A Stern Glance

On June 25, 2009, Vestin Realty Mortgage II, Inc. (Nasdaq: VRTB) entered into a letter agreement with Taberna Capital Management, LLC (Taberna) providing a mechanism for the potential retirement of Vestin II’s outstanding trust preferred securities. Under the letter agreement, upon execution of a custodial agreement, we will deposit $5 million for the purchase of replacement securities to be tendered in exchange for outstanding trust preferred securities. In addition, within sixty days after the first $5 million is paid, Vestin may in its discretion deposit up to $13,125,000 in additional cash for the purchase of additional replacement securities… Replacement securities will be tendered in exchange for trust preferred securities at a ratio which provides for a discount of 50% from the face amount of the trust preferred securities. If the company elects to purchase the full $18,125,000 of replacement securities, then such securities will be tendered in exchange for $36,250,000 of trust preferred securities. Vestin agreed to make a nonrefundable payment of $362,500 to Taberna to cover its costs related to the waiver and exchange arrangement.