon transfer of or in exchange for or
in

       


      
        
           


        

        
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      lieu of
any other Security shall carry the rights to the Modification Payment when due
and to interest accrued and unpaid, that were carried by such other
Security.”

       

      Section
3.                                Modifications to Events of
Default.  Section 5.1 of the
Indenture is hereby amended as follows:

       

      (a)           Clause
(a) of Section
5.1 of the Indenture is amended and restated to read in its entirety as
follows:

       

      “(a)           default
in the payment of any interest upon any Security, including any Additional
Interest in respect thereof, or any Modification Payment payable, in each case,
when it becomes due and payable, and continuance of such default for a period of
thirty (30) days; or”

       

      (b)           Clause
(e) of Section
5.1 of the Indenture is amended by adding the word “or” at the end
thereof.

       

      (c)           Clause
(f) of Section
5.1 of the Indenture is amended by replacing the “; or” at the end of
clause (f) with
“.”; and

       

      (d)           Clause
(g) of Section
5.1 of the Indenture is deleted in its entirety.

       

      Section
4.                                Deletion of Provisions
Regarding Letters of Credit.  Section 10.12 of the
Indenture is hereby deleted in its entirety.

       

      ARTICLE
II

       

      


       

      WAIVER,
CONSENT AND CANCELLATION

       

      Section
1.                                Waiver and
Consent.  By execution of this Supplemental Indenture, each of
Vestin Capital, as Holder of Preferred Securities with a Liquidation Amount of
$3,750,000, TPF VIII, as Holder of Preferred Securities with a Liquidation
Amount of $28,125,000, and TPF IX, as Holder of Preferred Securities with a
Liquidation Amount of $28,125,000, hereby (a) waives any existing default that
may exist or arise under Section 10.9 of the
Indenture for the calendar quarters ending December 31, 2008 through and
including June 30, 2009, 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)           TPF
VIII and TPF IX each hereby represents and warrants for the benefit of the
Company and the trustee that (i) it owns and is the Holder of Preferred
Securities with a Liquidation Amount of $28,125,000; (ii) it has the authority
to execute and deliver this

       


      
        
           


        

        
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      Supplemental
Indenture and to perform or caused to be performed its obligations under this
Article II; and (iii) this Supplemental Indenture has been duly and validly
executed and delivered by it pursuant to all necessary action on its part and is
legal, valid and binding upon and enforceable against it in accordance with its
terms.

       

      (b)           The
Company hereby represents and warrants for the benefit of TPF VIII, TPF IX 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.  The
Company hereby represents and warrants for the benefit of the Trustee that the
Company owns and is the Holder of Preferred Securities with a Liquidation Amount
of $3,750,000.

       

      Section
3.                                   Cancellation.  The
Company, TPF VIII and TPF IX each acknowledge and agree that substantially
concurrently with the Effective Date, (a) TPF VIII shall transfer Preferred
Securities with a Liquidation Amount of $10,000,000 to the Company in exchange
for certain other securities, (b) TPF IX shall transfer Preferred Securities
with a Liquidation Amount of $10,000,000 to the Company in exchange for certain
other securities, and (c) the Company shall direct that the Preferred Securities
described in subsections (a) and (b) above, as well as the Preferred Securities
with a Liquidation Amount of $3,750,000 owned by the Company, shall be cancelled
substantially concurrently with the Effective Date but no later than three (3)
Business Days thereafter, such that after such Preferred Securities are
cancelled, Preferred Securities with a principal amount of $36,250,000 shall
remain outstanding under the Indenture.  No Modification Fees shall be
payable at any time or on account of any time period accruing prior to the
Effective Date or otherwise to holders of Preferred Securities that are being or
to be cancelled as set forth herein.

       

      ARTICLE
III

       

      


       

      MISCELLANEOUS

       

      Section
1.                                Trustee’s
Role.  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.                                No Other
Modifications.  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.                                Conditions to
Effectiveness.  This Supplemental Indenture, including the
amendments to the Indenture effected hereby, shall become effective as of the
date (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

       


      
        
           


        

        
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      delivery
of an Officer’s Certificate relating to this Supplemental Indenture in
accordance with Sections 1.2 and
9.3 of the
Indenture; (iv) the Company shall have paid the reasonable costs and expenses
(including but not limited to legal fees) of the Trustee in connection with this
Supplemental Indenture and the closing deliveries contemplated
herein.

       

      Section
4.                                Counterparts.  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.                                Governing
Law.  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.                                Interpretation.  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.]


      
        
           


        

        
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      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:           /s/ Michael
Shustek

      Name: Michael
Shustek 

      Title:
President and Chief Executive Officer

       

      VESTIN II
CAPITAL TRUST I

      


       

      By:           /s/ Michael
Shustek

      Name: Michael
Shustek 

      Title:  Administrative
Trustee

       

      


       


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


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

      as
Trustee

       

      By:          /s/ Bill
Marshall                                                      

              Name:  Bill
Marshall

              Title:  Vice
President

       


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      


      TABERNA
PREFERRED FUNDING VIII, LTD.

      


       

      By:           /s/ Alasdair
Foster

         
Name:  Alasdair Foster

         
Title:    Director

       

      TABERNA
PREFERRED FUNDING IX, LTD.

      


      


      By:           /s/ Alasdair
Foster

         
Name:  Alasdair Foster

         
Title:    Director