Exhibit 10.4

 

COMMONWEALTH OF THE BAHAMAS

New Providence

 

THIS SUPPLEMENTAL DEBENTURE is made the        day of           A. D. 2007

 

BETWEEN:

 

(1)      ROYAL ISLAND BAHAMAS LTD., a company incorporated under the laws of the
Commonwealth of The Bahamas whose registered office is at Suite 400, The British
Colonial Hilton, Centre of Commerce, No.1 Bay Street, P.O. Box N-9740, Nassau,
Bahamas (“the Company”)

 

AND

 

(2)      iSTAR FINANCIAL INC., a Maryland corporation, as agent on behalf of the
Lenders (as defined in the Credit Agreement), having an office at 1114 Avenue of
the Americas, New York, New York 10036 (“the Agent” which expression where the
context so admits shall include its successors and assigns)

 

WHEREAS:

 

(A)          1. This deed is supplemental to a Promissory Note (hereinafter
referred to as the “Note”) dated the 20th day of December A.D., 2007 and made
between the Company, as Borrower of the one part and the Agent of the other part
and now about to be lodged for record at the Registry of Records in the City of
Nassau in the Island of New Providence one of the Islands of the Commonwealth of
The Bahamas whereunder the Agent agreed to advance to the Company the sum of
Sixty Million Dollars in the currency of the United States of America
(US$60,000,000.00) (hereinafter referred to as “the said currency”) and interest
thereon as therein provided subject to and upon the terms and conditions therein
contained.

 

(B)           Upon treaty of the said advance it was agreed that in addition to
the Note the Company should enter into this Supplemental Debenture and charge
the property described in Clause 2 hereof with the payment of principal and
interest thereon and all other manner due to the Agent under the Note as
collateral security to the Note in the manner hereinafter appearing and also
upon the condition that the Company shall enter into the covenants hereinafter
contained;

 

NOW THIS DEBENTURE WITNESSES as follows:

 

1.             Interpretation and definitions

 

Capitalized terms used herein but not otherwise defined shall have the meanings
set forth for such terms in a Credit Agreement dated the 20th day of December
A.D. 2007 and made between (i) the Company, Royal Island Golf Club Bahamas Ltd.,
and RIBL US Borrower LLC, as Borrowers of the one part, (ii) the banks and
financial institutions and other entities listed therein, as Lenders and (iii)
iStar Financial Inc., as Agent of the other part (hereinafter “the “Credit
Agreement”).

 

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In this Debenture:

 

1.1           “the Charged Assets” means the goodwill, undertaking, property,
assets, revenues, rights and other assets charged under clause 2.1;

 

1.2           “the Charged Property” means the property referred to in clauses
2.1.1 and 2.1.2;

 

1.3           “control” means owning (whether as registered holders of shares or
as beneficiary under any trust for the same) or being entitled to acquire or so
own a majority of the share capital or voting power of the Company or through
being entitled to the greater part of the assets of the Company on a winding up;

 

1.4           “the Default Rate” means default rate of interest charged pursuant
to Section 2.5B of the Credit Agreement;

 

1.5           “an Event of Default” means an Event of Default as defined in the
Credit Agreement;

 

1.6           “financial year” means the Fiscal Year of the Company as defined
in the Credit Agreement ;

 

1.7           “the Incumbrances” means all covenants restrictions stipulations
exceptions reservations and rent charges to which the Charged Property is
subject and any Permitted Encumbrances as defined in the Credit Agreement;

 

1.8           “the Receiver” has the meaning given to it in clause 11.1 and
includes any substituted receiver(s) and manager(s);

 

1.9           “the Securities” means the property referred to in clause 2.1.4;

 

1.10         “subsidiary” has the meaning given to it in the Companies Act 1992
section 2

 

1.11         the expressions “the Company” and “the Agent”, where the context
admits, include their respective successors and assigns, whether immediate or
derivative;

 

1.12         reference to any statute or statutory provision includes a
reference to:

 

1.12.1          that statute or statutory provision as from time to time amended
extended or re-enacted or consolidated, and

 

1.12.2          all statutory instruments or orders made pursuant to it;

 

1.13         words denoting the singular number only include the plural and vice
versa;

 

1.14         words denoting any gender include all the genders, and words
denoting persons include firms and corporations and vice versa;

 

1.15         unless the context otherwise requires, reference to a clause or
schedule is to a clause or schedule of this Debenture; and

 

1.16         the clause headings do not form part of this Debenture, are for
convenience only, and shall not be taken into account in its construction or
interpretation.

 

2.             Fixed and floating charges

 

2.1           As a continuing security for the payment of all money and the
discharge of all obligations and liabilities covenanted to be paid or met or
otherwise secured under this Debenture, the Company, as beneficial owner,
hereby:

 

2.1.1            grants and conveys to the Agent the Company’s right, title and
interest in ALL THAT the freehold property more particularly described in the
First Schedule TO HOLD the same unto and to the use of the Agent in accordance
with this Debenture, the Credit Agreement and other Loan Documents in fee simple
subject only to the Incumbrances;

 

2.1.2            assigns to the Agent the Company’s right, title and interest in
ALL THAT the leasehold property of the Company more particularly described in
the Second Schedule TO HOLD

 

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the same unto the Agent in accordance with this Debenture, the Credit Agreement
and other Loan Documents for all the unexpired residue of the term of any lease
or tenancy in respect of the same and any renewal thereof subject only to the
terms and conditions of any lease or tenancy agreement of the same;

 

2.1.3            charges to the Agent all other freehold and leasehold property
of the Company both present and future and all buildings, improvements
(including all infrastructure improvements and public improvements) and fixtures
(including trade fixtures), plant, machinery, vehicles, computers and office and
other equipment of the Company both present and future (excluding stock in trade
of the Company) from time to time on that property or the Charged Property or
used in connection with that property or the Charged Property , with the benefit
of all existing and future leases, under leases, tenancies and agreements
relating to such property or the Charged Property (including all rents and
profits from all such property including the Charged Property );

 

2.1.4            charges all stocks, shares, bonds and securities of any kind
whether marketable or otherwise, and all other interests including (but not
limited to) loan capital of the Company both present and future in any company,
firm, consortium or entity including all allotments, accretions, offices,
rights, benefits and advantages at any time accruing, offered or arising in
respect of or incidental to such stocks, shares, bonds and securities and all
stocks, shares, rights, money or property accruing to them or offered at any
time by way of conversion, redemption, bonus, preference, option or otherwise in
respect of them;

 

2.1.5            charges all book and other debts, revenues and claims both
present and future (including things in action which may give rise to a debt,
revenue or claim) due or owing or which may become due or owing to, or be
purchased or otherwise acquired by, the Company, and the full benefit of all
rights and remedies relating to such book and other debts, revenues and claims
including (but not limited to) any negotiable or non-negotiable instruments,
guarantees, indemnities, debentures, legal and equitable charges and other
security, reservation of proprietary rights of tracing, liens and all other
rights and remedies of any nature in respect of such property;

 

2.1.6            charges the uncalled capital, goodwill and all patents, patent
applications, trade marks, trade names, registered designs and copyrights, and
all licences and ancillary and connected rights relating to the intangible
property both present and future of the Company;

 

2.1.7            charges all of the Company’s right, title and interest in water
and water rights, timber crops, and mineral interests pertaining to the Charged
Property;

 

2.1.8            charges to the extent assignable, all entitlements, permits,
approvals, franchises, certificates and all other rights, privileges and
entitlements obtained now or in the future in connection with the Charged
Property and the property described in clause 2.1.3;

 

2.1.9            charges any contracts relating to the Charged Property and
property described in clause 2.1.3 (including all construction related
agreements, license agreements, service agreements, maintenance agreements,
management agreements and other agreements relating to the development of the
Charged Property);

 

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2.1.10         charges all deposits, Lender accounts, financial assets, funds,
instruments, investment property, notes or chattel paper arising from or by
virtue of any transactions related to the Charged Property and property
described in clause 2.1.3;

 

2.1.11         charges all proceeds arising from or by virtue of the sale, lease
or other disposition of the Charged Property and property described in clause
2.1.3;

 

2.1.12         charges all proceeds (including premium refunds) of each policy
of insurance relating to the Charged Property and property described in clause
2.1.3;

 

2.1.13         charges all proceeds from the taking or condemnation of any of
the Charged Property or property described in clause 2.1.3 or any rights
appurtenant thereto by right of eminent domain or by private or other purchase
in lieu thereof, including change of grade of streets, curb cuts or other rights
of access, for any public or quasi-public use under any law;

 

2.1.14         charges all of the Company’s right, title and interest in all
streets, roads, public places, easements and rights-of-way, existing or
proposed, public or private, adjacent to or used in connection with, belonging
or pertaining to the Charged Property;

 

2.1.15         charges all of the Company’s right title and interest in all
right, hereditaments and appurtenances pertaining to the foregoing;

 

2.1.16         charges other interests of every kind and character that the
Company now has or at any time hereafter acquires in and to the Charged Property
and property described in clause 2.1.3 and in and to all other real property,
personal property and other property that is used or useful in connection
therewith, including rights of ingress and egress and all reversionary rights or
interests of the Company with respect to such property; and

 

2.1.17         charges the undertaking and all other assets of the Company both
present and future, including (but not limited to) the stock in trade of the
Company, which are or may be from time to time while this Debenture is in force
comprised in the property and undertaking of the Company, and the property
described in clauses 2.1.3 to 2.1.6 if and in so far as the charges on that
property, or on any part or parts of that property, contained in this Debenture
are for any reason ineffective as fixed charges.

 

2.2           The charges created by clause 2.1 shall as regards the property
described in clauses 2.1.1 and 2.1.2 be first legal mortgages and the charges
created by clauses 2.1.3 to 2.1.15 be fixed charges and as to the property
described in clauses 2.1.16 and 2.1.17 shall be a first floating charge (subject
to clause 3.2), and in all such instances shall be subject to any Permitted
Encumbrances.

 

3.             Restrictions on the Company

 

3.1           The Company covenants that it will not (without the prior consent
in writing of the Agent), except to the extent permitted under the Credit
Agreement:

 

3.1.1           sell, assign, discount, part with, pledge, charge or otherwise
dispose of all or any part of the property described in clause 2.1.5 or deal
with it save in accordance with clause 8.15; or

 

3.1.2           (except for charges in favour of the Agent created under this
Debenture) create, attempt to create, assume, suffer to exist or permit to
subsist any mortgage, debenture, charge

 

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or pledge or permit any lien or other Incumbrance (save a lien arising by
operation of law in the ordinary course of trading) to arise on or affect all or
any of the Charged Assets; or

 

3.1.3            part with possession or transfer, sell, lease or otherwise
dispose of all or any of the Charged Assets or attempt or agree so to do (save
in the case of stock in trade charged by way of floating charge only which may
be sold at market value in the usual course of trading conducted at the date of
this Debenture and for the purpose of carrying on its business to the extent
permitted by the Credit Agreement).

 

3.1.4            create or issue any loan capital paid up or credited as paid up
in whole or part from a capitalisation of profits or reserves, issue any further
shares, except to the present shareholders, or register any transfer of shares,
except to a spouse, child or personal representative of an existing shareholder
or beneficiary under his or her will or intestacy; or

 

3.1.5            vary, surrender, cancel, assign, charge or otherwise dispose of
or permit to be forfeited its leasehold interest in any part of the Charged
Property or any credit sale, hire purchase, leasing, rental, licence or like
agreement for any material equipment used in its business or agree any rent
review but shall generally fulfil its obligations under every such lease and
agreement and when required produce to the Agent proof of all payments from time
to time due from the Company under such lease or agreement.

 

3.2           Notwithstanding anything in this Debenture, if, contrary to clause
3.1.2 the Company charges, pledges or otherwise incumbers any of the Charged
Assets described in clause 2.1.17 without the prior consent in writing of the
Agent, or attempts to do so, or if any creditor or other person attempts to
bring any distress, execution, sequestration or other process against any of the
Charged Assets described in clause 2.1.17, the floating charge created under
this Debenture over those assets shall automatically, without notice, operate as
a fixed charge instantly on such event occurring.

 

3.3           Except in every such case as may be permitted under the Credit
Agreement, during the continuance of this security the statutory and any other
powers of leasing, letting, entering into agreements for leases or lettings, and
accepting or agreeing to accept surrenders of leases or tenancies shall not in
relation to all or any part of the Charged Assets be exercisable by the Company,
nor shall the Company part with possession of all or any part of the Charged
Assets, confer any licence, right or interest to occupy, grant any licence or
permission to assign, underlet or part with possession of all or any part of the
Charged Assets, or agree suffer or permit any variation or addition to the terms
of any lease, tenancy or licence or otherwise without in every such case
obtaining the prior consent in writing of the Agent under the hand of an Officer
of the Agent.

 

4.             Recording at the Registry of Records

 

The Company will lodge for record in the Registry of Records all deeds and
documents relating to the Charged Assets from time to time and will direct the
Registrar General to return the same upon proper recording to the Agent.

 

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5.             Ranking

 

This Debenture shall constitute a first priority incumbrance on the property
described herein, subject to any Permitted Encumbrances.

 

6.             Lender accounts

 

The Company agrees that the Agent may, at any time without notice, after an
Event of Default, notwithstanding any settlement of account or other matter,
combine or consolidate all or any of its then existing accounts at any branch of
the Agent, including accounts in the name of the Agent or of the Company jointly
with others, and set-off or transfer any sum standing to the credit of any one
or more such accounts in or towards satisfaction of any money due or obligations
or liabilities of the Company to the Agent, whether such liabilities are
existence at the date of this Debenture or at the relevant time, actual,
contingent, primary, collateral, several or joint.

 

7.             Events of Default

 

The Agent shall cease to be under any further commitment to the Company, all
money and liabilities secured under this Debenture shall immediately become due
and payable on demand, and the security shall become enforceable if, pursuant to
the terms of the Credit Agreement an Event of Default shall have occurred.

 

8.             Covenants by the Company

 

The Company covenants with the Agent, to the extent required by and except as
provided in the Credit Agreement, that during the continuance of this security
the Company and each of its subsidiaries (if any) will at all times and, where
applicable immediately, observe the obligations and restrictions set out below.

 

8.1           Events of default

 

To the extent required by the Credit Agreement, the Company will notify the
Agent by fax or telex, confirmed in writing, of the occurrence of any event
which will or may in due course constitute an Event of Default.

 

8.2           Conduct of business

 

The Company will conduct and carry on its business in a proper, efficient and
business-like manner, in accordance with the Credit Agreement.

 

8.3           Accounts

 

The Company will furnish to the Agent financial statements and reports as the
Agent may reasonably require.

 

8.4           Book debts

 

The Company will pay all money which it receives in respect of book or other
debts as required under the Credit Agreement, and without prejudice to the
provisions of this Debenture, the Company will not without the prior consent of
the Agent (unless otherwise permitted under the Credit Agreement) sell, factor,
discount, charge, or assign any assets described in clause 2.1.5, or purport to
do so, and will if called upon by the Agent from time to time execute legal
assignments of any book or other debts to the Agent.

 

8.5           Covenants

 

The Company will observe and perform all covenants and stipulations from time to
time affecting its freehold and leasehold or the mode of use or enjoyment of
such property, and will not enter into any obligations affecting any such
property except in accordance with the Credit Agreement or erect, or commence to
erect, or cause or procure to be erected or commenced, or remove or demolish,
any building as defined in, or otherwise in contravention of, the Town Planning
Act 1961, or do or suffer or

 

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omit to be done any act, matter or thing which would infringe any provision of
any statute, order or regulation of a Governmental Authority from time to time
in force affecting any such property.

 

8.6           Intellectual and other property

 

The Company will observe and perform all covenants and stipulations from time to
time affecting its patents, patent applications, trade marks, trade names,
registered designs and copyrights and all other industrial or intangible
property, or any licence, distributorship or franchise agreement or ancillary or
connected rights from time to time relating to industrial or intangible
property, and preserve, maintain and renew when necessary or desirable all such
licences, distributorship or franchise agreements and rights, in any case in
accordance with the Credit Agreement.

 

8.7           Proceedings

 

The Company will use its best endeavours to enforce and at its own cost
institute, continue or defend all proceedings relating to any of the Charged
Assets.

 

8.8           Repairs

 

The Company will keep all buildings and erections and all plant, machinery,
fixtures, fittings, vehicles, computers and office and other equipment, and
every part of such property, in good and substantial repair and in good working
order and condition and not pull down or remove, or sell or otherwise dispose of
any of such property except as permitted in the Credit Agreement or otherwise
without the prior consent in writing of the Agent except in the ordinary course
of use, repair, maintenance or improvement. If the Company is at any time in
default in complying with this covenant, the Agent may, but is not bound to,
repair and maintain such property, with power for the Agent, its agents, and
their respective employees to enter any of the Company’s property for that
purpose or to inspect the property. Any sum so expended by the Agent shall be
repayable by the Company to the Agent in accordance with the Credit Agreement.

 

8.9           Insurance

 

The Company shall at its own expense insure and keep insured any of the Charged
Assets in accordance with the Credit Agreement.

 

8.10         Outgoings

 

The Company will punctually pay, and indemnify the Agent and any receiver
appointed by it against, all existing and future rent, rentcharges, fees, rates,
taxes, duties, charges, assessments, impositions and outgoings (whether imposed
by agreement statute or otherwise and whether in the nature of capital or
revenue and even if wholly novel) now or at any time during the continuance of
this security payable in respect of all or any part of the Charged Assets or by
the owner or occupier of those assets if and to the extent required under the
Credit Agreement. If any such sums are paid by the Agent or by any receiver the
sums must be repaid by the Company in accordance with the Credit Agreement.

 

8.11         Subsidiaries

 

Except as provided in the Credit Agreement, the Company will not (without the
prior consent in writing of the Agent) form or acquire any subsidiary or
transfer, sell, lease or otherwise dispose of any Charged Assets to any
subsidiary save on terms previously approved in writing by the Agent.

 

8.12         Notices

 

To the extent required under the Credit Agreement, the Company will, upon
receipt of it, produce to the Agent a copy and full details of any notice, order
or proposal given, issued or made by any Government or local or other authority
relating to any of the Charged Assets, and without delay take all necessary
steps to comply with the notice or order (or if the Agent so agrees or

 

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stipulates, appeal against it), or serve any appropriate counter-notice so as to
protect the Charged Assets, and also, at the request of the Agent (but at the
expense of the Company), make or join with the Agent in making any objections or
representations in relation to the notice or order that the Agent considers or
agrees are expedient. Any compensation received by the Company as a result of
such notice or order shall be applied in the reduction of the money due to the
Agent from the Company unless the Agent otherwise agrees.

 

8.13         Debts

 

The Company will get in and realise all book and other debts and claims charged
under this Debenture in the ordinary course of its business, and pay all money
which it may receive in respect of those book and other debts and claims into
its account with the Agent or to such account as the Agent from time to time
directs immediately on receipt, and pending such payment will hold such money on
trust for the Agent. Except as provided in the Credit Agreement, the Company
will not (without the prior consent in writing of the Agent) charge or otherwise
dispose of or release, exchange, compound, set off or grant time or indulgence
in respect of, or otherwise deal with all or any of those book and other debts
and claims, or purport so to do.

 

 

8.14         Encroachments and Title

 

Except as provided in the Credit Agreement, the Company will prevent any
encroachments, easements or other rights, possessory or otherwise, from arising
or being made or acquired over the Charged Property.  The Company warrants that
it holds and will maintain good and marketable title to the Charged Property and
property described in provisions 2.1.3, subject to the Permitted Encumbrances.

 

8.15         Redemption of shares

 

The Company will not (without the prior consent in writing of the Agent) redeem
or purchase its own shares.

 

8.16         Deposit of documents

 

To the extent required under the Credit Agreement or the other Loan Documents,
the Company will deposit with the Agent or a nominee of the Agent, and permit
the Agent or its nominee during the continuance of this security to hold and
retain:

 

8.16.1          all deeds and documents of title relating to all freehold and
leasehold property from time to time belonging to the Company (and the insurance
policies relating to such property);

 

8.16.2          all stock and share certificates and documents of title relating
to the Securities, and such deeds of transfer in blank and other documents as
the Agent may from time to time require for perfecting its title to the
Securities (executed by or signed on behalf of the registered holder) or for
vesting or enabling it to vest the Securities in itself or its nominees or in
any purchaser;

 

8.16.3          all assurance policies from time to time effected by the Company
on the lives of key employees; and

 

8.17.4          all such documents relating to the Charged Assets as the Agent
may from time to time require.

 

8.17         Dividends

 

Except to the extent permitted under the Credit Agreement, the Company will not,
without the written consent of the Agent withdraw from its business any amounts
or declare any dividends on its share capital or pay or agree to pay to its
directors or officers fees or other emoluments or remuneration.

 

8.18         Capital Works

 

Except as contemplated by the Development Budget (as defined in the Credit
Agreement) or as permitted by the Credit Agreement, the

 

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Company will not, without the written consent of the Agent (and then only to the
extent that such consent permits and in accordance with any condition attached
to such consent), incur or enter into any works of a capital nature in respect
of the Charged Property of a significant amount in each calendar year, or make
or incur any expenditure or liabilities of an exceptional or unusual nature.

 

8.19         Loans

 

Except to the extent permitted by the Credit Agreement, the Company will not,
without the written consent of the Agent make, waive or forgive the repayment of
any loans by the Company, or give or extend any credit, or make or cause to be
made any repayment of, or otherwise reduce, any loans (whether in existence at
the date hereof or during the continuance of the present security) to or on
behalf of the Company or its business from shareholders or others, or other
reduction, discharge or satisfaction of the Company’s indebtedness to such
persons, or other withdrawals of capital, or give any guarantee or provide any
credit.

 

8.20         Licences

 

The Company will use its best endeavours to obtain all licences and renewals of
licences necessary or desirable in relation to the carrying on of the business
of the Company and (if and when required by the Agent) to obtain a transfer of
such licences or any of them to the Agent or its nominee.

 

8.21         Value

 

The Company will not do or cause or permit to be done anything which may in any
way prejudice the value to the Agent of the Charged Assets.

 

9.             Further security

 

The Company will at any time, if and when required by the Agent, execute any
further legal or other mortgages, fixed or floating charges or assignments in
favour of the Agent over all or any of the Charged Assets, both present and
future, that the Agent from time to time requires to secure all money,
obligations and liabilities secured under this Debenture. Such further mortgages
charges or assignments are to be prepared by or on behalf of the Agent at the
cost of the Company and must contain an immediate power of sale without notice,
a clause excluding the Conveyancing and Law of Property Act 1909 section 19 and
the restrictions contained in section 22 of that Act, and such other clauses for
the benefit of the Agent as the Agent may reasonably require.

 

10.          Powers of the Agent

 

10.1         At any time after the Agent has demanded payment of any money or
the discharge of any obligation or liability secured by this Debenture (to the
extent Agent is permitted to do so under the Credit Agreement) the Agent may
exercise, without further notice, without the restrictions contained in the
Conveyancing and Law of Property Act 1909 section 22, and whether or not it has
appointed a receiver, all the powers conferred on mortgagees by that Act as
varied or extended by this Debenture and all the powers and discretions
conferred by this Debenture either expressly or by reference to a receiver
appointed under this Debenture.

 

10.2         The Conveyancing and Law of Property Act 1909 section 19 shall not
apply to this security or to any security given to the Agent under this
Debenture.

 

10.3         The statutory powers of leasing conferred on the Agent shall be
extended so as to authorise the Agent to lease and make agreements for leases,
at a premium or otherwise, and accept surrenders of leases and grant options as
the Agent considers expedient and without the need to observe any of the
provisions of

 

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the Conveyancing and Law of Property Act 1909 section 20, but in any event only
to the extent that Agent is permitted to exercise remedies under the Credit
Agreement.

 

11.           Receiver

 

11.1         Appointment

 

At any time after the Agent’s demand for payment of any money under the Credit
Agreement (to the extent Agent is permitted to do so under the Credit
Agreement), the Agent may, in writing under the hand of any officer of the
Agent, appoint any person or persons (“the Receiver”) to be an administrative
receiver or manager and receiver or manager, or any combination of those things,
of all or any part of the Charged Assets. The Agent may authorise any joint
receiver or manager to exercise any power independently of any other joint
receiver or manager, may from time to time fix the remuneration of the Receiver,
and may remove the Receiver and appoint another in his place.

 

11.2         Agency

 

After and during the continuation of an Event of Default, the Receiver and any
Manager shall be the agent of the Company, and the Company shall be solely
responsible for his acts or defaults and for his remuneration.

 

11.3         Powers

 

The Receiver shall have all the powers conferred from time to time on receivers
by statute, in the case of the powers conferred by the Conveyancing and Law of
Property Act 1909 without the restrictions contained in section 22 of that Act,
and in addition power on behalf and at the cost of the Company (notwithstanding
liquidation of the Company) to do or omit to do anything which the Company could
do or omit to do in relation to all or any part of the Charged Assets, but in
any case only to the extent permitted under the Credit Agreement. In particular
(but without limitation) the Receiver may, to the extent Agent is permitted to
exercise remedies under the Credit Agreement:

 

11.3.1       take possession of collect and get in all or any of the Charged
Assets, exercise in respect of the Securities all voting or other powers or
rights available to a registered holder of the Securities as he may think fit,
and bring defend or discontinue any proceedings or submit to arbitration in the
name of the Company or otherwise as may seem expedient to him;

 

11.3.2       carry on, manage, develop, reconstruct, amalgamate or diversify all
or any part of the business of the Company or concur in so doing, lease or
otherwise acquire and develop or improve properties or other assets without
being responsible for loss or damage, and raise or borrow any money (including
money for the completion with or without modification of any building in the
course of construction and any development or project in which the Company was
engaged) from or incur any other liability to the Agent or others on such terms
with or without security as he may think fit, so that any such security may be
or include a charge on the whole or any part of the Charged Assets ranking in
priority to this security or otherwise;

 

11.3.3       (without the restrictions imposed by the Conveyancing and Law of
Property Act 1909 section 22 or the need to observe any of the provisions of
section 20 of that Act) sell by public auction or private contract, let,
surrender or accept surrenders, grant licences or otherwise dispose of or deal
with all or any of the Charged Assets, or concur in so doing, in any manner, for
any consideration and generally on any

 

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terms and conditions he thinks fit, with full power to convey, let, surrender,
accept surrenders or otherwise transfer or deal with the Charged Assets in the
name, and on behalf, of the Company or otherwise, and so that covenants and
contractual obligations may be granted and assumed in the name of and so as to
bind the Company (or other the estate owner) if he considers it necessary or
expedient so to do;

 

11.3.4       promote the formation of a subsidiary company of the Company with a
view to the subsidiary purchasing, leasing, licensing or otherwise acquiring
interests in all or any of the Charged Assets, and arrange for the subsidiary to
trade or cease to trade on such terms and conditions as he may think fit;

 

11.3.5       make any arrangement or compromise or enter into or cancel any
contracts that Agent thinks expedient;

 

11.3.6       make and effect any repairs, renewals and improvements to all or
any part of the Charged Assets as he thinks fit and maintain, renew take out or
increase insurances;

 

11.3.7       appoint managers, agents, officers and employees for any of the
above purposes or to guard or protect the Charged Assets at such salaries and
commissions and for such periods and on such terms as he may determine, with
power to dismiss them;

 

11.3.8       make calls conditionally or unconditionally on the members of the
Company in respect of uncalled capital;

 

11.3.9       without any further consent by or notice to the Company, exercise
on behalf of the Company all the powers and provisions conferred on a landlord
or a tenant in respect of any part of the property charged by this Debenture,
but without any obligation to exercise any of these powers and without any
liability in respect of powers so exercised or omitted to be exercised; and

 

11.3.10     sign any document, execute any deed and do all other acts and things
that may be considered by him to be incidental or conducive to any of the
matters or powers referred to in this clause 11 or to the realisation of the
Agent’s security, and use the name of the Company for all the purposes referred
to in this clause 11.

 

11.4         Application of money

 

All money received by the Agent or by the Receiver shall be applied, after the
discharge of the remuneration and expenses of the Receiver and all liabilities
having priority to such costs, in or towards satisfaction of such of the money,
obligations and liabilities secured by this Debenture in accordance with the
terms of the Credit Agreement (save that the Agent may credit the money to a
suspense account for so long and in such manner as it may from time to time
determine and the Receiver may retain the money for such period as he and the
Agent consider expedient).

 

11.5         Protection of third parties

 

No purchaser or other person shall be bound or concerned to see or enquire
whether the right of the Agent or any receiver appointed by it to exercise any
of the powers conferred by this Debenture has arisen or not, or be concerned
with notice to the contrary or with the propriety of the exercise or purported
exercise of such powers or to see to the application of any money paid to the
Agent or any receiver.

 

11.6         Costs

 

The Company covenants with the Agent to pay on demand all costs, charges and
expenses properly incurred by the Agent or by any receiver in or about the
enforcement, preservation or attempted preservation of this security or of all
or any of the Charged Assets in accordance with the Credit Agreement. Any
receiver shall be

 

11

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entitled to remuneration appropriate to the work and responsibilities involved
upon the basis of charging from time to time adopted by the receiver in
accordance with the current practice of him or his firm.

 

11.7         Liability to account

 

Neither the Agent nor any receiver shall be liable to account as mortgagee in
possession in respect of all or any of the Charged Assets, or be liable for any
loss upon realisation of, or for any neglect or default of any nature in
connection with, the Charged Assets for which a mortgagee in possession may be
liable as such, or for anything except actual receipts.

 

11.8         [Intentionally deleted]

 

12.          Power of attorney

 

The Company, by way of security, irrevocably appoints the Agent and the persons
deriving title under it and separately any receiver, jointly and severally, to
be, after and during the continuation of an Event of Default, its attorney, in
its name, on its behalf and as its act and deed or otherwise, to execute and
complete in favour of the Agent or its nominees or of any purchaser any
documents which the Agent may require for perfecting its title to or for vesting
the Charged Assets both present and future in the Agent or its nominees or in
any purchaser, and to do all such acts and things as may be required for the
full exercise of all or any of the powers conferred by this Debenture or which
may be deemed expedient by the receiver on or in connection with any sale,
lease, disposition, realisation or getting in by the Agent or any receiver of
all or any part of the Charged Assets, or in connection with any other exercise
of any power under this Debenture and this appointment shall operate as a
general power of attorney.  The Company covenants with the Agent and separately
with any receiver that on request it will ratify and confirm all security
agreements, documents, acts and things and all transactions entered into by the
Agent or receiver, or by the Company at the instance of the Agent or receiver in
the exercise or purported exercise of its or his powers, and the Company
irrevocably acknowledges and agrees that this power of attorney is inter alia
given to secure the performance of the obligations owed by the Company to the
Agent and any receiver.

 

13.          Continuing security

 

13.1         This security shall be a continuing security notwithstanding any
settlement of account or other matter and is in addition to and shall not merge
with or otherwise prejudice or affect any contractual or other right or remedy
or any guarantee, lien, pledge, bill, note, mortgage or other security (whether
created by the deposit of documents or otherwise) now or after the date of this
Debenture held by or available to the Agent. This security shall not be in any
way prejudiced or affected by (or by the invalidity of) any other right or
remedy or any guarantee, lien, pledge, bill, note, mortgage or other security,
or the Agent now or in future dealing with, exchanging, releasing, varying or
abstaining from perfecting or enforcing any other right or remedy or any
guarantee, lien, pledge, bill, note, mortgage or other security or any rights
which it may now or after the date of this Debenture have, or giving time for
payment or indulgence or compounding with any other person liable.

 

13.2         The Agent may on receiving actual notice that the Company has
encumbered the Charged Assets close any account with the Company and open a new
account and, without prejudice to any right of the Agent to combine accounts, no
money paid in or carried to the Company’s credit in any such new account shall
be appropriated towards or have the effect of discharging any part of the amount
due to the Agent on any such closed account.

 

12

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13.3         If the Agent does not open a new account or accounts immediately on
receipt of such notice it shall nevertheless be treated as if it had done so at
the time when it received such notice and as from that time all payments made by
the Company shall be credited or be treated as having been credited to the new
account or accounts and shall not operate to reduce the amount due from the
Company to the Agent at the time when it received such notice.

 

14.          Money/currency

 

14.1         All money received or held by the Agent or a receiver under this
Debenture may from time to time, after demand has been made, be converted into
such other currency as the Agent considers necessary or desirable to cover the
obligations and liabilities of the Company in that currency at the then
prevailing rate of exchange of a Bank designated by the Agent (as conclusively
determined by the Agent) for purchasing the currency to be acquired.

 

14.2         If, and to the extent that, the Company fails to pay the amount due
on demand, the Agent may in its absolute discretion without notice to the
Company purchase at any time after that time so much of a currency as the Agent
considers necessary or desirable to cover the obligations and liabilities of the
Company in that currency secured by this Debenture at the then prevailing rate
of exchange of a Bank designated by the Agent (as conclusively but reasonably
determined by the Agent) for purchasing that currency, and the Company agrees to
indemnify the Agent against any costs and expenses and loss occasioned by the
Agent.

 

14.3         No payment to the Agent (whether under any judgement or court order
or otherwise) shall discharge the obligation or liability of the Company in
respect of which it was made unless and until the Agent has received payment in
full in the currency in which the obligation or liability was incurred. To the
extent the amount of any payment, on actual conversion into that currency falls
short of the obligation or liability expressed in that currency, the Agent shall
have a further separate cause of action against the Company and shall be
entitled to enforce the charges created by this Debenture to recover the amount
of the shortfall; provided, however, if such actual conversion results in an
overpayment of all monies due to Agent in the currency in which the obligation
or liability was incurred, the amount of any such excess payment shall be
returned to the Company.

 

15.          Discharge

 

If the Company shall pay to the Agent all the money and liabilities representing
the Obligations (as defined in the Credit Agreement) hereby secured the Agent at
any time thereafter at the request and cost of the Company will reconvey or
reassign the Charged Property to the Company or as the Company shall direct and
otherwise discharge this security.

 

16.          Indulgence

 

The Agent may at any time or times, without discharging or in any way
prejudicing this security or any remedy of the Agent under this Debenture, grant
to the Company or to any other person time or indulgence or further credit,
loans or advances, enter into any arrangement or variation of rights or abstain
from perfecting or enforcing any remedies, securities, guarantees or rights it
may now or subsequently have from or against the Company or any other person.

 

13

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17.          Miscellaneous

 

17.1         Failure or delay by the Agent in exercising any right or remedy
shall not operate as a waiver, and single or partial exercise or waiver of any
right or remedy shall not preclude its further exercise or the exercise of any
other right or remedy.

 

17.2         Each of the provisions of this Debenture is severable and distinct
from the others and if at any time one or more of such provisions is or becomes
invalid, illegal or unenforceable the validity, legality and enforceability of
the remaining provisions of this Debenture shall not in any way be affected or
impaired.

 

17.3         The Company certifies that neither the execution of this Debenture
nor the creation of the charges contained in this Debenture contravenes any of
the provisions of the memorandum and articles of association of the Company, or
other documents comprising the constitution or incorporation of the Company, or
the Companies Act 1992 sections 30, 31 and 156.

 

17.4         Any notice or demand for payment by the Agent under this Debenture
shall (without prejudice to any other effective mode of making such notice or
demand) be deemed to have been properly served on the Company if served on any
one of the directors or on the secretary of the Company or if delivered or sent
by letter post, fax or e-mail to the Company at its registered office or at any
of its principal places of business. Any such notice or demand sent by post
shall be deemed to have been served on the addressee on the fifth succeeding
business day following the day of posting notwithstanding that it be undelivered
or returned undelivered, and in proving such service it shall be sufficient to
prove that the notice or demand was properly addressed and posted. Any notice or
demand sent by fax or e-mail on a business day shall be deemed to have been
served at the time of dispatch. Any such notice or demand or any certificate as
to the amount at any time secured by this Debenture shall be conclusive and
binding upon the Company if signed by an officer or manager of the Agent.

 

17.5         The Company represents and warrants to the Agent that the Company
is not aware of any Incumbrance affecting the Charged Property which may not be
otherwise disclosed or permitted in the Credit Agreement or revealed by an
examination of the title documents to the same and the execution of this charge
and the observance and performance of the Company’s obligations under this
Debenture does not contravene any charge, mortgage, lease, loan facility or
other agreement.

 

17.6         Each and every right, power and remedy hereby granted to the Agent
shall be cumulative and not exclusive, and each and every right, power and
remedy, whether specifically hereby granted or otherwise existing, may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Agent and the exercise of any such right, power or remedy will
not be deemed a waiver of the right to exercise, at the same time or thereafter,
any other right, power or remedy.  No delay or omission by the Agent in the
exercise of any right, power or remedy will impair any such right, power or
remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.  Any and all covenants of the Company in this
Debenture may from time to time, by instrument in writing signed by the Agent,
be waived to such extent and in such manner as Agent may desire, but no such
waiver will ever affect or impair the rights of the Agent hereunder, except to
the extent specifically stated in such written instrument.  All changes to and
modifications of this Debenture must be in writing and signed by the Company and
the Agent.

 

17.7         Without regard to principles of conflicts of law, this Debenture
shall be construed under and governed by the laws of the

 

14

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Commonwealth of The Bahamas applicable to contracts made and to be performed
entirely within such country.

 

17.8         Notwithstanding anything to the contrary provided herein, to the
extent any of the terms or provisions of this Debenture are inconsistent with
the terms and provisions of the Credit Agreement, the terms and provisions of
the Credit Agreement shall control.

 

FIRST SCHEDULE

 

All Those Islands or Cays known as Royal Island, Chicken Cay and Rat Cay
together comprising Four Hundred and Thirty-one and Thirty-one hundredths
(431.31) acres which said Islands and Cays are situate between Spanish Wells and
Egg Island and within the Eleuthera chain of islands, one of the islands of The
Commonwealth of The Bahamas and which said Islands and Cays have such positions,
shapes, boundaries, marks and dimensions as are shown onn the diagram or plan
attached to an Indenture of Conveyance dated the 21st day of February, A.D.,
2006 made between Evelyn S. Guyton of the one part and Royal Island Bahamas
Limited of the other part and now of record in the Registry of Record in The
Commonwealth of The Bahamas in Volume 9568 at pages 530 to 541.

 

SECOND SCHEDULE

 

A.            All That certain lot piece or parcel of land containing by
admeasurement seven Thousand Two Hundred and Fifteen (7,215) Square Feet
situated immediately South of The Government Dock in the settlement of The Bluff
on the Island of Eleuthera in the Commonwealth of The Bahamas, ABUTTING AND
BOUNDING towards the North by the Public Dock, towards the East partly by the
main Government Road and partly by land now or formerly the school lot, towards
the South by sea towards the West by sea or however else the same may abut and
about which said lot piece or parcel of land has such position, shape,
boundaries, marks and dimensions as is shown on the diagram or plan attached to
Deed of Lease dated the      day of         ,A.D., 200 made between The Minister
with Responsibility for Lands   of the one part and Royal Island Bahamas Limited
of the other part and recorded in the Registry of Record in The Commonwealth of
The Bahamas in Volume      at pages     to

 

B.            All That certain lot piece or parcel of land containing by
admeasurement Thirty Nine and Fifty Nine Hundredths (39.59) acres situated
within Royal Island Harbour at Royal Island in the Commonwealth of The Bahamas
ABUTTING AND BOUNDING towards the North by property of Royal Island Bahamas
Limited towards the East by the sea (Royal Island Harbour) towards the South by
the sea (Royal Island Harbour) torwards the West by the sea (Royal Island
Harbour) or however else the same may abut and abound which said lot piece or
parcel of land has such position, shape, boundaries, marks and dimensions as is
shown on the diagram or plan attached to Deed of Lease date the      day of    ,
A.D., 200    made between The Minister with Responsibility for Lands of the one
part and Royal Island Bahamas Limited of the other part and recorded in the
Registry of Record in The Commonwealth of The Bahamas in Volume    at pages    
to

 

15

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IN WITNESS WHEREOF

 

the Company has caused its

 

Common Seal to be hereunto

 

affixed the day and year first

 

hereinbefore written

 

 

 

The Common Seal of the Company

)

 

was affixed hereto by Brian Parro

)

 

the Vice-President of the Company

)

 

and the said Brian Parro affixed his

)

 

signature hereto in the presence of:

)

      /s/ Brian Parros

 

 

 

 

            /s/ Russell B. Shelton

 

 

16

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COMMONWEALTH OF THE BAHAMAS

 

Grand Bahama

 

I, Russell Shelton of Dallas, Texas, United States of America, Secretary of
Royal Island Bahamas Limited (hereinafter called “the Company”) make oath and
say that I was present and saw the Common Seal of the Company affixed to the
annexed Supplemental Debenture dated the day of           A.D., 2007 by Brian
Parro the Vice-President of the Company and that I saw the said Brian Parro
sign, execute and deliver the said Supplemental Debenture as and for the Act and
Deed of the Company and for the purposes therein mentioned; and that I
subscribed my name as the Witness to the due execution thereof.  And Further
that the Seal affixed and impressed at the foot or end of the said Supplemental
Debenture is the Common Seal of the Company and was affixed and impressed
thereto by the said           by order and with the authority of the Board of
Directors of the Company and in conformity with the Articles of Association of
the Company.

 

 

SWORN at Nassau, Bahamas

)

 

 

 

 

this                        day

)

 

 

 

 

of                                 A.D. 2007

)

       /s/ Russell B. Shelton

 

 

 

                        Before me,

 

 

 

 

                      NOTARY PUBLIC

 

 

 

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