UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from _____________ to _____________
Commission File Number: 0-25248
CAYMAN ISLANDS N/A
-------------------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
TRAFALGAR PLACE, WEST BAY ROAD, P.O. BOX 1114GT,
GRAND CAYMAN, B.W.I. N/A
-------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
|
Registrant's Telephone number, including area code: (345) 945-4277
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this 10-K or any amendments to this Form 10-K. [NOT APPLICABLE]
The aggregate market value of common stock held by non-affiliates of the registrant, based on the closing sales price for the registrant's ordinary shares, as reported on the Nasdaq National Market on March 19, 2002, was $56,844,539.
As at March 19, 2002, there were 3,920,313 shares of the registrant's ordinary shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
EXCHANGE RATES
Unless otherwise indicated, all dollar amounts are in United States Dollars and references to "$", "U.S.", or "U.S.$" are to United States Dollars.
The official fixed exchange rate for conversion of CI$ into U.S.$, as determined by the Cayman Islands Monetary Authority, has been fixed since April 1974 at U.S. $1.20 per CI$1.00.
The official fixed exchange rate for conversion of BZE$ into U.S.$, as determined by the Central Bank of Belize, has been fixed since 1976 at U.S.$ 0.50 per BZE$ 1.00.
The official fixed exchange rate for conversion of BAH$ into U.S.$, as determined by the Central Bank of The Bahamas, has been fixed since 1973 at U.S.$ 1.00 per BAH$ 1.00.
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
------- ----------- ----
PART I
Item 1. Business................................................................ 1
Item 2. Properties.............................................................. 11
Item 3. Legal Proceedings....................................................... 14
Item 4. Submission of Matters to a Vote of Security Holders..................... 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.............................................................. 14
Item 6. Selected Financial Data................................................. 20
Item 7. Management's Discussions and Analysis of Financial Condition and
Results of Operations................................................ 21
Item 7A. Quantitative and Qualitative Disclosure about Market Risk............... 44
Item 8. Financial Statements and Supplementary Data............................. 44
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................. 78
PART III
Item 10. Directors and Executive Officers of the Registrant...................... 78
Item 11. Executive Compensation.................................................. 81
Item 12. Security Ownership of Certain Beneficial Owners and Management.... 86
Item 13. Certain Relationships and Related Transactions.......................... 88
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 89
SIGNATURES ......................................................................... 95
|
4 PART I
ITEM 1. BUSINESS
INTRODUCTION
Our company was incorporated in August 1973 in the Cayman Islands and provides water services in the Cayman Islands, Belize, and the Commonwealth of the Bahamas. Our principal executive offices are located at Trafalgar Place, West Bay Road, Grand Cayman, Cayman Islands. We provide water services in areas where the supply of potable water is scarce. These water services include the production of potable water from seawater, and the distribution of potable water through pipelines to our customers. Our customers include residential, commercial and tourist properties, government facilities, and public utilities.
Our business activities are reported in three business segments, which reflect a change in reporting during 2000 due to the acquisition of our wholly owned subsidiary company, Belize Water Ltd., in Belize, Central America and our entering into an agreement with South Bimini International Ltd., a Bahamian company, to provide water to property in South Bimini Island, Commonwealth of Bahamas. The business group structure is based on defined areas of management responsibility and the geographical location of our operations. The business group segments are Cayman Islands operations, Belize operations and Bahamas operations. In 2001, the Cayman Island operations, Belize operations and Bahamas operations accounted for 88.8%, 11.0% and 0.2%, respectively, of our total income. In 2000 these percentages were 95.4%, 4.6% and nil respectively.
FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
The information contained in Note 12 Segmented Information of our consolidated financial statements found on page 65, in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA for the year ended December 31, 2001, is incorporated herein by reference.
BUSINESS COMBINATION
Consolidated financial statements have been presented which include our wholly-owned subsidiary, Belize Water Ltd. This acquisition was accounted for by the purchase method. Our other three subsidiaries, Commonwealth Water Limited, Cayman Water Company Limited and Hurricane Hideaway Ltd. are dormant companies and have been consolidated.
CAYMAN ISLANDS OPERATIONS
The Cayman Islands comprise three islands, Grand Cayman, Little Cayman and Cayman Brac, located approximately 460 miles south of Miami, Florida. The three islands have a total area of approximately 100 square miles.
Our Cayman Islands operations produce potable water at our three reverse osmosis seawater conversion plants in Grand Cayman, namely our Governor's Harbour plant, West Bay plant, and our newly acquired Britannia plant. The Britannia plant was acquired and began operations on February 1, 2002, subsequent to entering into an agreement to purchase the facility on December 10, 2001.
The current capacity of our Governor's Harbour plant is 1.2 million U.S. gallons per day, which is in excess of the minimum quantities of water which Ocean Conversion (Cayman) Ltd., a Cayman Islands company which operates our Governor's Harbour plant, must supply to us under a water purchase agreement. The current capacity of our West Bay plant, which we operate, is 710,000 U.S. gallons per day. The current capacity of our Britannia plant, which we also operate, is 440,000 U.S. gallons per day. Since the plants began production of water, they have consistently been capable of operating at or near their rated capacity.
Feed water for the reverse osmosis units is drawn from deep wells with associated pumps on the properties. Wastewater is discharged into brine wells on the properties below the level of the feed water intakes.
Electricity to our plants is supplied by Caribbean Utilities Co. Ltd., a publicly traded utility company. At all three plant sites, we maintain diesel driven, standby generators with sufficient capacity to operate our distribution pumps and other essential equipment during any temporary interruptions in the electricity supply.
In the event of an emergency, our distribution system is connected to the George Town distribution system of Water Authority-Cayman. In order to efficiently maintain our equipment, we have purchased water from them for brief periods of time in the past. We have also sold potable water to the Water Authority-Cayman, and have supplied substantial quantities of water almost continuously over a seven-month period in late 1993 and early 1994.
Our pipeline system in the Cayman Islands covers the Seven Mile Beach and West Bay areas of Grand Cayman and consists of approximately 65 miles of PVC pipeline. We extend our distribution system periodically as property developments are completed. We have a main pipe loop covering a major part of the Seven Mile Beach area. We place extensions of smaller diameter pipe off our main pipe to service new developments in our service area. This system of building branches from the main pipe keeps our construction costs low and allows us to provide service to new areas in a timely manner. During 2001 we completed a number of small pipeline extensions into newly developed properties within our franchise area, and replaced approximately 0.5 miles of main pipeline with larger diameter pipe to accommodate future demand growth on our system.
Developers are responsible for laying the pipeline within the development at their own cost, but in accordance with our specifications. When the development is completed, the developer then transfers operation and maintenance of the pipeline to us.
We have a comprehensive layout of our pipeline system, which is maintained in a computer aided design ("CAD") system. This system is integrated with digital aerial photographs and a computer generated hydraulic model, which allows us to accurately locate pipes and equipment in need of repair and maintenance. It also helps us to plan extensions of and upgrades to our existing pipeline system.
The following table shows, for each of the five fiscal years ended December 31, 2001, our total number of customer connections at the end of each period and metered sales of water for that period:
2001 2000 1999 1998 1997
------- ------- ------- ------- -------
Number of Customers 2,999 2,836 2,606 2,347 2,069
Miles of Pipeline 65 64 63 62 57
Metered Sales (in thousands of U.S. gallons):
Commercial 358,711 345,940 308,949 315,980 300,350
Residential 104,002 97,759 86,712 80,150 72,393
Government facilities 11,425 7,599 5,686 4,420 4,007
------- ------- ------- ------- -------
Total 474,138 451,298 401,347 400,550 376,750
======= ======= ======= ======= =======
|
The table above does not precisely represent the actual number of customers we service. In hotels and condominiums, we may only have one customer, which is the operator of the hotel or the condominium, but we actually supply water to all of the units within that hotel or condominium development. Of the customers indicated in the table above, as of 2001, 49.1% were residential, 49.2% were hotels, condominiums and other commercial customers and 1.7% were government facilities.
During 2001, our prices per 1,000 US gallons ranged from $19.07 to $23.16. The average sales price for the year ended December 31, 2001 was $20.61 per 1,000 US gallons. During 2000, our prices per 1,000 US gallons ranged from $18.62 to $22.34. The average sales price for the year ended December 31, 2000 was $20.19 per 1,000 US gallons.
We have a five-year agreement with a developer to supply on demand a minimum of 48 million U.S. gallons of non-potable water per year on a take or pay basis to irrigate an 18-hole golf course.
Before 1991, any owner of property within our licensed area could install water making equipment for its own use. Since 1991, that option is only available to private residences, although water plants then in existence could be maintained but not replaced or expanded. When the Marriott Hotel was built in 1990 in our licensed area, the developer installed its own reverse osmosis equipment. The equipment proved unreliable and on February 4, 1994, we entered into an agreement with the owner of the Marriott Hotel to supply water to the Marriott Hotel at our standard tariff rates. The Marriott Hotel continues to operate its own reverse osmosis equipment to produce water for themselves, although generally in amounts less than their total monthly requirements.
In 1995, we entered into a 10-year agreement with the owner of the Westin Hotel. This agreement requires us to supply up to 1.86 million U.S. gallons on a monthly basis to the hotel at a discount to our standard tariff rates, and to supply any additional demand on a best efforts basis. The Westin Hotel maintains storage capacity on-site, assists pressurization with on-site repumping facilities, and has provided us with a letter of credit which covers the cost of 45 days of water supply.
In addition, on December 10, 2001, which took effect February 1, 2002, we entered into a twenty-five year agreement to supply a minimum of 62 million U.S. gallons of potable water per year on demand to our customer, Cayman Hotel and Golf, Inc., ("CHGI") the owners of the Hyatt Grand Cayman Resort and Britannia Golf course. CHGI has committed to pay for a minimum of 62 million US gallons of water by year on a take or pay basis. We are required by our government license to meet any water demand from CHGI above the 62 million US gallons per year.
The current market which we service under our license in the Cayman Islands consists of Seven Mile Beach and West Bay, Grand Cayman Island, two of the three most populated areas in the Cayman Islands. Our plants and water distribution system are equipped with efficient, state-of-the-art technology, and we consistently provide high quality water to our customers. The Cayman Islands Government, through Water Authority-Cayman, supplies water to parts of Grand Cayman Island, which are not within our licensed area, as well as, Little Cayman and Cayman Brac.
According to the most recent figures published by the Economics and Statistics Office of the Cayman Islands Government, the population of the Cayman Islands was approximately 39,410 persons in 1999. Most recent figures published by the Cayman Islands Government Department of Tourism show that the growth rate of tourism in the Cayman Islands has increased on average 8.83% annually over the 10 year period from 1989 through 1999, with total visitor arrivals of 1.25 million persons from January through October 2001, up from 1.12 million arrivals during the same period of 2000.
During 2001, construction continued slowly within our franchise area on the 360-room Ritz Carlton Hotel, Condominiums and Golf Course development. The developer of this project has announced an anticipated completion date of late 2003.
GOVERNMENT
The Cayman Islands are a British Overseas Territory of the United Kingdom and have had a stable political climate since 1670, when the Cayman Islands were ceded to England by the Treaty of Madrid. The Queen of England appoints the Governor of the Cayman Islands to make laws with the advice and consent of the legislative assembly. There are 15 elected members of the legislative assembly and three members appointed by the Governor from the Civil Service. The Executive Council is responsible for day-to-day government operations. The Executive Council consists of five ministers who are chosen by the legislative assembly from its 15 popularly elected members, and the three Civil Service members. The Governor has reserved powers and the United Kingdom retains full control over foreign affairs and defense. The Cayman Islands are a common law jurisdiction and have adopted a legal system similar to that of the United Kingdom.
CUSTOMS DUTIES AND TAXES
We are exempt from, or receive concessionary rates of, customs duties on capital expenditures on plant and major consumable spares and supplies imported into the Cayman Islands as follows:
o there are no taxes on profit, income, capital gains or appreciations of our company in the Cayman Islands;
o we do not pay any import duty or taxes on permeator membranes, electric pumps and motors and chemicals which we purchase; and
o we pay duty at the rate of 10% of the cost, including insurance and transportation to the Cayman Islands, of other plant and associated materials and equipment to manufacture or supply water in Seven Mile Beach or West Bay.
BELIZE OPERATIONS
On July 21, 2000, we acquired Seatec Belize Ltd. and subsequently changed the name of the company to Belize Water Limited. Belize Water Limited, a wholly owned subsidiary of Consolidated Water Co. Ltd., provides potable water from one reverse osmosis seawater conversion plant in Ambergris Caye, Belize, Central America, capable of producing 420,000 U.S. gallons per day, to Belize Water Services Limited ("BWSL"), who acquired the operations of the Belize Water and Sewerage Authority in February 2001. Belize Water Limited provides water to BWSL, which distributes the water through its own distribution system to residential, commercial and tourist properties in Ambergris Caye, Belize. During 2001, we supplied BWSL with 93.8 million U.S. gallons of water.
During 2001, our prices per 1,000 US gallons ranged from $13.06 to $14.75. The average sales price for the year ended December 31, 2001 was $13.12 per 1,000 US gallons. During 2000, our prices per 1,000 US gallons ranged from $13.06 to $14.67. The average sales price for the six months ended December 31, 2000 was $13.06 per 1,000 US gallons.
Feed water for the reverse osmosis units is drawn from deep wells with associated pumps on the property. Wastewater is discharged into brine wells on the property below the level of the feed water intakes.
Electricity to our plants is supplied by Belize Electricity Limited. At the plant site, we maintain a diesel driven, standby generators with sufficient capacity to operate our essential equipment during any temporary interruptions in the electricity supply.
Our market in Ambergris Caye consists of residential, commercial and tourist properties in the town of San Pedro, which is located on the southern end of Ambergris Caye. Ambergris Caye is one of about 1,000 islands located east of the Belize mainland, and off the southeastern tip of the Yucatan Peninsula. Ambergris Caye is approximately 25 miles long and according to the most recent data from the Belize Government has a population of about 4,500 residents, increased approximately 144% over the past ten years. We provide bulk potable water to BWSL who distribute this water to this market. BWSL currently has no other source of potable water in Ambergris Caye.
A 185 mile long barrier reef, which is the largest barrier reef in the Western Hemisphere, is situated just offshore of Ambergris Caye. This natural attraction is rapidly becoming a choice destination for SCUBA divers and tourists. Tourism is Belize's second largest source of foreign income, next to agriculture.
CUSTOMS DUTY, TAXES AND THE GOVERNMENT IN BELIZE
The Government of Belize has exempted Belize Water Ltd. from all duties and sales taxes until January 2003 and company taxes until January 2004. While the Government of Belize has confirmed its commitment to support all future applications for extensions or additional tax exemptions for the life of the water supply contract, future exemptions must be approved by the Belizean legislature and we cannot give any assurance that we will be granted any further tax exemptions after January 2004.
BAHAMAS OPERATIONS
The Bimini Islands consist of North Bimini and South Bimini, and are two of 700 islands which comprise the Commonwealth of the Bahamas. The Bimini Islands are located approximately 48 miles east of Ft. Lauderdale, Florida and are a premier destination for sport fishing enthusiasts. The population of the Biminis is approximately 1,600 persons and the islands have about 200 hotel and guest rooms available for tourists. The total land area of the Biminis is approximately 9 square miles.
In 2000, we entered into a water supply agreement with South Bimini International Ltd., a company incorporated in the Commonwealth of Bahamas, and on July 11, 2001 we began to provide potable water to the marina and condominium development, Bimini Sands Resort and Bimini Beach Hotel. The developer of the Bimini Sands Resort has developed half of a 150-slip marina and constructed 54 condominium units, and plans to construct a further 162 condominium units. We are not currently aware of any time schedule by the developer for the completion of the additional 162 condominium units.
We provide potable water to Bimini Sands Resort and to the Bimini Beach Hotel, a 40-room hotel also owned by the same developer, from one reverse osmosis seawater conversion plant in Bimini, Bahamas capable of producing 115,000 U.S. gallons per day. During 2001, we supplied South Bimini International Ltd. with 1.0 million U.S. gallons of water.
During 2001, our prices per 1,000 US gallons ranged from $14.66 to $26.32. The average sales price for the six months ended December 31, 2001 was $26.32 per 1,000 US gallons.
Feed water for the reverse osmosis units is drawn from deep wells with associated pumps on the property. Wastewater is discharged into brine wells on the property below the level of the feed water intakes.
Electricity to our plants is supplied by Bahamas Electricity Corporation. At the plant site, we maintain a diesel driven, standby generator with sufficient capacity to operate our distribution pumps and other essential equipment during any temporary interruptions in the electricity supply.
CUSTOMS DUTY, TAXES AND THE GOVERNMENT IN BAHAMAS
We have not been granted any tax exemptions for our Bahamian operations.
We believe that we may be subject to tax ranging from 1% to 2% of the gross revenues generated by our Bahamian operations and are currently reviewing the matter with our Bahamian attorneys. We did not pay any tax to the Bahamian government during 2001, other than National Insurance Board tax on our employee, and we calculate our potential tax liability based on our 2001 sales to be less than US$500.
GOVERNMENT REGULATION
We are regulated by the Water Authority of the Cayman Islands on behalf of the Cayman Islands Government and believe that our operations comply with all local laws and regulations.
We have been advised by our attorney in Belize that we may require a license from the Government of Belize under the Water Industry Act 2001 in relation to our water sales agreement with BWSL. We are currently reviewing our obligations under this new legislation, which was enacted to facilitate the privatization of the government Water and Sewerage Authority in February 2001. Our Belize operations are regulated by the terms and conditions of our water supply agreement with BWSL. However the new Water Industry Act 2001 requires all water service providers to obtain a license from the Public Utilities Commission, which was created under the Act. The Public Utilities Commission has the power to set the terms and conditions on which all water services in Belize are provided to the public. The Act also contains certain savings for operations which were in existence before the new law was enacted, which we believe may apply to our operations. To date we have not been advised by any Government entity that we require such a license, and do not foresee any difficulty or significant additional costs obtaining a license if necessary. We believe that our operations in Belize comply with all other local laws and regulations.
We believe that our operations in the Bahamas comply with all local laws and regulations, and we are currently reviewing our tax status as disclosed above.
MARKET AND SERVICE AREA
We believe that our potential market consists of any location where there is a need for potable water. While water sufficiency problems are not nearly as severe in the United States as in some other nations, three major states, California, Texas and Florida, are already facing water supply problems. These states and most water-deficient nations in the world all have access to significant amounts of ocean water, yet cannot economically process major quantities for consumption. The desalination of ocean water, either through distillation or reverse osmosis, is widely regarded as the most viable alternative to fresh water in areas with an insufficient natural supply.
We have historically focused on the English speaking Caribbean basin and adjacent areas as our primary market because (i) these areas have little or no naturally occurring fresh water, (ii) limited local regulations allow our operations to generate higher shareholder returns than could be achieved in more highly regulated countries, and (iii) these areas contain a high proportion of tourist properties, which generate higher volume sales than residential users.
GROWTH STRATEGY
Our growth strategy is as follows:
WE INTEND TO CONTINUE DEVELOPING OUR PRODUCTION AND DISTRIBUTION INFRASTRUCTURE AND PROVIDE HIGH QUALITY POTABLE WATER TO OUR LICENSED AREA IN THE CAYMAN ISLANDS. We intend to increase our customer base and revenues in the Cayman Islands by providing water service on the most cost-efficient basis to new residential, commercial and tourist properties that are being developed in our exclusive licensed area. We intend to increase our service area by exploring the possibility of acquiring other potable water suppliers within the Cayman Islands.
WE INTEND TO EXPAND OUR OPERATIONS IN BELIZE BY MODIFYING OUR AGREEMENT WITH BWSL. We intend to continue negotiations with BWSL to extend the term of our current water supply agreement in Ambergris Caye, to increase the guaranteed minimum quantities supplied under this agreement, and to provide desalinated water to other areas of Belize, particularly the cayes and coastal areas that could benefit from desalination technology.
WE INTEND TO EXPAND OUR OPERATIONS TO OTHER MARKETS WHERE THERE IS A NEED FOR POTABLE WATER. We are currently in various stages of discussion to supply potable water to several new markets, including the Bahamas, Mexico and two other Caribbean countries. We may pursue these opportunities either on our own or through joint ventures. So far we have focused on various locations throughout the Caribbean and Central America.
WE ALSO INTEND TO EXPAND OUR EXISTING AND FUTURE OPERATIONS INTO COMPLEMENTARY SERVICES, SUCH AS WASTEWATER SERVICES, WHICH WE HAVE PROVIDED IN THE PAST. Prior to the installation of a central wastewater system by the Cayman Islands government, we provided wastewater services on Grand Cayman. Since we have expertise in wastewater services, we may provide these services in the future.
REVERSE OSMOSIS ("RO") TECHNOLOGY
The conversion of saltwater to potable water is called desalination. There are two primary forms of desalination: distillation and RO. Both methods are used throughout the world and technologies are improving to lower the costs of production. RO is a separation process in which the water from a pressurized saline solution is separated from the dissolved material by passing it over a semi-permeable membrane. An energy source is needed to pressurize the salinated (or feed) water for pretreatment, which consists of fine filtration and in some cases the addition of precipitation inhibitors. Pre-treatment removes suspended solids, prevents salt precipitation and keeps the membranes free of microorganisms. Next, a high-pressure pump enables the water to pass through the membrane, while salts are rejected. The feed water is pumped into a closed vessel where it is pressurized against the membrane. As a portion of the feed water passes through the membrane, the remaining feed water increases in salt content. This remaining feed water is discharged without passing through the membrane. As the discharged feed water leaves the pressure vessel, its energy is captured by an energy recovery device, which is used to pressurize incoming feed water. The final step is post-treatment, which consists of stabilizing the water, removing hydrogen sulfide and adjusting the pH and chlorination to prepare it for distribution.
We use RO technology to convert seawater to potable water. We believe that this technology is the most effective and efficient conversion process for our market. However, we are always seeking ways to maximize efficiencies in our current processes and to investigate new and more efficient processes to convert seawater to potable water. The equipment at our plants is among the most energy efficient available and we monitor and maintain our equipment in an efficient manner. As a result of our many years of experience in seawater desalination, we believe that we have an expertise in the development and operation of desalination plants, which is easily transferable to locations outside the Cayman Islands.
RAW MATERIALS AND SOURCES OF SUPPLY
All materials, parts and supplies essential to our business operations can normally be obtained from multiple sources, except for the DWEER energy recovery devices which are exclusively manufactured by DesalCo Ltd., and which we use at our Governor's Harbour and West Bay RO plants in Grand Cayman. We do not manufacture any parts or components for equipment essential to our business. Our access to seawater for processing into potable water is granted through our licenses and contracts with governments of the various jurisdictions in which we have our operations.
LICENSES, FRANCHISES AND CONCESSIONS
With respect to our operations in the Cayman Islands, we rely on our exclusive franchise granted by the government of the Cayman Islands to produce and supply potable water within our franchise area in Grand Cayman. This franchise was granted in July 11, 1990 and is for a term of 20 years. This franchise agreement grants us the right of first refusal to extend the franchise.
TECHNICAL BREACH OF CAYMAN ISLANDS' LICENSE
Our license requires us to obtain prior government approval for an issuance or transfer of shares which (i) exceeds 5% of the issued ordinary shares of our company, or (ii) would, upon registration, result in any shareholder owning more than 5% of the issued shares. More than 5% of our ordinary shares are registered in the name of Cede and Co., the nominee for the Depository Trust Company, which is a clearing agency for shares held by participating banks and brokers. We do not believe that these shareholdings by Cede and Co. constitute a breach of the intent of the license. We believe that the purpose of this clause of the license is to allow the government to approve significant shareholders of our company. Cede and Co. and Depository Trust Company, however, act solely as the nominee for banks and brokers, and have no
beneficial ownership in the ordinary shares. Nevertheless, our Cayman Islands' legal counsel has advised us that these shareholdings by Cede & Co., which were not approved by the Cayman Islands' government, may be a technical breach of our license.
In August and September 1994, we completed an offering of 400,000 ordinary shares under Rule 504 of Regulation D of the Securities Act of 1933. In September 1995, we completed a private placement of 100,000 ordinary shares plus warrants to subscribe for an additional 100,000 ordinary shares under Regulation S of the Securities Act 1933. In April 1996, we completed a public offering of 575,000 ordinary shares, and in June 2000 we completed a public offering of 773,000 ordinary shares. Based upon the advice of our Cayman Islands' legal counsel, we determined that the license did not require the government's approval to complete these offerings. However, if a court determined that the government's approval of these offerings was required under the license, we would be in breach of the license. Our Cayman Islands' legal counsel has advised us that to make this determination, a court would have to disagree with our interpretation of the license and dismiss several defenses, which would be available to us. These defenses include acquiescence and waiver on the part of the government with respect to these offerings.
We have received a letter dated June 1, 2000, from an official of the Cayman Islands' government, stating that a public offering of our ordinary shares, which we completed in 1996 without the government's approval, was a breach of our license. The letter is not clear as to whether the government also views the completion of our 2000 public offering as a breach of our license. We have responded to this letter and stated that we do not believe that we are in breach of our license. We have been advised by our Cayman Islands' legal counsel that the June 1st letter from the Cayman Islands government does not constitute a formal "notice of breach of the license" as contemplated in the license. In June 2000, December 2000, and in 2002 we met with representatives of the Government to discuss this matter. At our latest meeting on March 18, 2002, the Government gave us indications that it is considering revisions to our license, which would clarify the definition of share ownership in order to favorably resolve the uncertainty regarding the technical breach of our license. Other than providing us with its June 1, 2000 letter, the Government has not taken any other action in connection with our license to date.
SEASONAL VARIATIONS IN OUR BUSINESS
Although, our water sales in the Cayman Islands, Belize and Bahamas are seasonal, the variations between the periods are not significant. We normally sell more water during the first and second quarters when greater numbers of tourists are present. Our sales are also effected to some extent by the weather. We sell less water during the third and fourth quarters, which normally experience higher rainfall amounts than other times of the year.
COMPETITION
With respect to our operations in the Cayman Islands, we do not compete with other utilities within our licensed area. Although we have been granted an exclusive franchise for our present service area, our ability to expand our service area is limited at the discretion of the government. At the present time, we are the only non-municipal public water utility on Grand Cayman. The Cayman Islands government, through Water Authority-Cayman, supplies water to parts of Grand Cayman which are not within our licensed area.
With respect to our operations in Belize, our water supply contract with BWSL is non-exclusive, and BWSL may seek contracts with other water suppliers to meet their future needs in San Pedro, Ambergris Caye, Belize. There are many companies throughout the world who provide desalination equipment and turnkey water supply contracts. We are not able to say with any certainty who we would compete against for future contracts in Belize.
With respect to our Bimini operation, we supply water to a private developer and do not have competitors. However if we are invited by the Bahamian government to provide a proposal to expand our operations to other areas of Bimini we can expect competition from companies such as Ionics, Inc. and Vivendi.
To implement our growth strategy outside our existing operating areas, we will have to compete with companies such as Ionics Inc. and Vivendi. These companies, among others, currently operate in areas in which we would like to expand our operations. These companies already maintain world-wide operations and have greater financial, managerial and other resources than our company. We believe that our low overhead costs, knowledge of local markets and conditions, and our efficient manner of operating desalinated water production and distribution equipment will provide us competitive advantage on projects, ranging in size from 5 million US gallons per day or less, in the Caribbean basin and surrounding areas.
ENVIRONMENTAL MATTERS
With respect to our Cayman Islands operations, although not required by local government regulations, we operate our water plants in accordance with guidelines of the Cayman Islands Department of Environment. Under these guidelines, our plants may not have emissions of hydrogen sulfide at levels greater than 20 milligrams per liter at the exit of the air scrubbers. We are licensed by the government to discharge concentrated seawater, which is a byproduct of our desalination process, into deep disposal wells. Our potable water also meets the guidelines of the World Health Organization and the U.S. Safe Drinking Water Act. In addition, noise levels at our plants cannot exceed the standards established by the U.S. Occupational Safety and Health Act. To date, we have not received any complaints from any regulatory authorities concerning hydrogen sulfide emissions or noise levels at our plants.
With respect to our Belize and Bahamas operations, we are required by our water supply contracts to take all reasonable measures to prevent pollution of the environment. We are licensed by the Belize and Bahamian governments to discharge concentrated seawater, which is a byproduct of our desalination process, into deep disposal wells. We operate our plants in a manner so as to minimize the emission of hydrogen sulfide gas into the environment. We are not aware of any existing or pending environmental legislation which may effect our operations in Belize and the Bahamas. To date we have not received any complaints from any regulatory authorities regarding hydrogen sulfide gas emission, nor any other matter relating to operations.
EMPLOYEES
We presently employ 37 persons in the Cayman Islands, four of whom are executive and management personnel who have an average of 16 years experience with our company or in a directly related position. Nine employees are engaged in administrative and clerical positions. The remaining staff are engaged in engineering, plant maintenance and operations, pipe laying and repair, leak detection, new customer connections, meter reading and laboratory analysis of water quality. Our staff has significant experience and on average have worked with us for 8 years with three of the employees having worked over 20 years with us. We presently employ six persons in Belize to manage and operate our plant. We presently employ one person in the Bahamas to manage and operate our water plant and distribution system on South Bimini. Our employees are not parties to a collective bargaining agreement. We consider our relationship with our employees to be good.
ITEM 2. PROPERTIES
We own our Governor's Harbour facility in Grand Cayman, which consists of a 3.2 acre site, including 485 feet of waterfront, and an 8,745 square foot building which contains the water treatment facility. We own two storage reservoirs with a total capacity of 2.0 million U.S. gallons of water at our Governor's Harbour site. The property surrounding the facility has yet to be fully developed, although these areas are beginning to be developed for residential and tourist accommodations. The current production capacity of the Governor's Harbour plant is 1.2 million U.S. gallons per day.
This RO plant is operated and maintained by OCL under a separate water purchase agreement.
The primary components of the Governor's Harbour plant are:
o five feedwater supply wells that average a depth of 140 feet. The combined pumping capability is approximately 3,750 U.S. gallons per minute;
o two brine disposal wells drilled to an approximate depth of 200 feet;
o two positive displacement pumps with a pumping capacity of 410 U.S. gallons per minute each;
o two "back up" centrifugal pumps with a pumping capacity of 300 U.S. gallons per minute each;
o 77 vessels (measuring approximately 265" in length and 8" in diameter) each housing six spiral wound seawater membranes (measuring approximately 40" in length and 8" in diameter);
o a work exchanger energy recovery system;
o an air scrubber to remove the hydrogen sulfide from the product water, which is capable of scrubbing approximately 800 U.S. gallons of water per minute; and
o Paragon TNT v5.0 control software on Gateway Hardware with I/O System Opto 22 and Optomux interface controller to control the operations of the plant.
We own our West Bay facility in Grand Cayman, which consists of a 6.1 acre site in West Bay. The plant began operating on June 1, 1995 and was expanded in February 1998 and February 2000. On this site, we have a 2,600 square foot building which houses our water production facilities, a 2,400 square foot building which houses the potable water distribution pumps, a water quality testing laboratory, office space and water storage capacity consisting of three 1.0 million U.S. gallon potable water tanks. The current production capacity of the West Bay plant is 710,000 U.S. gallons per day.
The primary components of this plant are:
o three feedwater supply wells that average a depth of 140 feet. The combined pumping capability is approximately 2,250 U.S. gallons per minute;
o one brine disposal well drilled to an approximate depth of 200 feet;
o two positive displacement pumps with a pumping capacity of 386 U.S. gallons per minute each;
o 43 vessels (measuring approximately 280" in length and 8" in diameter) each housing seven spiral wound seawater membranes (measuring approximately 40" in length and 8" in diameter);
o one hydraulic turbo energy recovery system;
o one work exchanger energy recovery system;
o an air scrubber to remove the hydrogen sulfide from the product water, which is capable of scrubbing 1,000 U.S. gallons of water per minute; and
o an Allen Bradley SLC500 Programmable Logic Controller (PLC) linked to a Compaq PC computer running Windows NT 4.0 and Wintelligent View interfaced with the PLC to control the operation of the plant.
On February 1, 2002, we purchased the Britannia water production and distribution facility in Grand Cayman, which consists of four seawater RO plants with a combined nominal production capacity of 440,000 US gallons of water per day, an 840,000 US gallon bolted steel water tank, potable water high service pumps, and various ancillary equipment to support the operation. We have entered into a lease of the 0.73 acre site and steel frame building which houses the plant, from Cayman Hotel and Golf Inc., for a term of 25 years at an annual rent of US$1.00.
The primary components of this plant are:
o six feed water supply wells drilled to a depth of approximately 100 feet;
o one brine disposal well drilled to a depth of approximately 150 feet;
o four skid-mounted seawater RO plants with desalinated water production capacities of 110,000 US gallons per day each, and utilizing electric powered high pressure pumps and Calder energy recovery devices;
o one potable water ozonation system used to neutralize hydrogen sulphide and disinfect the product water;
o one 840,000 US gallon bolted steel tank used to store potable water;
o one high service pump station used to pump water from the bolted steel tank to our distribution pipeline.
We own our Seven Mile Beach and West Bay potable water distribution systems in Grand Cayman. The combined systems consist of approximately 65 miles of polyvinyl chloride and polyethylene water pipes, valves, curb stops, meter boxes, and water meters installed in accordance to accepted engineering standards in the United States of America.
We own our San Pedro water production facility in Ambergris Caye, Belize. The plant consists of a one story concrete block building, which contains a seawater RO water production plant with a production capacity of 420,000 US gallons per day. We lease from the Government of Belize at a annual rent of BZ$1.00, the parcel of land on which our plant is located. The lease commenced on April 27, 1993 and the term is for 18 years.
The primary components of this plant are:
o two feed water supply wells drilled to an approximate depth of 100 feet;
o one brine disposal well drilled to a depth of approximately 150 feet;
o two multi-stage vertical turbine high pressure pumps with pumping capacities of 400 U.S. gallons per minute each;
o two Caterpillar 3406 diesel engines which are the primary power sources for the high pressure pumps;
o two 250 horse power electric motors which act as backup power sources for the high pressure pumps;
o 18 pressure vessels each housing six spiral wound seawater RO membranes;
o two hydraulic turbo energy recovery systems;
o one air scrubber to remove the hydrogen sulfide from the product water;
o one calcite bed and ancillary pumps to increase the alkalinity of the product water; and
o an Allen Bradley PLC5 Programmable Logic Controller (PLC) linked to a Compaq PC computer running Windows NT 4.0 and Citect MMI software and interfaced with the PLC to control the operation of the plant.
We own our Bahamas water production facility in South Bimini, Bahamas. The plant consists of two 40 foot long standard refrigerated shipping containers, which contain a seawater RO water production plant with a rated capacity of 115,000 US gallons per day, a 250,000 US gallon bolted steel potable water tank, and a high service pump skid. The facility is located on a parcel of land owned by South Bimini International Ltd., and we are allowed, under the terms of our water supply agreement, to utilize the land for the term of the agreement, without charge.
The primary components of this plant are:
o two feed water supply wells drilled to a depth of approximately 100 feet;
o one brine disposal well drilled to a depth of approximately 150 feet;
o one containerized seawater RO plant with desalinated water production capacity of 115,000 US gallons per day each, and utilizing electric powered high pressure pumps and hydraulic turbocharger energy recovery devices;
o one potable water ozonation system used to neutralize hydrogen sulphide and disinfect the product water;
o one 250,000 US gallon bolted steel tank used to store potable water; and
o one high service pump station used to pump water from the bolted steel tank to our customer's pipeline.
In addition to the properties where our water plants are located, we lease approximately 3,200 square feet of space for our executive offices at Trafalgar Place, West Bay Road, Grand Cayman Island. We have an annual lease expiring on January 31, 2003, with a yearly extension provision until January 31, 2005, on this property.
Our Governor's Harbour site includes a waterfront portion. This waterfront portion is not essential to our operations. We initially bought this property to enhance the value of the entire Governor's Harbour site if we decided to sell the site or develop it for other purposes. We purchased this water frontage in 1992 from Hurricane Hideaway Ltd. At the same time, we purchased Hurricane Hideaway Ltd., which owns certain development rights and which is now a wholly owned subsidiary of our company. We believe that our properties are suitable for the conduct of our current operations for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any ongoing or pending legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our ordinary shares of common stock ("ordinary shares") are listed on the Nasdaq National Market and trade under the symbol "CWCO". Our ordinary shares are not traded on any market other than the Nasdaq National Market. Listed below, for each quarter of the last two fiscal years, are the high and low bid prices for the ordinary shares on the Nasdaq National Market.
HIGH LOW
---- ---
First Quarter 2000 $ 7.13 $ 6.00
Second Quarter 2000 8.25 6.00
Third Quarter 2000 8.00 6.13
Fourth Quarter 2000 9.13 6.19
First Quarter 2001 9.88 6.88
Second Quarter 2001 9.85 7.78
Third Quarter 2001 12.00 8.90
Fourth Quarter 2001 12.00 9.95
|
The high and low bid prices in the table reflect interdealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
There is no trading market for our redeemable preferred shares, which are only issued to, or purchased by, long-term employees of our company and which must be held by these employees for a period of four years before they vest.
On December 10, 2001, we issued options to purchase 30,000 ordinary shares having an exercise price of $11.17 to a director. These options are exercisable until December 9, 2004. On December 31, 2001, we issued options to purchase an additional 105,486 ordinary shares having an exercise price of $10.84 to three other directors and one executive officer. These options are exercisable until March 10, 2005. The options issued on December 10, 2001, were exempt from registration under Section 4(2) of the Securities Act of 1933 because the director is a sophisticated investor who has knowledge of all material information about us. The options issued on December 31, 2001 were exempt from registration under Regulation S promulgated under the Securities Act of 1933 because the options were offered and sold outside of the United States to non-U.S. persons, as defined in Regulation S. All of the options were issued as consideration for services that the directors and executive officer provided to us during fiscal year 2001.
HOLDERS
On March 19, 2002, we had 573 holders of record of the ordinary shares. Management believes that of the ordinary shares held of record, approximately 15% are registered to residents of the Cayman Islands and 85% are registered to residents of other countries, primarily the United States. All of the redeemable preferred shares are owned by residents of the Cayman Islands.
Other than for the terms of our license described in "ITEM 1. BUSINESS," our company is not directly or indirectly owned or controlled by another corporation or by any government.
DIVIDENDS
We have paid cash dividends on our ordinary shares since 1985. The board of directors' policy is to pay cash dividends out of accumulated profits on a quarterly basis, if funds are available. As of February 29, 2000, our board of directors have established a policy, although not a binding obligation, that, subject to annual review by the board of directors, our company will maintain a dividend pay-out ratio in the range of 50% to 60% of net income. However, our payment of any future cash dividends will still depend upon our earnings, financial condition, capital demand and other factors. The board of directors declares and approves all interim dividends. The final dividend in each year, if any, is recommended by the board of directors and must be, and has always been, approved by our shareholders before distribution.
Listed below, for each quarter of the last two fiscal years, is the amount of interim dividends, in U.S. dollars, declared on our issued and outstanding ordinary shares and redeemable preferred shares. No final dividend was declared during the last two fiscal years.
First Quarter 2000 $ 0.08 Per Share Second Quarter 2000 0.08 Per Share Third Quarter 2000 0.08 Per Share Fourth Quarter 2000 0.10 Per Share First Quarter 2001 0.10 Per Share Second Quarter 2001 0.10 Per Share Third Quarter 2001 0.10 Per Share Fourth Quarter 2001 0.10 Per Share |
EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Our company is not subject to any governmental laws, decrees or regulations in the Cayman Islands which restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities. The Cayman Islands does not impose any limitations on the right of non-resident owners to hold or vote our ordinary shares other than stated below. There are no exchange control restrictions in the Cayman Islands.
In accordance with the terms of our license, the Cayman Islands' government has the right to approve, in advance, any transfer of the ordinary shares which increases the holdings of any shareholder who already owns more than 5% of the issued share capital of the company or any transfer which would increase the ownership of any existing or new shareholder above 5%. In accordance with our Articles of Association, all share transfers are subject to the approval of the board of directors at their sole discretion. To date, the board of directors has never exercised the right to decline to register a transfer. This provision has been incorporated into the our Articles of Association in order to ensure that the board of directors is not put into a position where it is legally obligated to register a transfer which would cause our company to be in breach of the license. Although not intended as such, this provision may discourage or prevent a change in control of our company by merger or otherwise.
Belize has foreign currency exchange control laws and any purchase of United States dollars must be made through the Central Bank of Belize. Under our contract with BWSL, we are paid for our water in Belize dollars. Our Belizean subsidiary has been provided with a guarantee from the Government of Belize to repatriate any and all of the Belize Water Ltd. earnings in United States dollars to any foreign destination.
The Commonwealth of the Bahamas has foreign currency exchange control laws and any purchase of United States dollars must be made through the Central Bank of the Bahamas. We are paid by our customer for water sold by our Bahamian operation in United States dollars, and expenses are also incurred in United States dollars, and therefore do not have any requirement to exchange currency in the Bahamas.
TAXATION
The Cayman Islands presently impose no taxes on profit, income, capital gains, or appreciations of our company and no taxes are currently imposed in the Cayman Islands on profit, income, capital gains, or appreciations of the holders of our securities or in the nature of estate duty, inheritance, or capital transfer tax.
A major source of revenue to the Cayman Islands government is a 7.5% or 9% stamp tax, depending on location, on the transfer of ownership of land in the Cayman Islands. During the period of November 14, 2001 to November 13, 2002 the stamp tax rate was temporarily set at 5%. To prevent stamp tax avoidance by transfer of the ownership of the shares of a company, which owns land in the Cayman Islands (as opposed to transfer of the land itself), The Land Holding Companies (Share Transfer Tax) Law was passed in 1976. The effect of this law is to charge a company, which owns land or an interest in land in the Cayman Islands a tax based on the value of its land or interest in land attributable to each share transferred. The stamp tax calculation does not take into account the proportion which the value of a company's Cayman land or interest bears to its total assets and whether the intention of the transfer is to transfer ownership of a part of a company's entire business or a part of its Cayman land or interest. We requested the Cayman Islands government exempt us from the landholding company's tax, which our company is required to pay on the transfer
of our shares. Prior to becoming quoted on Nasdaq, paid this tax on private share transfers. We have never paid tax on transfers of our publicly traded shares. Other local companies whose businesses are not primarily related to the ownership of land, and whose shares are publicly traded have either received an exemption from the tax, or have not been pursued by government for payment of the tax. We believe that the likelihood that government will seek to collect this tax on transfers of our publicly traded shares is remote and we are currently engaged in discussions with the Cayman Islands government to obtain an exemption.
As disclosed in Part I, Item 1 under the discussion of our Belize Operations, the Government of Belize has exempted our subsidiary, Belize Water Ltd., from all duties and sales taxes until January 2003 and company taxes until January 2004. The Government of Belize has confirmed its commitment to support all future applications for extensions or additional tax exemptions for the life of the water supply contract.
As disclosed in Part I, Item 1 under the discussion of our Bahamian Operations, we have not been granted any tax exemptions for our Bahamian operations. We believe that we may be subject to a tax ranging from 1% to 2% on the gross revenues generated by our Bahamian operations and are currently reviewing the matter with our Bahamian attorneys. Our potential tax liability for our 2001 sales in the Bahamas is immaterial.
DESCRIPTION OF SECURITIES
ORDINARY SHARES
We are authorized to issue 9,900,000 ordinary shares, par value CI$1.00 per share. At March 19, 2002, 3,920,313 ordinary shares were issued and outstanding. Holders of ordinary shares may cast one vote for each share held of record at all shareholder meetings. All voting is non-cumulative. Holders of more than 50% of the outstanding shares present and voting at an annual meeting at which a quorum is present are able to elect all of our directors. Holders of ordinary shares do not have preemptive rights or rights to convert their ordinary shares into any other securities. All of the outstanding ordinary shares are fully paid and non-assessable.
Holders of ordinary shares are entitled to ratably receive dividends, if any, distributed out of our accumulated profits. Subject to the preferential rights of holders of the redeemable preferred shares, upon liquidation, all holders of ordinary shares are entitled to participate pro rata in our assets, which are available for distribution.
Other than 3,172 ordinary shares, for a member of senior management in Belize, no ordinary shares have been set aside for any employee share plans.
REDEEMABLE PREFERRED SHARES
We are authorized to issue 100,000 redeemable preferred shares, par value CI$1.00 per share. At March 19, 2002, 25,195 redeemable preferred shares were issued and outstanding.
Holders of redeemable preferred shares may cast one vote for each share held of record at all shareholder meetings and are entitled to receive ratably dividends, if any, distributed out of our accumulated profits. All voting is on a non-cumulative basis. In the event of a liquidation of our company, the redeemable preferred shares rank in preference to the ordinary shares with respect to the repayment of the par value of redeemable preferred shares plus any premium paid or credited on the purchase of the shares. Under our employee share plan, we may redeem any redeemable preferred shares issued to an employee. The ordinary shares and the redeemable preferred shares rank equally in all other respects.
Currently, no shares have been set aside for our employee share incentive plan.
CLASS B ORDINARY SHARES
In 1997, we adopted an option deed under which option holders may exercise rights to purchase our class B ordinary shares, par value CI$1.00 per share. As of the date of this Annual Report, there are no class B ordinary shares issued and outstanding.
Holders of class B ordinary shares are entitled to the same voting rights and dividends paid on ordinary shares and redeemable preferred shares, and we cannot pay a dividend on the ordinary shares without paying the same dividend on the class B ordinary shares, and vice versa. We cannot redeem the class B ordinary shares, and the holders of the class B ordinary shares are not entitled to any repayments of capital upon the dissolution of our company.
If we enter into a transaction in which ordinary shares are exchanged for securities or other consideration of another company, then the class B ordinary shares will be also be exchanged pursuant to a formula. The class B ordinary shares and the ordinary shares rank equally in all other respects.
OUTSTANDING WARRANTS
On April 9, 1996, we issued warrants to purchase up to 50,000 ordinary shares at $6.30 per share to the underwriter of our initial public offering. All of these warrants expired on April 3, 2001.
OPTION DEED
In 1997, in response to an attempt by Argyle/Cay Water, Ltd. to acquire up to 50% of our company, our board of directors approved an option deed, which is similar to a "poison pill." The option deed may delay or prevent a change in control of our company.
The option deed grants to each holder of an ordinary and redeemable preferred share an option to purchase one one-hundredth of a class B ordinary share at an exercise price of $37.50, subject to adjustment. If a takeover attempt occurs, each shareholder would be able to exercise the option and receive class B ordinary shares with a value equal to twice the exercise price of the option. Under circumstances described in the option deed, instead of receiving ordinary shares, we may issue to each shareholder cash or other equity or debt securities of our company, or the equity securities of the acquiring company, as the case may be, with a value equal to twice the exercise price of the option.
Takeover events that would trigger the options include a person or group becoming the owner of 20% or more of our outstanding ordinary shares or the commencement of, or announcement of an intention to make, a tender offer or exchange offer, which upon completion would result in the beneficial ownership by a person or group of 20% or more of the outstanding ordinary shares. Accordingly, exercise of the options may cause substantial dilution to a person who attempts to acquire our company.
The options are attached to each ordinary share and redeemable preferred share and presently have no monetary value. The options will not trade separately from our shares unless and until they become exercisable. The options, which expire on July 31, 2007, may be redeemed, at the option of our board of directors, at a price of CI$.01 per option at any time until ten business days following the date that a group or person acquires ownership of 20% or more of the outstanding ordinary shares. Any amendment to the option deed is subject to the terms and conditions of our agreement with Argyle/Cay-Water, Ltd. described in the section of this Annual Report entitled "ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT"
The option deed may have certain anti-takeover effects, although it is not intended to prevent any acquisition or business combination that is at a fair price and otherwise in the best interests of our company and our shareholders as determined by our board of directors. However, a shareholder could potentially disagree with the board's determination of what constitutes a fair price or the best interests of our company and our shareholders.
The full terms and conditions of the options are contained in an option deed between us and our option agent, American Stock Transfer & Trust Company. The above description of the options is a summary only and does not purport to be complete. You should read the entire option deed to understand the terms of the options.
REPURCHASED SHARES
During 2001, we repurchased 25,000 shares at an average cost of $10.86. Under Cayman Islands law, shares that we repurchase out of capital are treated as cancelled upon repurchase, and our issued share capital is reduced by the par value of those shares, with the difference being adjusted to additional paid up capital. Also during 2001, we treated the purchase of our treasury shares of 8,000, 102,752 and 79,100 in 1998, 1999 and 2000, respectively, in the Consolidated Balance Sheet and the Consolidated Statement of Shareholders' Equity as cancelled on repurchase.
TRANSFER AGENT
The transfer agent for the ordinary shares is American Stock Transfer & Trust Company, New York, New York.
ITEM 6. SELECTED FINANCIAL DATA
As a result of a management decision we have voluntarily adopted accounting principles generally accepted in the United States of America ("US-GAAP") effective January 1, 2000. Previously, annual financial statements were prepared in accordance with International Accounting Standards ("IAS"). As a result all prior periods' financial information presented in the selected financial data have been prepared in accordance with "US-GAAP".
The consolidated financial statements include the accounts of our wholly-owned subsidiaries Belize Water Ltd, Commonwealth Water Limited, Cayman Water Company Limited and Hurricane Hideaway Ltd. The operating results of Belize Water Ltd. have been included in the financial statements since the date of the acquisition (July 21, 2000). All inter-company balances and transactions have been eliminated.
Set forth below is selected financial data based upon our consolidated financial statements. The table contains information (expressed in US dollars) derived from our audited consolidated financial statements for the five-year period ended December 31, 2001. This selected financial data should be read in conjunction with the more detailed financial statements and related notes thereto contained elsewhere in this Annual Report. The audited consolidated financial statements for the years ended December 31, 1998 and 1997 and accountant's reports thereon are not included in this Annual Report.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
2001 2000 1999 1998 1997
----------- ----------- ----------- ----------- -----------
STATEMENT OF INCOME DATA:
Water Sales $11,026,923 $ 9,576,959 $ 7,936,118 $ 7,925,232 $ 7,214,557
Net Income (1) 2,764,573 2,404,820 1,569,717 1,451,933 1,112,402
BALANCE SHEET DATA:
Total Assets 22,721,178 21,845,672 16,431,321 15,594,021 14,814,817
Long Term Debt Obligation 1,213,804 1,131,986 1,926,786 2,470,112 1,769,746
Long Term Purchase Obligation -- -- -- 320,141 1,265,275
Redeemable preferred stock 30,234 40,361 49,270 52,686 40,906
DIVIDENDS DECLARED PER SHARE 0.40 0.34 0.20 0.19 0.13
BASIC EARNINGS PER SHARE 0.71 0.68 0.51 0.47 0.37
BASED ON NUMBER OF SHARES 3,897,969 3,532,501 3,044,293 3,055,845 2,986,216
DILUTED EARNINGS PER SHARE 0.69 0.67 0.49 0.45 0.35
BASED ON WEIGHTED NUMBER OF SHARES 3,999,691 3,616,271 3,188,048 3,191,583 3,136,574
|
(1) Net Income represents income after a cumulative change in accounting principle in 1999 of $117,576 (see ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Change in Accounting Principle), and an exceptional item of $97,886 in 1997 representing the remaining book value of the vapor compression equipment previously used by our company that was written down to zero.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Our objective is to provide water services in areas where the supply of potable water is scarce and where the use of RO technology to produce potable water is economically feasible. By focusing on this market, we believe that we can provide a superior financial return to our investors. To increase share value and maintain dividend payouts in accordance with current company policy, we need to expand our revenues by developing new business opportunities both within our current service areas, and in new areas. We need to maintain our high operating efficiencies by adhering to our strict equipment maintenance and water loss mitigation programs in order to achieve gross profit margins between 40% and 45%. We further believe that many Caribbean basin and adjacent countries, while being water scarce, also present opportunities for operation of our plants in limited regulatory settings which are less restrictive than the highly regulated markets of North America, which promotes cost effective operation of our equipment.
We have been operating our business on Grand Cayman Island since 1973 and have been using RO technology to convert seawater to potable water since 1989. There is no natural supply of fresh water on the Cayman Islands. We currently have an exclusive license from the Cayman Islands government to process potable water from seawater and then sell and distribute that water by pipeline to Seven Mile Beach and West Bay, Grand Cayman Island. We obtain water from our three RO plants on Grand Cayman (Governor's Harbour plant, West Bay plant and our newly acquired Britannia plant), which together are capable of producing 2.02 million U.S. gallons per day on a reliable basis, or approximately 755 million U.S. gallons per year. We own our RO plants and substantially all of the 65 miles of our underground distribution infrastructure. For the year ended December 31, 2001, we supplied 474.1 million U.S. gallons of water to hotels, residential customers, condominiums, other commercial customers and government facilities on Grand Cayman.
On July 21, 2000, we acquired Seatec Belize Ltd., a company organized under the laws of Belize. Seatec Belize Ltd., now renamed Belize Water Ltd., owns and operates a RO plant in Ambergris Caye, Belize and provides potable water to BWSL under contract. BWSL provides water and sewage services to the mainland Belize, and contracts us to produce potable water on Ambergris Caye, which has no natural source of fresh water. Our RO seawater conversion plant, is capable of producing 420,000 U.S. gallons per day or approximately 153 million U.S. gallons per year, for BWSL, who distributes the water to residential, commercial, and tourist properties in Ambergris Caye, Belize. During the year ended December 31, 2001, we supplied approximately 93.8 million U.S. gallons to BWSL.
Since July 11, 2001, we have been supplying desalinated water to South Bimini International Ltd. under a ten-year water supply agreement. This Bahamian company owns and operates resort properties on South Bimini Island, Bahamas and we provide potable water to these properties. The island of South Bimini has no natural source of fresh water. Our Bahamas operations provides water from one RO seawater conversion plant, capable of producing 115,000 U.S. gallons per day or approximately 42 million U.S. gallons per year, to South Bimini International Ltd. This water is distributed to the condominiums, marina and hotel property in South Bimini, Bahamas. For the year ended December 31, 2001, we supplied approximately 1 million U.S. gallons to South Bimini International Ltd. Sales in 2001 were low because we only supplied water from July 2001, and the condominium development is in its initial stages. We expect the demand for water from our plant to increase as additional phases are completed at the Bimini Sands development.
Although at a slower pace than in previous years, development is taking place on Grand Cayman Island, and particularly in our licensed area to accommodate both the growing local population and the tourism market. Because our license requires us to supply water to developments in our licensed area, the planning department of the Cayman Islands government routinely advises us of proposed developments in our licensed area. This advance notice allows us to manage our production capacity to meet anticipated demand. We believe that we have, or have contracted for, a sufficient supply of water to meet the foreseeable future demand.
We installed our first RO plant in December 1989 at Governor's Harbour, located in the Seven Mile Beach area, through a water purchase agreement with OCL. Under the agreement, OCL operates the plant, and we must purchase a minimum volume of water from them. In addition, OCL has to provide us additional volumes of water upon demand up to a fixed level, and any excess on a best efforts basis. The agreement requires a plant capacity of 1.1 million U.S. gallons per day, which is the maximum capacity of the plant. The agreement was amended in December 2000 to increase the production capacity of the plant to 1.2 million US gallons per day. The agreement expires on December 31, 2004, at which time we will have fulfilled our obligations under the agreement and we will be the sole operator of the plant. Upon expiration of our agreement with OCL, we expect that our operating costs at Governor's Harbour will decrease significantly.
In 1995, we installed our second RO seawater conversion plant, at our West Bay site. We own and are responsible for operation and maintenance of the West Bay plant. This plant is capable of producing 710,000 U.S. gallons per day of potable water.
In February 2002, we purchased our third RO seawater conversion plant, which was previously owned and operated by Cayman Hotel & Golf Inc., a company which owns and operates the Hyatt Hotel and Britannia Golf Course, and developed the Britannia condominiums and villas. This plant is capable of producing 440,000 US gallons of desalinated water per day.
OUR OPERATIONS UNDER THE LICENSE IN THE CAYMAN ISLANDS
Our exclusive operational license was issued to us by the Cayman Islands government under The Water (Production and Supply) Law of 1979. The license terminates, unless further renewed, on July 11, 2010.
Two years prior to the expiration of the license, we have the right to negotiate with the government to extend the license for an additional term. Unless we are in default under the license, the government may not grant a license to any other party without first offering the license to us on terms that are no less favorable than those which the government offers to a third party.
We must provide, within our licensed area, any requested piped water service which, in the opinion of the Executive Council of the Cayman Islands government, is commercially feasible. Where supply is not considered commercially feasible, we may require the potential customer to contribute toward the capital costs of pipe laying (Advances in Aid of Construction). We then repay these advances to the customer, without interest, by way of a discount of 10% on future billings for water sales until this indebtedness has been repaid. We have been installing additional pipeline when we consider it to be commercially feasible, and the Cayman Islands government has never objected to our determination regarding commercial feasibility.
Under the license, we pay a royalty to the government of 7.5% of our gross US gallon potable water sales revenue. The base selling price of water under the license presently varies between $18.96 and $22.74 per 1,000 U.S. gallons, depending upon the type and location of the customer and the monthly volume of water purchased. The license provides for an automatic adjustment for inflation/deflation on an annual basis, subject to temporary limited exceptions, and an automatic adjustment for the cost of electricity on a monthly basis. The Water Authority (Cayman), on behalf of government, reviews and approves the calculations of the price adjustments for inflation and electricity costs.
If we want to increase our prices for any reason other than inflation, we have to request prior approval of the Executive Council of the Cayman Islands government. If the parties fail to agree, the matter is referred to arbitration. The last price increase that we requested, other than automatic inflation adjustments since 1990, was granted in full in June 1985.
RESIDENTIAL AND COMMERCIAL OPERATIONS IN THE CAYMAN ISLANDS
We enter into standard contracts with hotels, condominiums and other properties located in our licensed area to provide potable water to such properties. We currently have agreements on differing terms and rates to supply potable water to the 309-room Marriott Hotel and the 343-room Westin Hotel, the Hyatt Hotel and Britannia Golf Course, and to supply non-potable water to the SafeHaven Golf Course. We bill on a monthly basis based on metered consumption. Receivables are typically collected within 30 to 35 days after the billing date and receivables not collected within 45 days subject the customer to disconnection from our water service. In 2001, bad debts represented less than 1% of our total sales for the year. Customers who have had their service disconnected must pay re-connection charges.
In the Seven Mile Beach area, our primary customers are the hotels and condominium complexes which serve the tourists. In the West Bay area, our primary customers are residential homes. Occasionally, we also supply to, or buy from, on an as-needed basis, the Water Authority-Cayman, which serves the business district of George Town and other parts of Grand Cayman Island.
WASTEWATER SERVICES IN THE CAYMAN ISLANDS
We began providing sewerage services on Grand Cayman in 1973. In 1987 the Cayman Islands government, through Water Authority-Cayman, constructed a public sewerage system in part of the Seven Mile Beach area where Governor's Harbour is located. On September 1, 1988, Water Authority-Cayman began processing sewage delivered by the pipelines and lift stations in that area. We stopped our processing of sewage on that date. Water Authority-Cayman currently directly bills our former sewerage customers for its services. In October 2001, we reached an agreement with the Water Authority-Cayman that they will take over the ownership and operation of two remaining sewage lift stations, which we presently operate. Our present obligation under this agreement is to replace certain minor pieces of equipment in these stations prior to take over by the Water Authority-Cayman. We expect the take over to occur in May 2002. No revenue was earned for wastewater services during 2001.
DEMAND FOR WATER IN THE CAYMAN ISLANDS
In the past, demand on our pipeline distribution has varied throughout the year. However, an increase in year-round tourism in recent years has created more uniform demand for water throughout the year. Demand depends upon the number of tourists visiting the Cayman Islands and the amount of rainfall during any particular time of the year. In general, 75% of tourists come from the United States. Our operating results in any particular quarter are not indicative of the results to be expected for the full fiscal year. The table below lists the total volume of water we supplied on a quarterly basis for the years ended December 31, 2001, 2000, 1999, 1998 and 1997 to all our customers:
2001 2000 1999 1998 1997
------- ------- ------- ------- -------
(in thousands of U.S. gallons)
First Quarter 119,115 125,869 107,031 109,255 100,853
Second Quarter 129,305 117,766 113,007 108,334 98,473
Third Quarter 118,733 100,259 90,888 90,950 87,483
Fourth Quarter 106,985 107,404 90,421 92,011 89,941
------- ------- ------- ------- -------
Total 474,138 451,298 401,347 400,550 376,750
======= ======= ======= ======= =======
|
OUR OPERATIONS UNDER THE CONTRACT IN BELIZE
We have entered into a contract with BWSL to supply a minimum of 135,000 US gallons of water per day to BWSL expiring in 2011. At the expiry of the contract, BWSL may at its option extend the term of the agreement or purchase the plant outright.
The base price of water supplied, and adjustments thereto, are determined by the terms of the contract, which provides for adjustments based upon the movement in the government price indices specified in the contract, as well as, monthly adjustments for changes in the cost of diesel fuel and electricity.
We bill on a monthly basis based on metered consumption. Receivables are due within 21 days after the billing date. Interest of 1.5% per year is charged on any delayed payments. We have had collection problems with BWSL in the past, however, we are working on a solution that will ensure payment will be made when required. As at the date of this Annual Report, BWSL is current on its outstanding balance, with exception of interest, which has accrued on their account. In 2001, we had no bad debts for our Belize sales for the year.
BWSL has submitted claims for compensation for damages, which it believes resulted from our equipment failures during August and September 2001. They have further claimed for the rectification of a minor mistake in the water rate inflation adjustment formula in our agreement, a mistake which dates back to November 1995. We have fully settled one claim for compensation which resulted from an equipment failure during the first week of August 2001 by crediting their account $14,864, but have rejected their other claim for compensation relating to the temporary reduction of our production capacity on another occasion. While we were not able to meet BWSL's demand for water during certain periods when our equipment malfunctioned, we were able to provide quantities of water well in excess of the minimum amount required in our agreement.
We are currently engaged in discussions regarding BWSL's claim for rectification of the inflation adjustment formula, and to collect unpaid interest, which has accrued on their account because of their late payment of invoices. At the date of this Annual Report, we have offered $38,790 to settle all of their outstanding claims, and have agreed to correct the inflation adjustment formula in the agreement. We believe that correcting this minor mistake in the agreement will not have a significant impact on the profitability of our Belize operations going forward, and that we will collect the outstanding interest charges from BWSL.
BWSL distributes our water primarily to residential properties, small hotels, and businesses which serve the tourist market.
DEMAND FOR WATER IN BELIZE
We have only operated our plant in Belize for about 21 months. However, we believe that water sales in Belize are cyclical, and on a similar cycle to sales in the Cayman Islands, since both operations cater to similar tourist markets. We also believe that water sales will be higher in the future since sales were limited before March 2000 because the production capacity of the water plant was lower than demand. While 2001 sales indicate an increasing trend, it may not be indicative of similarly high percentage increases in the future because of production limitations in the first quarter of 2000.
Our sales in Belize were restricted in August, September and October 2001 because of several major component failures at our San Pedro plant. We believe that we could have sold more water during these months if our plant had been able to operate at full capacity. We have taken action to ensure this does not occur again by increasing our inventory of critical spare parts.
The total volume of water we supplied (in thousands of U.S. gallons) to BWSL on a quarterly basis for the years ended December 31, 2001 and 2000:
2001 2000
------ ------
(in thousands of U.S. gallons)
First Quarter 24,589 17,455*
Second Quarter 26,519 20,928*
Third Quarter 21,404 19,507
Fourth Quarter 21,266 19,624
------ ------
Total 93,778 77,514
====== ======
|
* Sales made pre-acquisition by Seatec Belize Ltd. Used only for comparison purposes.
OUR OPERATIONS UNDER CONTRACT IN BAHAMAS
In 2000, we entered into a water supply agreement with South Bimini International Ltd. and began supplying water under this contract on July 11, 2001. Under our agreement South Bimini International Ltd. is committed to pay for a minimum of 3,000 US Gallons of water per customer per month (36,000 US Gallons per year) on a take or pay basis in relation to the Bimini Sands Resort property in South Bimini Island, Bahamas. The price of water supplied is adjusted for inflation annually based on Bahamas government indices, and adjusted monthly for changes in the cost of electricity.
DEMAND FOR WATER IN BAHAMAS
We have only been supplying water in Bimini for approximately eight months, to a resort property, which is only partially completed and a small 40-room hotel. Currently the resort is comprised of 54 condominiums, and a developing 150-slip marina. By the end of 2002, we anticipate that we will be providing water to an additional 30 condominiums. The resort property is ultimately expected to include over 300 condominium units, a large hotel casino, and a marina that can accommodate twice as many boats as the existing facility. We believe that water sales in Bimini will be cyclical. We expect that our sales will be higher during the summer months when tourists and fisherman arrive from the United States by boat, and when several large angling tournaments are traditionally held in Bimini. We expect that our sales will be lower during winter months when the weather is not conducive to pleasure boat travel from the United States.
The total volume of water we supplied (in thousands of U.S. gallons) to South Bimini International Ltd. during each of the third and fourth quarters for the year ended December 31, 2001 was 449 and 551 respectively.
WATER SALES AND OTHER INCOME ("TOTAL INCOME")
Our total income includes water sales income, other income and interest income from all of our business segments. Water sales income is comprised of water sales to our individual Cayman Islands customers, to BWSL and to South Bimini International Ltd. Other income consists of monthly meter rental charges, sales to companies that deliver water by truck to customers not connected to our pipeline in the Cayman Islands, connection charges for new customers and re-connection charges for delinquent accounts. In April 1999, we settled a dispute with the owner of the Hyatt Hotel and the developer of the Britannia development, who supplied water to the Hyatt Hotel, a hotel located within our Seven Mile Beach license area. Accordingly, other income also consists of settlement fee payments for the supply of water to the Britannia development by the Hyatt Hotel, which has its own water production facility. During 2001, we negotiated the purchase of this water production facility and a separate water supply agreement with the Hyatt Hotel and Britannia Golf Course. On February 1, 2002 we took possession of this facility and began supplying water under the new agreement. At this time the settlement agreement ceased and no further revenue will be collected under this settlement. Additionally, included in other income is interest income relating to interest derived from excess cash balances placed on term deposit and interest payable by BWSL due to late payment of invoices.
EXPENSES
Expenses include cost of water sales ("direct production expenses") and our indirect, or general and administrative expenses. Direct production expenses include royalty payments to the Cayman Islands government; electricity and chemical expenses; payments to OCL relating to operation of the Governor's Harbour plant; production equipment and facility depreciation costs; equipment maintenance and expenses and operational staff costs. Indirect, or general and administrative expenses, consist primarily of salaries and employee benefits for administrative personnel, office lease payments, legal and professional expenses and financing costs. There are no income taxes in the Cayman Islands and we are currently exempt from taxes in Belize. We may be liable for gross revenue tax in the Bahamas as disclosed in Part I, Item 1, under our discussion of our Bahamas Operations.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000
WATER SALES AND OTHER INCOME ("TOTAL INCOME")
Total Income increased by 14.4% from $10,025,686 to $11,473,706 for the year ended December 31, 2000 and 2001, respectively. Total Income is comprised of water sales and other income.
The Cayman operations increased Total Income by $626,843 for the year ended December 31, 2001, representing 43.3% of the increase.
The addition of the operations of Belize Water Ltd. as of July 21, 2000 increased Total Income by $794,401 for the year ended December 31, 2001, representing 54.9% of the increase.
Finally, the addition of the Bahamas operations as of July 11, 2001 increased Total Income by $26,776 for the year ended December 31, 2001 representing 1.8% of the increase.
Sales in Cayman are made within our license area to approximately 3,000 customers. All sales in Belize are to one customer, Belize Water Services Ltd., a private company that recently acquired the assets of Belize Water and Sewerage Authority, which was previously a government statutory corporation. The terms of our contract have not changed as a result of the privatization of Belize Water and Sewerage Authority. Currently in the Bahamas, all sales are to one customer, South Bimini International Ltd. known as Bimini Sands Resort and Marina, which uses water at their hotel, condominiums and full service marina.
Total water sales increased by 15.1% from $9,576,959 to $11,026,923 for the years ended December 31, 2000 and 2001, respectively. The total water sales increase of $1,449,964 was a result of several factors detailed below.
Our Cayman operation added $657,784 to water sales for the year ended December 31, 2001, which is 45.4% of the total increase. Of this increase 70.1% was due to a 5.1% increase in the number of US gallons sold over the same period in the prior year. This increase was due to both an increase in our customer base, as well as, increased usage of 3.5% from commercial, 6.4% increase from residential, and a 50% increase from government facilities which was due to bulk sales of $112,409 made to assist the Water-Authority (Cayman) to make up temporary shortfalls in their production capacity. The automatic inflation adjustment increased our Cayman Islands water rates in January 2001 for most of our customers by an average of 2.5%, which makes up the remaining 29.9% of the increase.
Our Belize operation added $765,847 to water sales for the year ended December 31, 2001, which is 52.8% of the total increase. Of this increase 99.3% was due to a full year of water sales in 2001 compared to six months in 2000. The quantities of water produced by our Belize operations in 2001 were approximately 21% higher than in 2000 (pre-acquisition as reported by the previous owners of the Belize operations). These higher sales during the year have resulted because in the prior year we had only six months of production and sales. However, our water sales in Belize were lower than expected because of an equipment malfunction in late August and September 2001, which temporarily reduced the production capacity of our water plant by 50% for 3 days. This malfunction has now been corrected and our plant is operating at full production capacity. The automatic inflation adjustment increased our Belize water rates in June 2001 by 0.53%, which makes up the remaining 0.7% of the increase.
Finally, the addition of the Bahamas operations as of July 11, 2001 increased water sales by $26,333 for the year ended December 31, 2001, representing 1.8% of the increase.
In late 2000, the Cayman Islands Government changed the base year of the Cayman Islands Consumer Price Index ("CI-CPI"), which is used in our license to calculate our annual automatic inflation adjustment, rendering the then license formula inoperable. As provided for in our license, our Cayman Islands rates during the first nine months of 2001 were adjusted by substituting in the formula the movement of the United States Producers Price Index ("US-PPI") for Industrial Commodities for the CI-CPI. Our rates during the first nine months of 2001 were inflated by 3.7%. In September 2001 the Government agreed with us a new automatic inflation adjustment formula, which uses the re-based CI-CPI. This new formula took effect in October 2001 and reduced our Cayman Islands water rates by 1.2% for the last three months of the year. The next automatic inflation adjustment occurred in January 2002 and decreased our Cayman Island water rates by 0.39%.
Other income decreased by 0.4% from $448,727 to $446,783 for the year ended December 31, 2000 and 2001, respectively. This decrease was a result of a reduction in interest earned from 2000 to 2001, which amounted to $32,314 and $28,584, respectively. In 2001, interest was earned on our outstanding balance in our Belize operations, due to the temporary delay in payment by BWSL. In 2000 interest was earned on our significant investment of unutilized cash from the sale of shares until we purchased our Belize subsidiary.
EXPENSES
Cost of water sales increased by 12.6% from $5,423,297 to $6,109,117 for the years ended December 31, 2000 and 2001, respectively.
Our Cayman operations increased cost of water sales by $171,425 for the year ended December 31, 2001, representing 25.0% of the increase. Although cost of water sales increased, it increased at a lower rate than our water sales since we benefit from efficiency savings in our water production operation when we produce more water.
The addition of the operations of Belize Water Ltd. as of July 21, 2000 increased cost of water sales by $467,769 for the year ended December 31, 2001 representing 68.2% of the increase. This increase was due to increased water production to meet increased sales, and machinery repairs related to the August and September 2001 equipment malfunctions.
Finally, the addition of the Bahamas operations as of July 11, 2001 increased cost of water sales by $46,626 for the year ended December 21, 2001 representing 6.8% of the increase.
Gross profit margins increased from 43.4% to 44.6% for the years ended December 31, 2000 and 2001, respectively.
Gross profit margins for our Cayman operations increased from 43.2% to 45.3% for the years ended December 31, 2000 and 2001, respectively. The reasons for this 2.1% increase are increased plant efficiencies, as mentioned earlier, and decreased depreciation expense of approximately $197,000, which resulted from our reassessment of the useful economic lives of certain assets. These lower expenses were offset by the increased full year of amortization expense of our intangible asset, which arose on purchase of BWSL in July 2000, increased insurance costs during the last two months of 2001, and additional labour costs incurred for maintenance of our West Bay plant.
Gross profit margins for our Belize operations decreased from 46.2% to 41.7% for the years ended December 31, 2000 and 2001, respectively. This decrease resulted from equipment repair costs, which we incurred during August and September 2001 as a result of a major equipment malfunction, and higher electricity costs resulting from the utilization of our 250 Horse Power standby electric motor on one of our production trains. We were unable to utilize our diesel engine to power that production train for most of 2001 because of a mechanical failure of that engine in early 2001, which caused us to order a replacement engine, as well as, the mechanical malfunctions of other equipment, which occurred in August and September 2001. We have recently received all the necessary replacements parts and that production train is now operating on the more efficient diesel engine.
Gross profit margin for our Bahamas operations for the year ended December 31, 2001 was a negative 77.1%. This was due to low water sales and a relatively higher proportion of fixed costs such as depreciation, which we expected in the early phases of the Bimini Sands Resort development project. Both of these are temporary factors and are not expected to continue in the future. We forecast that the Bahamas operation will generate positive cash flows during May 2002.
Indirect expenses increased by 18.3% from $2,197,569 to $2,600,016 for the years ended December 31, 2000 and 2001, respectively.
Our Cayman operations increased indirect expenses by $240,830 for the year ended December 31, 2001, representing 59.9% of the increase. Of this increase, 49.0% is due to a new executive position, Director of Special Projects, and 5.6% is a result of increased costs incurred in the first quarter resulting from the replacement of our former Chief Financial Officer who left us on April 6, 2001. In addition, we had a 4% increase in salaries, and stock compensation expense increased by $36,279 because ordinary share options granted to our executive officers under the terms of their employment agreements, had market values that were higher than the exercise price on the date of grant, unlike in 2000.
The addition of the operations of Belize Water Ltd. as of July 21, 2000 increased indirect expenses by $157,491 for the year ended December 31, 2001, representing 39.1% of the increase. This was due to the reallocation of employee duties, which increased indirect expenses when compared to the same periods in the prior year and the fact that the prior year included only six months of operations after our acquisition of our Belize subsidiary in July 2000.
Finally, the addition of the Bahamas operations as of July 11, 2001 increased indirect expenses by $4,126 for the year ended December 31, 2001, representing 1.0% of the increase. These costs relate to the administration of the Bahamas operations.
As a percentage of the Total Income, indirect expenses were at 21.9% and 22.7% for the year ended December 31, 2000 and 2001, respectively.
NET INCOME
Net income increased by 15.0% from $2,404,820 to $2,764,573 for the years ended December 31, 2000 and 2001, respectively. This increase was due to the several reasons detailed above.
DIVIDENDS
In December 2000 we increased our per share dividend to ordinary shareholders from $0.32 to $0.40 per year and in December 2001, we increased our per share dividend from $0.40 to $0.42 per year, payable on a quarterly basis. We have consistently paid dividends to ordinary shareholders since we began issuing dividends in 1985. Our board of directors has established a policy that we will maintain a dividend pay-out ratio in the range of 50% to 60% of net income. This policy is subject to modification by our board of directors, however, we expect to continue increasing our dividend as our earnings grow.
REASSESSMENT OF USEFUL ECONOMIC LIVES OF PROPERTY, PLANT AND EQUIPMENT
During the year ended December 31, 2001 we carried out an extensive engineering analysis of our potable water production and distribution equipment in Grand Cayman. The result of which was the reassessment of the useful economic lives of various assets and a decrease in depreciation expense on an annual basis in the amount of $197,472, which increased basic and fully diluted earnings per share by $0.05 for the year ended December 31, 2001.
This analysis included the revision of our computerized hydraulic model of the pipeline system, and updating our water meter replacement schedule. Our long-term strategic engineering analysis concluded that certain assets, including portions of the Seven Mile Beach distribution system, the Governor's Harbour VC Building, and water meters would not need to be replaced or relocated as early as previously planned.
As a result of the circumstances detailed below, we considered it appropriate to reassess the estimated useful economic life of the Seven Mile Beach distribution system from 20 years to 40 years of which 13 years has already elapsed, the Governor's Harbour VC building from 20 to 40 years of which 21 years had already elapsed, and water meters from 5 years to 10 years of which 3 years had already elapsed. Also as a result of these circumstances, it was determined that the projected future utilization of a key piece of equipment (the Vermeer Trencher), which we use to install or replace pipelines, would be reduced. It was considered appropriate to reassess the useful economic life of this piece of equipment from 10 years to 20 years, of which 3 years had already elapsed.
Also during the year ended December 31, 2001 we carried out a review of the condition and technology of our West Bay RO plant and concluded that the plant was now meeting performance and operational requirements consistent with those of the Governor's Harbour RO plant. A similar review had been carried out on the Governor's Harbour RO plant in 1994. As a result of these circumstances, it was considered appropriate to reassess the estimated useful economic life of the West Bay RO plant from 10 years to 15 years, of which 3 years had already elapsed, which is now consistent with depreciation parameters used for the Governor's Harbour RO plant.
SEVEN MILE BEACH DISTRIBUTION SYSTEM
When the Seven Mile Beach ("SMB") distribution pipeline was initially installed, the West Bay road was at an early stage of development. At the time of installation, 20 years was considered to be an appropriate best estimate for the useful life of the system, given the circumstances and relatively early stage of development in the Cayman Islands. Fundamental changes regarding the West Bay road that were being considered by Government had not been rejected. We planned for several years to relocate our Governor's Harbour RO plant to enable alternate use or sale of the waterfront land, and if undertaken, this relocation would have involved the removal and relaying of pipeline.
During 2001, we revised our master distribution plan, which includes the SMB distribution system, in order to evaluate the possible addition of the Britannia plant to the system, to determine whether contemplated upgrades to the Governor's Harbour reservoirs were warranted, and to consider future capital expenditure for pipeline replacements or new pipelines. It was determined that certain pipeline replacements, which had been scheduled subsequent to the 1996 master distribution plan were no longer necessary, and that existing SMB distribution system assets could be utilized for a much longer period than previously anticipated. The Government also revised their schedule and layout for significant road improvements within our service areas, which alleviated the need for any major changes to our SMB distribution system. The West Bay road is at a mature stage of development, and the level of construction, which has now peaked, would inhibit any changes to the road layout and our distribution system. We decided not to relocate our Governor's Harbour reservoirs, distribution pumps, and RO plant.
As a result of these events and circumstances, in early 2001, we considered it appropriate to reassess the remaining useful economic life of the SMB distribution system and the Governor's Harbour pipeline. Based on our experience and industry standards, it was concluded that the pipeline, being of the same material and construction as the remainder of our pipeline, had a useful economic life of 40 years, of which 13 had already elapsed.
GOVERNOR'S HARBOUR VAPOR COMPRESSION ("VC") BUILDING
The VC Building was initially constructed in 1976 to accommodate diesel engine powered seawater desalination equipment, which we operated. In 1994 the building was remodeled to house two large high pressure pumps, which are part of the Ocean Conversion (Cayman) Ltd. ("OCL") seawater RO plant. The building is comprised of a reinforced concrete foundation, and painted steel prefabricated wall and roof structures. The foundation included a number of unusual features, which were necessary because of the specialized equipment and piping in the plant. We planned for several years to relocate our Governor's Harbour plant to enable alternate use or sale of the waterfront land, and if undertaken, this relocation would have involved removing the VC building. We did not believe that the VC building would continue to be a useful asset after the Governor's Harbour site was re-located. In 1998, we phased out the last seawater desalination unit, which was housed in the VC Building. The large high pressure pumps for the OCL RO plant remained. It was decided at that time that the VC building would be remodeled to accommodate materials storage, and to improve the appearance of the structure, and would continue to house the large pumps, which are part of the RO plant. In 2000 we contracted with a local building contractor to completely replace the painted steel wall and roof panels of the VC building with more durable and rust-resistant material called Galv-Alum. The reinforced concrete foundation was determined to be sound and only required filling of various holes and trenches left over from the phased-out desalination equipment.
During 2001, we revised our master distribution plan, which includes the VC building, in order to evaluate the possible addition of the Britannia plant to the system, to determine whether contemplated upgrades to the Governor's Harbour reservoirs were warranted, and to consider future capital expenditure for pipeline replacements or new pipelines. We had decided not to relocate our Governor's Harbour reservoirs, distribution pumps, VC building and RO plant.
As a result of these events and circumstances, in 2001, we considered it appropriate to reassess the remaining useful economic life of the VC building. Based on our experience and industry standards, it was concluded that the building had a remaining useful economic life of 20 years, of which 1 year had already elapsed.
DISTRIBUTION SYSTEM METERS
Our established policy is to replace customer water meters when they have been in service for a specified number of years, or have registered a certain volume of water, in accordance to published manufacturer recommendations. This policy was implemented in 1988 in order to minimize un-billed water, which could otherwise pass through a water meter, which was not functioning properly because of age or fatigue.
We have for more than 10 years purchased water meters from ABB Kent, who had guaranteed the proper functionality of their water meters for a period of five years, or a specified registered volume, depending on the model. We were advised in writing by ABB Kent that they now guarantee their new and existing C700 water meters under new parameters, which include an extended functional life of 6 to 15 years, and extended registered volumes.
It was deemed appropriate by us, at that time, to reassess the useful economic life of all C700 water meters, which were presently in service, and to change the useful economic life of these assets to 10 years, which is at the midpoint of the manufacturer's guarantee period.
VERMEER TRENCHER
We use our Vermeer trencher to construct water distribution pipelines within our franchise area. For reasons detailed in the section above entitled "Seven Mile Beach Distribution System", we have over the past two years significantly reduced the utilization of the Vermeer trencher. In early 2000 we completed a large extension to our distribution system, the Harquail Bypass, but have since only carried out minor extensions of our pipelines, within new developments in the West Bay service area.
During 2001, the Government revised their schedule and layout for significant road improvements within our service areas, which alleviated the need for any major changes to our distribution system. Our franchise area is at a mature stage of development, and it is not anticipated that any further significant pipeline construction projects are eminent. We revised our master distribution plan, which alleviated the need for any significant pipeline upgrades or new pipelines for the foreseeable future.
As a result of these events and circumstances, in early 2001, we considered it appropriate to reassess the remaining useful economic life of the Vermeer trencher. Based on our experience and projected future utilization of the asset, it was determined that the asset had a useful economic life of 20 years, of which 3 had already elapsed.
WEST BAY RO PLANT
Our first sea water RO plant was manufactured and installed by OCL at the Governor's Harbour location in 1990. At the time that this plant was acquired, the technology was state-of-the-art and little operational experience existed industry wide. This was one of the primary reasons that we lease-purchased the technology instead of purchasing it outright. We furthermore had concerns regarding potential accelerated obsolescence of the equipment, resulting from continued research and development in the RO field. After three years of operational experience on this OCL plant, we established that the technology was meeting operational requirements of capacity, quality and reliability. Other similar RO units had been installed in other locations and evidence indicated that the technology was reliable. OCL had, in accordance to the lease-purchase agreement, been maintaining the asset in like-new condition. Individual components were replaced on schedule or as needed in accordance to our conservative maintenance program, and these items were expensed as incurred. Following an expansion in 1994 we considered it appropriate to reconsider the useful life of the asset at that time, and based on experience, it was considered that the asset had a 12 year remaining life at that time.
The second seawater RO plant (the West Bay RO plant) was manufactured and installed by a different supplier, US Filter Corporation, in 1998. Again at the time it was a state-of-the-art new technology (from a different supplier) and we had concerns about potential accelerated obsolescence of the equipment because of continuing research and development in the RO field. Given that conditions were similar to those prevalent when the company purchased its first RO plant from OCL, management contracted to lease-purchase the West Bay RO plant and have the manufacturer operate the plant on a day-to-day basis. Consistent with the treatment of the Governor's Harbour plant, we considered it appropriate to initially depreciate the asset over ten years. The manufacturer, in accordance with the lease-purchase agreement, maintained the West Bay RO plant in a like-new condition. Individual components were replaced on schedule or as needed in accordance to our conservative maintenance program, and these items were expensed as incurred.
By 2001, we have had ten years experience operating seawater RO plants. There has been no change in the technology used in the RO plant, and it has become evident from operational experience that the plant is reliable and meets the requirements of its purpose. Mr. Wil Pergande of Osmonics, Inc., is an expert in the RO field and member of our board of directors, and is well placed to reach such a conclusion on the current mature state of RO technology. There are currently no alternatives and no research or development underway which would indicate any upcoming significant changes in the underlying technology. There has been progress in membrane technology, however we replace membranes in both of our RO plants on a regular basis in accordance to set maintenance schedules.
As a result of these developments, at the beginning of 2001, we considered it appropriate to reassess the remaining useful life of the West Bay RO plant based on our experience. It was considered that the situation and circumstances of the two RO plants were now consistent and that the asset had a remaining useful economic life of 12 years.
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999.
WATER SALES AND OTHER INCOME ("TOTAL INCOME")
Total Income increased by 22% from $8,249,988 to $10,025,686 for the years ended December 31, 1999 and 2000, respectively. Total Income is comprised of water sales and other income.
The Cayman operations increased Total Income by $1,310,770 for the year ended December 31, 2000, representing 73.8% of the increase.
The addition of the operations of Belize Water Ltd. as of July 21, 2000 increased Total Income by $464,928 for the year ended December 31, 2000, representing 26.2% of the increase.
Total water sales increased by 20.7% from $7,936,118 to $9,576,959 for the years ended December 31, 1999 and 2000, respectively.
Our Cayman operation added $1,175,913 to water sales for the year ended December 31, 2000, which is 71.7% of the total increase. This increase was due to an inflationary increase in base rates, as well as, generic growth in our customer base, due to increased housing and new hotel properties, which came on line in our Cayman Islands franchise area.
Our Belize operation added $464,928 to water sales for the year ended December 31, 2000, which is 28.3% of the total increase.
Other income increased by 43.0% from $313,870 to $448,727 for the years ended December 31, 1999 and 2000, respectively. This increase was a result of a full twelve months of revenue being recorded from the Hyatt Settlement versus six months in 1999, as well as, more interest being earned during 2000 than in 1999 being $32,314 and $594, respectively. In 2000, interest was earned on our significant investment of unutilized cash from the sale of shares until we purchased our Belize subsidiary.
EXPENSES
Cost of water sales increased by 14% from $4,770,179 to $5,423,297 for the years ended December 31, 1999 and 2000, respectively.
Our Cayman operations increased cost of water sales by $402,766 for the year ended December 31, 2000, representing 61.7% of the increase. This increase is due to costs of producing additional water to provide for the increased sales, the additional six months of amortization expense from the purchase of our Belize subsidiary and an increase in depreciation due to the significant number of projects that were completed in 2000.
The addition of the operations of Belize Water Ltd. as of July 21, 2000 increased cost of water sales by $250,352 for the year ended December 31, 2000 representing 38.3% of the increase.
Gross profit margins increased from 39.9% to 43.4% for the years ended December 31, 1999 and 2000, respectively.
Gross profit margins for our Cayman operations increased from 39.9% to 43.2% for the years ended December 31, 1999 and 2000, respectively. These increases were due to the increased plant efficiencies, as well as, much lower electricity costs due to the installation of a new energy recovery system in our West Bay RO plant, which allows us to produce the same water at a much lower cost.
Gross profit margins for our Belize operations were 46.2% for the year ended December 31, 2000.
Indirect expenses increased by 23% from $1,792,516 to $2,197,569 for the years ended December 31, 1999 and 2000, respectively.
Our Cayman operations increased indirect expenses by $371,631 for the year ended December 31, 2000, representing 91.7% of the increase. This increase is due to increase employment costs, increased professional fees due to the change in accounting policy and the voluntary increase of SEC disclosure, increased financial and investor public relations and increased expenditures looking for new business.
The addition of the operations of Belize Water Ltd. as of July 21, 2000 increased indirect expenses by $33,422 for the year ended December 31, 2000, representing 8.3% of the increase.
As a percentage of Total Income, indirect expenses remained unchanged at 22% of total income for the years ended December 31, 1999 and 2000, respectively.
NET INCOME
Net income increased by 53.2% from $1,569,717 to $2,404,820 for the years ended December 31, 1999 and 2000, respectively. This increase was due to the reasons stated above, in addition to, a 14.1% increase due to a cumulative effect of a change in account principle noted below.
DIVIDENDS
In October 1999, we doubled our per share dividend to ordinary shareholders from $0.16 to $0.32 per year and in December 2000, we increased it from $0.32 to $0.40 per year, payable on a quarterly basis. We have consistently increased our dividend to ordinary shareholders since we began issuing dividends in 1985. As of February 29, 2000, our board of directors has established a policy that we will maintain a dividend pay-out ratio in the range of 50% to 60% of net income. This policy is subject to modification by our board of directors, however, we expect to continue increasing our dividend as our earnings grow.
CHANGE IN ACCOUNTING PRINCIPLE
Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" requires start up costs to be expensed as incurred rather than deferred. As a result, the cumulative effect of this change was $117,576, and this item was recorded as a change in accounting principle in the 1999 Consolidated Statements of Income.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
We generate cash primarily from our operations in the Cayman Islands, Belize and Bahamas, and at a lesser frequency from the sale of our shares, and through our loans and facilities obtained from two banks. Cash flow is impacted by operating and maintenance expenses, the timeliness and adequacy of rate increases (excluding automatic adjustments to our rates for inflation and electricity costs), and various factors affecting tourism in the Cayman Islands, Belize and Bahamas, such as weather conditions and the economy. We use cash to fund our operations in the Cayman Islands, Belize and Bahamas, fund capital projects, to make payments under our operating agreement with Ocean Conversion (Cayman) Ltd., a Cayman Islands company which operates our Governor's Harbour plant, to expand our infrastructure, to pay dividends, to repay principal on our loans, to repurchase our shares when appropriate and to take advantage of new investment opportunities which expand our operations.
OPERATING ACTIVITIES
Cash from operating activities for the years ended December 31, 2000 and 2001 was $3,922,712 and $4,193,921, respectively. We generated cash by increasing our net income through greater utilization of our existing plants, equipment and resources in all three segments of the business, minimization of water losses and efficiencies created by a strong management team. The loss in the Bahamas operation for the year ended December 31, 2001 was $23,976. This investment is long-term and we do not expect to produce a positive cash flow until the second quarter 2002. Currently we provide water to 54 condominiums, half of a developing marina and a small existing hotel. By the end of 2002 we anticipate that we will be providing water to 30 additional condominiums, and the marina is projected to be doubled in size. The change between 2000 and 1999 was due to increased cash generated from operations due to the acquisition of our Belize operations.
WORKING CAPITAL
At December 31, 2001, we had a working capital surplus of $325,996. This surplus relates to the increase of cash we received from our operating activities which allowed us to payback our bank overdraft and continue to build our cash balances. Currently 72.2% of our cash is denominated in Belize dollars. Through our Belize government guarantees we are in the process of repatriating United States dollars to the Cayman Islands.
INVESTING ACTIVITIES
Cash used in investing activities during the years ended December 31, 2000 and 2001 was $6,268,738 and $1,904,237, respectively. Cash was used in investing activities for expenditures for new property, plant and equipment with the majority associated with the construction of our new water production and distribution system in Bimini, Bahamas. The investment in the Bahamas operation totals $1,085,759 of which $307,395 relates to costs associated with the prior year. We also continued to expand our water distribution system in the Cayman Islands by constructing pipelines to service several new developments within our franchise area. In addition, we purchased 16,600 shares of Belize Water Services Ltd. for $12,450. This investment has been recorded at cost and represents less than 1% of the total issued and outstanding share capital of Belize Water Services Ltd. As these shares are not publicly traded, there is a risk that a market for resale may not be available. During the similar period in 2000,
investing activities consisted of the purchase of our Belize subsidiary on July 21, 2000, the installation of a new energy recovery system and the expansion of our water production plant in West Bay, Cayman Islands, and the completion of a major pipeline extension within our franchise area in the Cayman Islands. In 1999, investing activities consisted primary of purchase of property, plant and equipment.
FINANCING ACTIVITIES
Cash generated from financing activities for the year ended December 31, 2000 was $2,574,717, compared to cash used of $2,024,075 for the year ended December 31, 2001. During 2001, the primary financing activity was the payment of four interim quarterly dividends totaling $0.40 per share. This was offset by proceeds from an issuance of ordinary shares of common stock due to a director exercising certain options and a net increase in our long-term bank debt due to the draw down of a new credit facility in order to assist with the financing of the investment in the Bahamas. During the same period during 2000, we had substantial proceeds from an issuance of common stock due to our share offering, which was primarily used for the purchase of the Belize subsidiary. These cash amounts were offset by the payment of four interim quarterly dividends in 2000 totaling $0.34 per share and the repayment of both short-term and long-term debt including the plant purchase portion of our water supply agreement with OCL. In 1999, a term loan of $1,000,000 was drawn down of which $200,000 was repaid using excess operating cash flow and we also paid four interim quarterly dividends totaling $0.20 per share.
On September 21, 2001, the Company reactivated its stock repurchase program, which was originally approved by the Board of Directors in October 1998, and may repurchase up to 10% of the outstanding ordinary shares of common stock in the open market and in private negotiated transactions. Depending upon market conditions and other factors, purchases under this program may be commenced or suspended at any time. During the year ended December 31, 2001, 25,000 ordinary shares of common stock were repurchased at an average price of $10.86. These shares were cancelled in accordance with Cayman Island's law. During the same period in 2000, we repurchased 79,100 ordinary shares of common stock at $6.25 per share from a shareholder whose assets were being liquidated. These shares were also cancelled in accordance with Cayman Island's law. During the same period in 1999, we repurchased 110,752 at an average price of $7.44 per share. These shares were also cancelled in accordance with Cayman Island's law.
MATERIAL COMMITMENTS FOR CAPITAL EXPENDITURES
As at December 31, 2001, we had approximately $1,620,000 committed for capital expenditures for the purchase of the Hyatt hotel water production facilities and construction of pipeline to connect the facility to our distribution network. On February 1, 2002 we used our existing credit facilities to finance the purchase of the Hyatt RO plant and equipment for $1.5 million. We also intend to finance our pipeline construction project using existing credit facilities.
IMPACT OF INFLATION
Under the terms of our Cayman Islands license, Belize water sales agreement and Bimini water sales agreement, there is an automatic price adjustment for inflation on an annual basis, subject to temporary exceptions. We therefore believe that the impact of inflation on our net income will not be material.
EXCHANGE RATES
The official exchange rate for conversion of United States Dollars into Cayman Islands Dollars, as determined by the Cayman Islands Monetary Authority, has been fixed since 1974 at U.S. $1.20 per CI$1.00.
The official exchange rate for conversion of United States Dollars into Belizean Dollars, as determined by the Central Bank of Belize, has been fixed since 1976 at U.S.$0.50 per BZE$1.00.
The official fixed exchange rate for conversion of BAH$ into U.S.$, as determined by the Central Bank of The Bahamas, has been fixed since 1973 at U.S.$ 1.00 per BAH$ 1.00.
FORWARD-LOOKING STATEMENTS
We discuss in this Annual Report and in documents which we have incorporated into this Annual Report by reference matters which are not historical facts, but which are "forward-looking statements." We intend these forward looking statements to qualify for safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, our future plans, objectives, expectations and events, assumptions and estimates about our company and our industry in general.
The forward-looking statements in this Annual Report reflect what we currently anticipate will happen. What actually happens could differ materially from what we currently anticipate will happen. We are not promising to make any public announcement when we think forward looking statements in this Annual Report are no longer accurate whether as a result of new information, what actually happens in the future or for any other reason.
Important matters that may affect what will actually happen include, but are not limited to, tourism in the Cayman Islands, Belize and Bahamas, scheduled new construction within our operating areas, the U.S., Cayman Islands, Belize and Bahamas economies, regulatory matters, weather conditions in the Cayman Islands, Belize and Bahamas, availability of capital for expansion of our operations, and other factors described in the "Risk Factors" section below as well as elsewhere in this Annual Report.
RISK FACTORS
We have described for you below some risks which may materially and adversely affect our business, financial condition or results of operations.
WE RELY ON AN EXCLUSIVE LICENSE IN THE CAYMAN ISLANDS WHICH MAY NOT BE RENEWED IN THE FUTURE AND UNDER WHICH WE MUST OBTAIN PRIOR APPROVAL FOR AN INCREASE IN OUR RATES FOR ANY REASON OTHER THAN INFLATION. We presently operate as a public water utility under an exclusive license originally issued to us in December 1979 by the government of the Cayman Islands. We own our production infrastructure and substantially all of our distribution infrastructure.
Our license expires on July 11, 2010. If we are not in default of any terms of the license, we have a right of first refusal to renew the license on terms that are no less favorable than those which the government offers to a third party. Nevertheless, we cannot assure you that the government will renew our license or that we will be able to negotiate a new license on satisfactory terms.
Under our license, we must obtain prior approval from the Cayman Islands government to increase our rates for any reason other than inflation. Our ability to raise our rates is limited by this requirement, including potential delays and costs involved in obtaining government approval for a rate increase.
WE RELY ON WATER SUPPLY AGREEMENTS WITH OUR CUSTOMERS IN BELIZE AND THE BAHAMAS WHICH MAY OR MAY NOT, UPON THEIR EXPIRATION, BE RENEWED OR RENEGOTIATED. We presently operate as bulk water suppliers in Belize and the Bahamas under water sales agreements with our customers BWSL and South Bimini International Ltd. respectively. We own our production plant in Belize and BWSL has the option to purchase the plant at the expiration of our agreement, at a price to be agreed by BWSL and ourselves 6 months prior to expiration of the agreement. We own our production and distribution plant in the Bahamas which, in the absence of any new agreement, must be removed from the property of South Bimini International Ltd. at the expiration of our water supply agreement.
OUR BUSINESS IS AFFECTED BY TOURISM, WEATHER CONDITIONS, THE ECONOMIES OF CAYMAN, BELIZE, BAHAMAS AND THE U.S. Tourist arrivals and weather conditions within our operating areas impact the demand for our water. Normally, the highest demand is in the first two quarters of each calendar year, which corresponds with the high tourist season. Lowest demand for water arises in the third quarter of each calendar year, which corresponds with the period with the most rainfall and the least tourist arrivals. Approximately 75% of tourists to the Cayman Islands come from the U.S. In addition, development activity in the Cayman Islands often decreases during downturns in the U.S. economy, which is tracked by the Cayman Islands economy. Accordingly, a significant downturn in tourist arrivals to the Cayman Islands or in the U.S. economy for any reason would be detrimental to our revenues and operating results. After the events of September 11, 2001, tourism undoubtedly suffered, but management has observed that tourist visits has improved dramatically in recent months. We believe that Cayman Islands long-standing relationships, coupled with the fact it is a close and safe tourist destination served to lessen the impact.
WE MAY HAVE DIFFICULTY ACCOMPLISHING OUR GROWTH STRATEGY WITHIN AND OUTSIDE OF OUR CURRENT OPERATING AREAS. Even though we have an exclusive license for our present service area in the Cayman Islands, our ability to expand our service area in the Cayman Islands is limited to the discretion of the Cayman Islands government.
Further, part of our long-term growth strategy is to expand our water supply and distribution operations to locations outside the Cayman Islands, such as Belize and the Bahamas. Our expansion into new locations depends on our ability to identify suitable new service territories and to obtain necessary permits and licenses to operate in these territories.
Although we believe that we have sufficient capital to satisfy our capital requirements for expansion in the Cayman Islands, Belize and Bahamas for the next 12 months, we will need additional financing to further expand our operations elsewhere. We cannot make any assurances that we will be able to obtain the additional financing which we may need to expand our operations on satisfactory terms, if at all.
Our expansion to territories outside our current operations includes significant risks, including, but not limited to, the following:
o regulatory risks, including government relations difficulties, local regulations and currency controls;
o risks related to operating in foreign countries, including political instability, reliance on local economies, environmental or geographical problems, shortages of materials and skilled labor; and
o risks related to development of new operations, including assessing the demand for water, engineering difficulties and inability to begin operations as scheduled.
If our expansion plans are successful, we may have difficulties in managing our growth outside our current operations. Expanding our operations to areas outside the Cayman Islands, Belize and Bahamas will require us to hire and train new personnel, expand our management information systems and control our operating expenses. We cannot currently estimate the costs required or give any assurance that any new operations outside our current operations will attain or maintain profitability or that the results from these new operations will not negatively impact our overall profitability.
OUR OPERATIONS IN THE CARIBBEAN COULD BE HARMED BY HURRICANES. The Cayman Islands, Belize and Bahamas, like the rest of the Caribbean, are susceptible to damage from hurricanes. A significant hurricane could cause major damage to our equipment and properties and the properties of our customers, including the large tourist properties. This would result in decreased revenues from water sales until the damaged equipment and properties are repaired and the tourism industry returned to the status quo.
WE ARE NOT FULLY INSURED AGAINST HURRICANE DAMAGE. The Cayman Islands have been directly hit by one hurricane since we began operations in 1973 and Belize has been directly hit by one hurricane since we began operations on July 21, 2000, and the damage to our properties and equipment was minimal. We do not insure our underground water distribution system on the Cayman Islands, nor the Governor's Harbour reservoirs, which are constructed from earthen berms. We are however, fully insured on all of our other above-ground property that may be susceptible to loss, including our RO equipment, machinery, other equipment, buildings and the West Bay and Britannia reservoir tanks. Currently in Belize we are insured at the estimated replacement value of these assets. In the Cayman Islands and Bahamas we are insured, by a different provider for the depreciated value of our above ground assets and we are working to obtain coverage for the estimated replacement value of these assets as well. We have experienced some difficulty obtaining full replacement value coverage for our Cayman Islands and Bahamas assets because of the conditions in the insurance market after the events of September 11, 2001. We believe that it is highly unlikely, based on our previous experience with hurricane damage to our operations in Belize, that our insured equipment would be damaged so severely that it would require full and complete replacement. We will evaluate our needs and obtain the insurance coverage that we believe is necessary for any new operations outside our current operating areas. A severe hurricane which resulted in major damage to our properties and equipment could have a material adverse affect on our operating results. Even though we are not fully insured, we have mitigated the risks by implementing disaster recovery plans and obtaining insurance for loss of revenue from our Cayman, Belize and Bahamas operations.
WE COULD BE NEGATIVELY AFFECTED BY POTENTIAL GOVERNMENT ACTIONS AND REGULATIONS. There is always a possibility that the governments in our service areas may issue legislation or adopt new regulations:
o restricting foreign ownership of our company;
o providing for the expropriation of our assets by the government;
o providing for nationalization of public utilities by the government;
o providing for different water quality standards;
o resulting in unilateral changes to or renegotiation of our exclusive license or water supply contracts; or
o causing currency exchange fluctuations or devaluations or changes in tax laws and exchange controls.
SERVICE OF PROCESS AND ENFORCEMENT OF LEGAL PROCEEDINGS AGAINST US IN THE UNITED STATES MAY BE DIFFICULT TO OBTAIN. Service of process on our company and our directors and officers, 9 out of 12 of whom reside outside the United States, may be difficult to obtain within the United States. Also, since substantially all of our assets are located outside the United States, any judgment obtained in the United States against us may not be collectible within the United States.
Civil liabilities under the Securities Act of 1933 or the Securities Exchange Act of 1934 for original actions instituted outside the Cayman Islands may or may not be enforceable. There is no reciprocal enforcement of foreign judgments between the United States and the Cayman Islands, so foreign judgments originating from the United States are not directly enforceable in the Cayman Islands.
A prevailing party in a United States proceeding against us or our officers or directors would have to initiate a new proceeding in the Cayman Islands using the United States judgment as evidence of the party's claim. Any action would have to overcome available defenses in the Cayman Islands courts, including, but not limited to:
o lack of competent jurisdiction in the United States courts (including competent jurisdiction according to the rules of private international law currently in effect in the Cayman Islands);
o lack of due service of process in the United States proceeding;
o that United States judgments or their enforcement are contrary to the law, public policy, natural justice, security or sovereignty of the Cayman Islands;
o that United States judgments were obtained by fraud or conflict with any other valid judgment in the same matter between the same parties; and
o that proceedings between the same parties in the same matter were pending in a Cayman Islands court at the time the lawsuit was instituted in the United States court.
A United States judgment awarding remedies unobtainable in any action in the courts of the Cayman Islands (for example, treble damages, which would probably be regarded as penalties), probably would not be enforceable under any circumstances.
PROVISIONS IN OUR ARTICLES OF ASSOCIATION, REQUIREMENTS OF GOVERNMENT APPROVAL AND AN OPTION DEED ADOPTED BY OUR BOARD OF DIRECTORS MAY DISCOURAGE A CHANGE IN CONTROL OF OUR COMPANY AND MAY MAKE IT MORE DIFFICULT TO SELL OUR ORDINARY SHARES. An issuance or transfer of a number of shares which (i) exceeds 5% of the issued shares of our company, or (ii) would, upon registration, result in any shareholder owning more than 5% of the issued shares, requires the prior approval of the Cayman Islands government.
It may be difficult for a shareholder to acquire more than 5% of our shares and be able to influence significantly our board of directors or obtain a controlling equity interest in our company and change our management and policies.
Our articles of association include provisions, which may discourage or prevent a change in control of our company. For instance, our board of directors consists of three groups. Each group serves a staggered term of three years before the directors in the group are scheduled for re-election. Also, the board of directors may refuse to register any transfer of shares on our books. This provision of the articles of association ensures that the board of directors is not legally obligated to register a share transfer which would cause us to be in breach of the government license in the Cayman Islands as discussed above. Our board of directors has never refused to approve the registration of the transfer of shares.
We have also adopted an option deed, which is similar to a poison pill. The option deed will discourage a change in control of our company by causing substantial dilution to a person or group who attempts to acquire our company on terms not approved by the board of directors.
As a result of these provisions which discourage or prevent an unfriendly or unapproved change in control of our company, a shareholder may not have an opportunity to sell his or her ordinary shares at a higher market price, which, at least temporarily, typically accompanies attempts to acquire control of a company through a tender offer, open market purchases or otherwise.
WE MAY BE IN TECHNICAL BREACH OF THE TERMS OF OUR CAYMAN ISLANDS LICENSE. As stated above, our Cayman Islands license requires that government approves in advance any issuance or transfer of ordinary shares which represents more than 5% of the issued shares, or which would increase the ownership of any shareholder above 5% of the issued shares of our company.
More than 5% of our issued and outstanding ordinary shares are and in the future may be registered in the name of Cede and Co. Cede and Co. is the nominee for the Depository Trust Company, otherwise know as DTC, which is a clearing agency for shares held by participating banks and brokers. We do not believe that these shareholdings by Cede and Co. constitute a breach of the intent of the license. We believe that the purpose of this clause of the license is to allow the Government to approve significant shareholders of the company. Cede and Co. and Depository Trust Company, however, act solely as the nominee for banks and brokers, and have no beneficial ownership in the ordinary shares of common stock. Nevertheless, our Cayman Islands' legal counsel has advised us that these shareholdings by Cede & Co., which were not approved by the government, may be a technical breach of its license.
On June 1, 2000, we received a letter from an official of the Cayman Islands' government stating that a public offering which we completed in 1996 without government approval was a breach of our license. We have responded to this letter and stated that we do not believe that we are in breach of our license. A meeting with officials of the Cayman Islands' government, to discuss this matter, was held on June 16, 2000 in accordance with the Government's suggestion in the June 1st letter. We have been advised by our Cayman Islands' counsel that this letter does not constitute a formal "notice of breach" as contemplated in the license. However, if a court determined that the Government's approval of these offerings was required under the license, we would be in breach of the license. Legal Counsel has advised us that in order to make this determination, a court would have to disagree with our interpretation of the license and dismiss several defenses that would be available to us. These defenses include acquiescence and waiver on the part of the Government with respect to these offerings. In December 2000, and in 2002, we had additional meetings with Government representatives. At our latest meeting on March 18, 2002, the Government gave us indications that it is considering revisions to our license, which would clarify the definition of share ownership in order to favorably resolve the uncertainty regarding the technical breach of our license. Nevertheless, there can be no assurance that Government will revise our license in a manner favorable to us.
THERE MAY BE A RISK OF VARIATION IN CURRENCY EXCHANGE RATES. Although we report our results in United States dollars, the majority of our revenue is earned in both Cayman Islands dollars and Belizean dollars. Our Bahamas revenue is earned in United States dollars. The Cayman Islands dollar is presently fixed at U.S.$1.20 per CI$1.00, the Belizean dollar is presently fixed at U.S.$0.50 per BZE$1.00 and the Bahamian dollar is presently fixed at U.S. $1.00 per BAH$1.00. These rates of exchange have been fixed since 1974, 1976 and 1973 respectively. As a result, we do not hedge against any exchange rate risk associated with our reporting in United States dollars. However, if any of the fixed exchange rates becomes a floating exchange rate, our results of operations could be affected.
SHARES ELIGIBLE FOR FUTURE SALE UNDER RULE 144 OF THE SECURITIES ACT MAY ADVERSELY AFFECT THE MARKET PRICE OF THE ORDINARY SHARES. As of March 19, 2002, there were 3,920,313 ordinary shares issued and outstanding. With the exception of ordinary shares held by officers, directors and other affiliates of our company, all or substantially all of the shares may be immediately sold without registration under the Securities Act of 1933. These shares may be sold under Rule 144(k) or under the exemption provided by Section 4(1) of the Securities Act for transactions by any person other than an issuer, underwriter or dealer. In addition, the estimated 824,124 ordinary shares held by our affiliates (as this term is defined in the Securities Act of 1933) are eligible for resale in compliance with Rule 144 of the Securities Act.
Generally, Rule 144 permits the sale, within any three-month period, of shares in an amount which does not exceed the greater of one percent of the then-outstanding ordinary shares or the average weekly trading volume during the four calendar weeks before a sale. We can not predict the effect sales made under Rule 144, or otherwise, may have on the then-prevailing market price of the ordinary shares. Any substantial sale of the ordinary shares under Rule 144, or otherwise, may have an adverse effect on the market price of the ordinary shares.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Our primary market risk exposure is in the area of currency exchange rate fluctuations. Although we report our results in United States dollars, the majority of our revenue is earned in both Cayman Islands dollars and Belizean dollars. Our Bahamas operations revenue is earned in United States dollars. The Cayman Islands dollar is presently fixed at U.S.$1.20 per CI$1.00 and the Belizean dollar is presently fixed at U.S.$0.50 per BZE$1.00. These rates of exchange have been fixed since 1974 and 1976, respectively. As a result, we do not hedge against any exchange rate risk associated with our reporting in United States dollars. However, if either of the fixed exchange rates becomes a floating exchange rate, our results of operations could be affected.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED WATER CO. LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Report of Independent Accountants.............................................. 45
Consolidated Balance Sheets as at December 31, 2001 and 2000................... 46
Consolidated Statements of Income for each of the years ended December 31,
2001, 2000 and 1999......................................................... 47
Consolidated Statements of Stockholders' Equity for each of the years ended
December 31, 2001, 2000 and 1999............................................ 48
Consolidated Statements of Cash Flows for each of the years ended
December 31, 2001, 2000, and 1999........................................... 49
Notes to Consolidated Financial Statements..................................... 51
|
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CONSOLIDATED WATER CO. LTD.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, stockholders' equity and cash flows present fairly, in all material respects, the financial position of Consolidated Water Co. Ltd. and its subsidiaries (the "Group") at December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Group's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers PricewaterhouseCoopers Grand Cayman, Cayman Islands March 13, 2002 |
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
DECEMBER 31,
---------------------------
2001 2000
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 8) 516,446 250,837
Accounts receivable (Note 3) 1,323,156 1,488,729
Spares inventory 271,134 120,014
Inventory of water 48,377 34,219
Prepaid expenses and other assets 319,900 299,499
----------- -----------
Total current assets 2,479,013 2,193,298
PROPERTY, PLANT AND EQUIPMENT (Notes 4 and 15) 18,414,935 17,643,891
INTANGIBLE ASSET (Note 5) 1,814,780 2,008,483
INVESTMENT (Note 6) 12,450 --
----------- -----------
Total assets $22,721,178 $21,845,672
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdrafts (Note 8) -- 703,331
Dividends payable (Note 7) 499,383 401,965
Accounts payable and other liabilities 1,087,470 1,067,514
Stock compensation liability (Note 17) 210,324 380,850
Current portion of long term debt (Note 8) 355,840 219,580
----------- -----------
Total current liabilities 2,153,017 2,773,240
LONG TERM DEBT (Note 8) 1,213,804 1,131,986
SECURITY DEPOSIT (Note 16) 52,763 52,763
ADVANCES IN AID OF CONSTRUCTION 37,494 41,090
----------- -----------
Total liabilities 3,457,078 3,999,079
----------- -----------
STOCKHOLDERS' EQUITY
Common stock (Note 9) 4,704,077 4,635,774
Additional paid-in capital (Note 9) 6,896,753 6,726,749
Vested redeemable preferred stock (Note 9) 2,841 11,983
Non-vested redeemable preferred stock (Note 9) 27,393 28,378
Retained earnings 7,633,036 6,443,709
----------- -----------
Total stockholders' equity 19,264,100 17,846,593
----------- -----------
Total liabilities and stockholders' equity $22,721,178 $21,845,672
=========== ===========
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED STATEMENTS OF INCOME
(Expressed in United States dollars)
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
2001 2000 1999
------------ ------------ ------------
Water sales (Note 16) 11,026,923 9,576,959 7,936,118
Cost of water sales (Note 10) (6,109,117) (5,423,297) (4,770,179)
------------ ------------ ------------
Gross profit 4,917,806 4,153,662 3,165,939
------------ ------------ ------------
Indirect expenses (Note 10) (2,600,016) (2,197,569) (1,792,516)
------------ ------------ ------------
Income from operations 2,317,790 1,956,093 1,373,423
------------ ------------ ------------
Other income:
Interest income 28,584 32,314 594
Other income 418,199 416,413 313,276
------------ ------------ ------------
446,783 448,727 313,870
------------ ------------ ------------
Income before accounting change 2,764,573 2,404,820 1,687,293
Cumulative effect of a change in accounting principle -- -- (117,576)
------------ ------------ ------------
Net income $ 2,764,573 $ 2,404,820 $ 1,569,717
============ ============ ============
BASIC EARNINGS PER SHARE (Note 11)
Income before accounting change 0.71 0.68 0.55
Accounting changes -- -- (0.04)
------------ ------------ ------------
Net income 0.71 $ 0.68 $ 0.51
============ ============ ============
DILUTED EARNINGS PER SHARE (Note 11)
Income before accounting change 0.69 0.67 0.53
Accounting changes -- -- (0.04)
------------ ------------ ------------
Net income $ 0.69 $ 0.67 $ 0.49
============ ============ ============
Weighted average number of common shares used
in the determination of:
Basic earnings per share (Note 11) 3,897,969 3,532,501 3,044,293
============ ============ ============
Diluted earnings per share (Note 11) 3,999,691 3,616,271 3,188,048
============ ============ ============
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001
(Expressed in United States dollars)
VESTED
REDEEMABLE
COMMON ADDITIONAL SHARES PREFERRED
STOCK PAID-IN CAPITAL REPURCHASED STOCK
---------- --------------- ----------- -----------
Balance at December 31, 1998 3,657,866 2,912,646 -- 8,486
Issue of share capital (Note 9) 127,494 488,387 -- (7,365)
Repurchase of shares (Note 9) -- -- (758,928) --
Cancellation of shares repurchased (Note 9) (123,302) (635,626) 758,928 --
Net income for the year -- -- -- --
Dividends -- -- -- --
------------ ------------ ------------ ------------
Balance at December 31, 1999 3,662,058 2,765,407 -- 1,121
Issue of share capital (net of issue
costs) (Note 9) 1,068,636 4,360,797 -- 10,862
Repurchase of shares (Note 9) -- -- (494,375) --
Cancellation of shares repurchased (Note 9) (94,920) (399,455) 494,375 --
Net income for the year -- -- -- --
Dividends -- -- -- --
------------ ------------ ------------ ------------
Balance at December 31, 2000 4,635,774 6,726,749 -- 11,983
Issue of share capital (Note 9) 98,303 411,599 -- (9,142)
Repurchase of shares (Note 9) -- -- (271,595) --
Cancellation of shares repurchased (Note 9) (30,000) (241,595) 271,595 --
Net income for the year -- -- -- --
Dividends -- -- -- --
------------ ------------ ------------ ------------
Balance at December 31, 2001 $ 4,704,077 $ 6,896,753 $ -- $ 2,841
============ ============ ============ ============
|
NON-VESTED
REDEEMABLE TOTAL
PREFERRED RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
----------- -------- ------------
Balance at December 31, 1998 44,200 4,370,193 10,993,391
Issue of share capital (Note 9) 3,949 -- 612,465
Repurchase of shares (Note 9) -- -- (758,928)
Cancellation of shares repurchased (Note 9) -- -- --
Net income for the year -- 1,569,717 1,569,717
Dividends -- (638,346) (638,346)
------------ ------------ ------------
Balance at December 31, 1999 48,149 5,301,564 11,778,299
Issue of share capital (net of issue
costs) (Note 9) (19,771) -- 5,420,524
Repurchase of shares (Note 9) -- -- (494,375)
Cancellation of shares repurchased (Note 9) -- -- --
Net income for the year -- 2,404,820 2,404,820
Dividends -- (1,262,675) (1,262,675)
------------ ------------ ------------
Balance at December 31, 2000 28,378 6,443,709 17,846,593
Issue of share capital (Note 9) (985) -- 499,775
Repurchase of shares (Note 9) -- -- (271,595)
Cancellation of shares repurchased (Note 9) -- -- --
Net income for the year -- 2,764,573 2,764,573
Dividends -- (1,575,246) (1,575,246)
------------ ------------ ------------
Balance at December 31, 2001 $ 27,393 $ 7,633,036 $ 19,264,100
============ ============ ============
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------
2001 2000 1999
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 11,607,099 9,919,966 7,841,289
Cash paid to suppliers and employees (7,344,692) (5,876,811) (5,127,240)
------------ ------------ ------------
Cash generated from operations 4,262,407 4,043,155 2,714,049
Interest received 28,584 32,314 594
Interest paid (97,070) (152,757) (185,722)
------------ ------------ ------------
Net cash provided by operating activities 4,193,921 3,922,712 2,528,921
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subsidiary, net of cash acquired (Note 5) -- (3,966,979) --
Purchase of property, plant and equipment (1,892,147) (2,301,759) (1,543,368)
Purchase of investment (12,450) -- --
Proceeds from sale of property, plant and equipment 360 -- 1,920
------------ ------------ ------------
Net cash used in investing activities (1,904,237) (6,268,738) (1,541,448)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of
ordinary shares of common stock and preference stock 210,601 5,368,945 146,060
Repurchase of ordinary shares of common stock (271,595) (494,375) (758,928)
Draw down of credit facility 500,000 -- --
Increase (decrease) in bank overdraft (703,331) 32,938 591,359
Repayment of principal on long term debt (281,922) (885,355) (533,353)
Principal payments under Water Purchase Agreement -- (320,141) (344,304)
Dividends paid (1,477,828) (1,127,295) (505,193)
------------ ------------ ------------
Net cash provided by (used in) financing activities (2,024,075) 2,574,717 (1,404,359)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 265,609 228,691 (416,886)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 250,837 22,146 439,032
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 516,446 $ 250,837 $ 22,146
============ ============ ============
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
2001 2000 1999
----------- ----------- -----------
RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES
TO NET INCOME FROM OPERATIONS:
Net income 2,764,573 2,404,820 1,569,717
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
FROM OPERATING ACTIVITIES
Depreciation (Notes 4 and 10) 1,113,041 1,071,455 816,960
Loss (gain) on sale of fixed assets 7,702 -- (1,920)
Amortization of intangible asset (Note 5) 193,703 64,979 --
Share issue costs deferred -- -- 89,145
Stock compensation (Note 22) 289,174 51,579 377,260
Cumulative effect of a change in accounting principle -- -- 117,576
CHANGE IN ASSETS AND LIABILITIES
Decrease (increase) in spares inventory (151,120) 25,278 (25,662)
Decrease (increase) in inventory of water (14,158) (5,235) 1,677
Decrease (increase) in accounts receivable 165,573 (56,259) (401,926)
Decrease (increase) in prepaid expenses and other assets (20,401) 1,647 (111,213)
Increase in accounts payable and other liabilities 19,956 320,183 203,471
Increase (decrease) in stock compensation liability (170,526) 48,259 (101,664)
Decrease in advances in aid of construction (3,596) (3,994) (4,500)
----------- ----------- -----------
NET CASH FROM OPERATING ACTIVITIES $ 4,193,921 $ 3,922,712 $ 2,528,921
=========== =========== ===========
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPAL ACTIVITY AND STATUS
Consolidated Water Co. Ltd. (the "Company") and its wholly-owned subsidiaries (together the "Group") use reverse osmosis technology to produce fresh water from seawater. The Group processes and supplies water to its customers in Grand Cayman, Cayman Islands, Ambergris Caye, Belize, and South Bimini, Bahamas. The Company's exclusive license in Grand Cayman allows it to process and supply water to certain areas of Grand Cayman for a period of twenty years from July 11, 1990 in addition to having a right of first refusal on the extension or renewal thereof. The Group has a contract with Belize Water Services Ltd. ( "BWSL") of Belize, formally known as Water and Sewerage Authority of Belize, to supply water to BWSL in Ambergris Caye expiring in 2011. At the expiry of the contract, BWSL may at its option extend the term of the agreement or purchase the plant outright. In addition, on July 11, 2001 the Company commenced supplying water under a ten year agreement to South Bimini International Ltd., a Bahamian company, which owns and operates resort properties on South Bimini Island, Bahamas. The base price of water supplied by the Group, and adjustments thereto, are generally determined by the terms of the license and contracts, which provide for adjustments based upon the movement in the government price indices specified in the license and contracts respectively as well as monthly adjustments for changes in the cost of energy.
2. ACCOUNTING POLICIES
BASIS OF PREPARATION: As a result of a management decision the Group has voluntarily adopted accounting principles generally accepted in the United States of America ("US-GAAP") effective January 1, 2000. Previously, annual financial statements were prepared in accordance with International Accounting Standards ("IAS"). As a result all prior periods' financial statements presented in these financial statements have been prepared in accordance with "US-GAAP". The following income statement captions contain certain items, the accounting for which has changed as a result of the change from IAS to US-GAAP:
INCOME STATEMENT: Indirect expenses include: i) recognition of stock option compensation expenses and ii) start up costs expensed following the change in accounting policy to effect the application of Statement of Position 98-5 "Reporting on the Costs of Start Up Activities."
USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Group's significant accounting policies are:
BASIS OF CONSOLIDATION: The consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries Belize Water Limited, Commonwealth Water Limited, Hurricane Hide-A-Way Ltd., and Cayman Water Company Limited. The operating results of Belize Water Limited have been included in the financial statements since the date of the acquisition (July 21, 2000). All inter-company balances and transactions have been eliminated. There are no operating results for Commonwealth Water Limited, Hurricane Hide-A-Way Ltd. and Cayman Water Company Limited as these companies have been dormant since inception and have no assets and liabilities.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACCOUNTING POLICIES (CONTINUED)
REPORTING CURRENCY: The functional currency of the Company and its foreign subsidiaries are their respective local currencies. The consolidated operations are reported using United States dollars. It is the intention of the Company to declare and pay dividends in United States dollars.
The exchange rate between the Cayman Islands dollar and the United States dollar has been fixed during all periods presented at CI$1.00 to US$1.20. The exchange rate between the Belize Dollar and the United States dollar has been fixed during all periods presented at BZE$1.00 to US$0.50. The exchange rate between the Bahamian Dollar and the United States dollar has been fixed during all periods presented at BAH$1.00 to US$1.00. Accordingly, no foreign currency gain or losses arise on the translation of the foreign operations due to the fixed exchange rate.
FOREIGN CURRENCY: Monetary assets and liabilities denominated in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Foreign currency transactions are translated at the rate ruling on the
date of the transaction. Net exchange gains of $2,477 (2000: $3,812; 1999:
$36,512) are included in other income.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents comprise cash at bank on call and highly liquid deposits with an original maturity of three months or less.
SPARES INVENTORY: Spares inventory, which consists primarily of replacement spares and parts, are valued at the lower of cost and net realizable value on a first-in, first-out basis.
INVENTORY OF WATER: Inventory of water represents the cost of desalinated potable water produced or purchased by the Company and held in the Company's reservoirs at year end. The value of the inventory of water is based on the lower of average cost of producing and purchasing water during the year and the volume of water on hand at year end or net realizable value.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using a straight line method with allowance being made for estimated residual values. Rates are determined based on the estimated useful lives of the assets as follows:
Buildings 5 to 40 years
Plant and equipment 5 to 15 years
Distribution system 3 to 40 years
Office furniture, fixtures and equipment 3 to 10 years
Vehicles 3 to 10 years
Leasehold improvements Shorter of 5 years and
operating lease term outstanding
Lab Equipment 3 to 10 years
|
Additions to property, plant and equipment comprise of the cost of the contracted services, direct labour and materials. Assets under construction are recorded as additions for the year upon completion of the projects. Depreciation commences in the month of completion and transfer from assets under construction into the other categories of Property, plant and equipment.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSET: The intangible asset consists of the contract acquired on the acquisition of Belize Water Limited (Note 5) on July 21, 2000 and is being amortised on a straight line basis over the remaining period of the license, which expires in April 2011.
INVESTMENT: Investments are recorded at cost less provision for impairment, if any.
OBLIGATIONS UNDER WATER PURCHASE AGREEMENT: The Company assumed substantially all the benefits and risks of the plant and equipment under the Water Purchase Agreement (Note 15). The assets have been capitalized at the amount specified in the agreement.
ADVANCES IN AID OF CONSTRUCTION: The Company recognizes a liability in respect of advances in aid of construction when such advances are received from certain condominium developers in the licensed area to help defray the capital expenditure costs of the Company. These advances do not represent a loan to the Company and are interest free. However, the Company allows a discount of 10% on future supplies of water to these developments until the aggregate discounts allowed are equivalent to advances received. Such discounts are charged against advances received.
SHARES REPURCHASED: Under Cayman Island law, shares repurchased out of capital by the Company are treated as cancelled upon redemption, and the Company's issued share capital is reduced by the par value of those shares, with the difference being adjusted to additional paid up capital.
STOCK AND STOCK OPTION INCENTIVE PLANS: The Company issues stock under incentive plans that form part of employees and non-executive Directors' remuneration, and grants options to purchase ordinary shares as part of remuneration for certain long-serving employees and the executive Officers.
The Company has elected to account for stock-based employee compensation plans in accordance with Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees," as permitted by SFAS 123, "Accounting for Stock-Based Compensation." In accordance with APB No. 25, compensation expense is not recognized for stock options that have no intrinsic value on the date of grant. Compensation expense is recognized immediately for restricted stock for which future service is not required as a condition to the delivery of the underlying shares of common stock. For restricted stock with future service requirements, compensation expense is recognized over the relevant vesting period. Stock compensation expenses are recorded within employee costs.
The liability for unexercised stock option compensation expense is recorded as other liabilities. On exercise of options, proceeds up to the par value of the stock issued are credited to ordinary share capital, any proceeds in excess of the par value of the stock issued are credited to additional paid in capital in the period in which the options are exercised.
WATER SALES AND COST OF WATER SALES: The Group bills customers monthly for water delivered based on meter readings performed at or near each month end, and in accordance with various agreements which stipulate minimum monthly charges for water service. An accrual, where necessary, is made for water delivered but unbilled at year end where readings are not performed at the year end date. This accrual is matched with the associated direct costs of producing and purchasing water.
OTHER INCOME: Foreign exchange gains, water meter and fire hydrant rental and recurring income from a dispute settlement agreement with Cayman Hotel and Golf Inc. are recorded as other income.
REPAIRS AND MAINTENANCE: All repair and maintenance costs are expensed as incurred.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ACCOUNTS RECEIVABLE
Accounts receivable comprise receivables from customers and are shown net of an allowance for doubtful accounts of $12,000 (2000: $12,000). Significant concentrations of credit risk are disclosed in Note 21.
4. PROPERTY, PLANT AND EQUIPMENT
Certain fixed assets are pledged as collateral for certain obligations of the Company, as more fully described in Note 8.
DISPOSALS/
TRANSFERS FROM
DECEMBER 31, ASSETS UNDER DECEMBER 31,
2000 ADDITIONS CONSTRUCTION 2001
----------- --------- -------------- -------------
COST
Land 475,679 -- -- 475,679
Buildings 2,115,025 32,392 -- 2,147,417
Plant and equipment 8,812,711 719,028 -- 9,531,739
Distribution 11,386,877 1,449,668 -- 12,836,545
Office furniture, fixtures and equipment 636,514 38,936 -- 675,450
Vehicles 698,176 76,199 (23,484) 750,891
Leasehold improvements 26,032 13,448 -- 39,480
Lab equipment 34,324 3,585 -- 37,909
Assets under construction 701,251 1,557,154 (1,973,499) 284,906
------------ ------------ ------------ ------------
$ 24,886,589 $ 3,890,410 $ (1,996,983) $ 26,780,016
============ ============ ============ ============
|
DECEMBER 31, CHARGE FOR DECEMBER 31,
2000 THE YEAR DISPOSALS 2001
------------ ------------ ------------ ------------
ACCUMULATED DEPRECIATION
Buildings 610,177 66,542 -- 676,719
Plant and equipment 3,097,203 630,798 -- 3,728,001
Distribution 2,837,004 268,189 -- 3,105,193
Office furniture, fixtures and equipment 311,213 90,996 -- 402,209
Vehicles 337,135 73,464 (15,422) 395,177
Leasehold improvements 20,100 6,152 -- 26,252
Lab equipment 29,866 1,664 -- 31,530
------------ ------------ ------------ ------------
$ 7,242,698 $ 1,137,805 $ (15,422) $ 8,365,081
============ ============ ============ ============
Net book value $ 17,643,891 $ 18,414,935
============ ============
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Included in plant and equipment is the reverse osmosis water production plant, which has been acquired under the Water Purchase Agreement (see Note 15). Included within additions for the year are transfers of completed projects from assets under construction comprising of buildings $7,420, plant and equipment $616,651 and distribution $1,349,428.
During the year the Company capitalized $24,764 (2000: $33,682; 1999: $35,749) of depreciation charges in relation to plant and equipment specifically purchased to continue further development of the distribution system.
At December 31, 2001, the Group had outstanding capital commitments of $1,620,000 (2000: $570,000). It is Company policy to maintain adequate insurance for loss or damage to all fixed assets that in management's assessment may be susceptible to loss. The Company does not insure its underground distribution system which totals $9,471,931 (2000: $8,791,350) and assets insured by third parties under agreement that have a total cost of $3,633,997 (2000: $3,550,897) (Note 15).
During the year ended December 31, 2001 the Company carried out an extensive engineering analysis of its potable water production and distribution equipment in Grand Cayman, which included the revision of the Company's computerized hydraulic model of the pipeline system, and updating of the Company's water meter replacement schedule. The Company's engineering analysis concluded that certain assets, including portions of the Seven Mile Beach Distribution System, the Governor's Harbour VC Building, and water meters would not need to be replaced or relocated as early as previously planned. Furthermore extensive renovation of the Governor's Harbour VC Building was completed in 2000. As a result of these circumstances, management considered it appropriate to reassess the estimated useful economic life of the Seven Mile Beach distribution system from 20 years to 40 years of which 13 years has already elapsed, the Governor's Harbour VC building from 20 to 40 years of which 21 years had already elapsed, and water meters from 5 years to 10 years of which 3 years had already elapsed. Also as a result of these circumstances, it was determined that the projected future utilization of a key piece of equipment, which the Company uses to install or replace pipelines, would be reduced. It was considered appropriate by management to reassess the useful economic life of this piece of equipment from 10 years to 20 years, of which 3 years had already elapsed.
Also during the year ended December 31, 2001 the Company carried out a review of the condition and technology of its West Bay RO Plant and concluded that the plant was now meeting performance and operational requirements consistent with those of the Governor's Harbour RO Plant. A similar review had been carried out on the Governor's Harbour RO Plant in 1994. As a result of these circumstances, it was considered appropriate by management to reassess the estimated useful economic life of the West Bay RO Plant from 10 years to 15 years, of which 3 years had already elapsed, which is now consistent with depreciation parameters used for the Governor's Harbour RO Plant.
The reassessment of the useful economic lives of these assets resulted in decreased depreciation expense on an annual basis in the amount of $197,472, which increased basic and fully diluted earnings per share by $0.05 for the year ended December 31, 2001.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. INTANGIBLE ASSET
On July 21, 2000, the Company acquired all of the issued and outstanding capital stock of Seatec Belize Ltd., a company organized under the laws of Belize, for a total purchase price, less cash and cash equivalents acquired, of $3,966,979. Of this amount, $2,073,462 has been attributed to intangible assets and represents the value of the water purveyor contract (the "contract") that the acquired company has with Belize Water Services Limited. Seatec Belize Ltd., now renamed Belize Water Limited, owns and operates a reverse osmosis plant in Ambergris Caye, Belize. This acquisition has been accounted for by the purchase method and the intangible asset is being amortised on a straight line basis over the remaining period of the contract, which expires in April 2011.
2001 2000
----------- -----------
Intangible asset - contract 2,073,462 2,073,462
Accumulated amortisation (258,682) (64,979)
----------- -----------
Net book value $ 1,814,780 $ 2,008,483
=========== ===========
|
6. INVESTMENT
2001 2000
----------- -----------
Investment in Belize Water Services Ltd. 12,450 --
----------- -----------
Total investment $ 12,450 $ --
=========== ===========
|
The investment in Belize Water Services Ltd. represents less than a 1% holding of total issued and outstanding shares of Belize Water Services Ltd.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. DIVIDENDS PAID / PAYABLE
Quarterly interim dividends per share were declared in respect of both classes of shareholders on record as follows:
Dividend per share: 2001 2000 1999
---- ---- ----
March 31 $ 0.10 $ 0.08 $ 0.04
June 30 $ 0.10 $ 0.08 $ 0.04
September 30 $ 0.10 $ 0.08 $ 0.04
December 31 $ 0.10 $ 0.10 $ 0.08
|
Interim dividends for the first three quarters were paid during each respective year. The interim dividend for the fourth quarter was declared by the Board of Directors in October of each respective year. These quarterly interim dividends are subject to no further ratification and consequently the fourth quarter interim dividends have been recorded as a liability in each respective year. Included in dividends payable at December 31, 2001 are unclaimed dividends of $100,160 (2000: $10,051).
8. BANK BALANCES AND LOANS
2001 2000
---------- -----------
Cash and cash equivalents $ 516,446 $ 250,837
=========== ===========
|
Cash and cash equivalents are not restricted as to withdrawal or use. At December 31, 2001, the equivalent of $372,688 (2000: $10,414) is denominated in Belize dollars. The Group has a guarantee from the Government of Belize to repatriate any and all of the Belize Water Ltd. earnings in United States dollars to any foreign destination.
Bank overdrafts - Royal Bank of Canada $ -- $ 703,331
=========== ==========
European Investment Bank:
Long term debt $ 1,132,144 $1,351,566
=========== ==========
Royal Bank of Canada:
Long term debt $ 437,500 $ --
=========== ==========
|
As at December 31, 2001, the total lending facility made available by the Royal
Bank of Canada comprised of a) a revolving line of credit with a limit of
$1,000,000, bearing interest at New York Prime plus 1%, which is convertible in
$100,000 increments into a monthly revolving LIBOR note, bearing interest at
LIBOR plus 1.5%, and b) term loans with a limit of $3,500,000, bearing interest
at LIBOR plus 1.5%. Any amounts drawn down under the line of credit and any term
loans are collateralised by a fixed and floating charge ("the first charge") of
$2,500,000 (to be increased to maximum of $4,500,000). The fixed charge covers
land owned by the Company and the floating charge covers all other assets of the
Company, except those assets charged in connection with the Water Purchase
Agreement (see Note 15). Of this facility, a bank overdraft of $nil (2000:
$703,331) and a term loan of $437,500 (2000: $nil) was outstanding at December
31, 2001.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. BANK BALANCES AND LOANS (CONTINUED)
During 1991, in order to fund an extension to the water distribution system, the European Investment Bank, Luxembourg (the "bank"), agreed to loan the US$ equivalent of 2 million European Currency Units (approximately US$2.5 million at that time). The loan is guaranteed by the Overseas Development Administration ("ODA") of the Foreign and Commonwealth Office of the Government of the United Kingdom and is repayable in 24 semi annual installments, which commenced on December 20, 1994. The interest rate for the entire term is fixed at the bank's prevailing lending rate, less a subsidy of 4% per annum, at the date each tranche is drawn down.
The rates of interest applicable to, and the amounts of each tranche at the current year end exchange rates are:
DATE OF INTEREST
DRAWDOWN RATE
-------- ---------
Tranche 1 April 11, 1991 $ 322,814 4.25%
Tranche 2 September 8, 1992 1,018,895 3.15%
Tranche 3 February 12, 1992 847,727 3.45%
Tranche 4 March 17, 1993 362,736 3.00%
----------
2,552,172
Capital repayments to December 31, 2001 (1,420,028)
----------
Total debt obligation as at December 31, 2001 $ 1,132,144
==========
|
Of the final tranche, at December 31, 2001 the equivalent of $50,437 (2000:
$60,034) is repayable in pounds sterling, all other obligations under this loan
are repayable in United States dollars.
The Government of the Cayman Islands has, for a fee of 1% per annum, provided a counter guarantee to the ODA. The Company, with the approval of the Royal Bank of Canada, the holder of the first charge, has agreed to secure the counter guarantee by a second charge over all assets of the Company.
CURRENT PORTION OF LONG TERM DEBT OBLIGATION:
Royal Bank of Canada 125,000
European Investment Bank 230,840
----------
$ 355,840
==========
LONG TERM DEBT OBLIGATION:
Royal Bank of Canada 312,500
European Investment Bank 901,304
----------
$1,213,804
==========
|
THE AGGREGATE CAPITAL REPAYMENT OBLIGATIONS FOR THE NEXT FIVE YEARS ARE AS FOLLOWS:
2002 355,840
2003 362,300
2004 369,000
2005 313,800
2006 168,704
----------
$1,569,644
==========
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL
2001 2000 1999
------------ ------------ ------------
CAPITAL STOCK AUTHORIZED:
9,900,000 ordinary shares of common
stock CI$1.00 each 11,880,000 11,880,000 11,880,000
100,000 redeemable preferred
stock of CI$1.00 each 120,000 120,000 120,000
------------ ------------ ------------
$ 12,000,000 $ 12,000,000 $ 12,000,000
============ ============ ============
ORDINARY SHARES OF COMMON STOCK
OF CI$1.00 EACH ISSUED AND FULLY PAID:
Balance of ordinary shares at beginning of year
3,863,144 (2000: 3,154,467; 1999: 3,048,222) 4,635,774 3,662,058 3,657,866
Ordinary shares issued under public
offering nil (2000: 773,000; 1999: nil) -- 927,600 --
Cancellation of repurchased shares 25,000
(2000: 79,100; 1999: 102,752) (30,000) (94,920) (123,302)
Cancellation of ordinary shares 200
(2000: nil; 1999: nil) (240) -- --
Ordinary shares issued on exercise of
options 60,000 (2000: nil; 1999: 89,010) 72,000 -- 106,812
Ordinary shares issued on exercise of
warrants nil (2000: 100,000; 1999: nil) -- 120,000 --
Ordinary shares issued under Directors' Share
Plan 7,860 (2000: 6,890; 1999: 2,400) 9,431 8,269 2,880
Ordinary shares issued on redemption of
preferred stock 14,260 (2000: 10,639; 1999: 14,835) 17,112 12,767 17,802
------------ ------------ ------------
Balance of ordinary shares at end of year
3,920,064 (2000: 3,863,144; 1999: 3,154,467) $ 4,704,077 $ 4,635,774 $ 3,662,058
============ ============ ============
SHARES REPURCHASED:
Balance of shares repurchased at beginning of
year nil (2000: nil; 1999: nil) -- -- --
Shares acquired at cost 25,000 (2000: 79,100;
1999: 102,752) (271,595) (494,375) (758,928)
Repurchased shares cancelled during the
year 25,000 (2000: 79,100; 1999: 102,752) 271,595 494,375 758,928
------------ ------------ ------------
Balance of shares repurchased at end of
year nil (2000: nil; 1999: nil) $ -- $ -- $ --
============ ============ ============
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL (CONTINUED)
2001 2000 1999
----------- ----------- -----------
ADDITIONAL PAID IN CAPITAL:
Balance at beginning of year 6,726,749 2,765,407 2,912,646
Additional paid in capital from ordinary shares
of common stock issued under public offering -- 4,825,800 --
Share issue costs arising on ordinary shares of
common stock issued under public offering -- (790,669) --
Reduction in additional paid in capital from
cancellation of shares repurchased (241,595) (399,455) (635,626)
Additional paid in capital from ordinary
shares of common stock issued under
Directors' Share Plan (see Note 17) 47,567 40,815 11,970
Additional paid in capital from exercise of
stock options (see Note 17) 305,420 -- 466,401
Additional paid in capital from exercise of
warrants (see Note 17) -- 280,000 --
Additional paid in capital on preferred stock
issued under employee share plan (see Note 17) 58,612 4,851 10,016
----------- ----------- -----------
Balance at end of year $ 6,896,753 $ 6,726,749 $ 2,765,407
=========== =========== ===========
VESTED REDEEMABLE PREFERRED STOCK OF CI$1.00
EACH ISSUED AND FULLY PAID (NOTE 17):
Balance of vested redeemable preferred stock at
beginning of year 9,986 (2000: 934; 1999: 7,072) 11,983 1,121 8,486
Preferred stock vested during the year 5,358
(2000: 11,400; 1999: 7,036) 6,430 13,680 8,444
Vested preferred stock redeemed and issued as
ordinary shares 12,977 (2000: 2,348; 1999: 13,174) (15,572) (2,818) (15,809)
----------- ----------- -----------
Balance of vested redeemable preferred stock at
end of year 2,367 (2000: 9,986; 1999: 934) $ 2,841 $ 11,983 $ 1,121
=========== =========== ===========
NON-VESTED REDEEMABLE PREFERRED STOCK OF
CI$1.00 EACH ISSUED AND FULLY PAID (NOTE 17):
Balance of non-vested redeemable preferred stock at
beginning of year 23,648 (2000: 40,124; 1999: 36,833) 28,378 48,149 44,200
Preferred stock vested during the year 5,358
(2000: 11,400; 1999: 7,036) (6,430) (13,680) (8,444)
Non-vested preferred stock issued 5,821
(2000: 3,415; 1999: 11,988) 6,985 4,098 14,386
Non-vested preferred stock redeemed nil
(2000: 200; 1999: nil) -- (240) --
Non-vested preferred stock redeemed and issued as
Ordinary shares 1,283 (2000: 8,291; 1999: 1,661) (1,540) (9,949) (1,993)
----------- ----------- -----------
Balance of non-vested redeemable preferred stock
at end of year 22,828 (2000: 23,648; 1999: 40,124) $ 27,393 $ 28,378 $ 48,149
=========== =========== ===========
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL (CONTINUED)
The redeemable preferred stock are issued under the Company's Employee Share Incentive Plan (Note 17) and carry the same voting and dividend rights as ordinary shares. The redeemable preferred stock is only redeemable with the Company's agreement. In consideration for redeemed vested preferred stock, ordinary share capital is issued on a share for share basis. Upon liquidation of the Company, the redeemable preferred stock rank in preference to the common stock to the extent of the par value of the redeemable preferred stock and any related additional paid in capital.
Outstanding non-vested preferred stock currently redeemable are as follows:
NO. OF SHARES REDEMPTION REDEMPTION
REDEEMABLE PRICE VALUE
---------- ------------ -------------
Up to the year ended December 31, 2002 17,881 -- --
872 $5.3175 4,637
1,081 $5.7120 6,175
1,136 $5.4720 6,216
1,858 $5.3238 9,892
------- -------
22,828 $26,920
======= =======
Up to the year ended December 31, 2003 12,791 -- --
1,081 $5.7120 6,175
1,136 $5.4720 6,216
1,858 $5.3238 9,892
------- -------
16,866 $22,283
======= =======
Up to the year ended December 31, 2004 6,087 -- --
1,136 $5.4720 6,216
1,858 $5.3238 9,892
------- -------
9,081 $16,108
======= =======
Up to the year ended December 31, 2005 3,963 -- --
1,858 $5.3238 9,892
------- -------
5,821 $ 9,892
======= =======
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL (CONTINUED)
In April 1996 the Company filed a Form F-1 registration statement with the SEC in connection with the issue of 575,000 ordinary shares of common stock at $5.25 per share. Under the terms of the related underwriting agreement, the underwriter was issued a warrant to purchase 50,000 ordinary shares of common stock at $6.30 per share. Consideration of $500 was paid for the warrant which management considered to approximate fair value. The warrants were exercisable during the four year period commencing April 3, 1997 and expired on April 3, 2001. During the year ended December 31, 2001, no warrants were exercised under this agreement.
In conjunction with the private placement of ordinary shares of common stock that took place in August 1995, the Company issued warrants to purchase 100,000 ordinary shares of common stock at a price of $4.00 per share. The warrants were exercised in January and February 2000.
Under the provisions of the Land Holding Companies Share Transfer Tax Law of the Cayman Islands, tax is payable on the transfer of shares in the Company. Prior to becoming quoted on Nasdaq, the Company paid this tax on private share transfers. The Company has never paid tax on transfers of its publicly traded shares. Management believes that the likelihood that Government will seek to collect this tax on transfers of the Company's publicly traded shares is remote. Management, therefore, has not provided for a share transfer tax liability in these financial statements.
In August 1997 the Company established a Class `B' stock option plan designed to deter coercive takeover tactics. Pursuant to this plan, holders of ordinary shares of common stock and redeemable preferred stock were granted options which entitle them to purchase 1/100 of a share of Class `B' stock at an exercise price of $37.50 if a person or group acquires or commences a tender offer for 20% or more of the Company's ordinary shares of common stock. Option holders (other than the acquiring person or group) will also be entitled to buy, for the $37.50 exercise price, ordinary shares of the Company's common stock with a then market value of $75.00 in the event a person or group actually acquires 20% or more of the Company's ordinary shares of common stock. Options may be redeemed at $0.01 under certain circumstances. 30,000 of the Company's authorized but unissued ordinary shares have been reserved for issue as Class `B' stock. The Class `B' stock rank pari passu with the ordinary shares of common stock for dividend and voting rights. As at December 31, 2001, no Class `B' stock options have been exercised or redeemed.
The Company purchased treasury shares of 8,000, 102,752, and 79,100 in 1998, 1999 and 2000 respectively. The Company paid $62,375, $758,928 and $494,375 in 1998, 1999 and 2000, respectively to acquire these shares. Under the Cayman Island's Companies Law, treasury shares purchased are to be treated as cancelled on purchase. Accordingly, the Company has reclassified the purchase of these treasury shares in the Consolidated Balance Sheet and the Consolidated Statement of Shareholders' Equity as cancelled on purchase for the fiscal years ended December 31, 1998, 1999 and 2000.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. EXPENSES
YEAR ENDED DECEMBER 31,
----------------------------------------
2001 2000 1999
---------- ---------- ----------
COST OF WATER SALES COMPRISE THE FOLLOWING:
Water purchases 2,074,759 2,062,582 1,775,494
Depreciation 1,018,541 992,410 760,901
Amortisation of intangible asset (Note 5) 193,703 64,979 --
Employee costs 939,976 741,789 601,678
Fuel oil 91,842 81,102 --
Royalties (Note 19) 694,351 641,428 560,441
Water Purchase Agreement obligation interest (Note 15) -- 16,910 58,042
Electricity 534,919 316,135 450,451
Insurance 89,808 64,160 56,308
Other direct costs 471,218 441,802 506,864
---------- ---------- ----------
$6,109,117 $5,423,297 $4,770,179
========== ========== ==========
INDIRECT EXPENSES COMPRISE THE FOLLOWING:
Employee costs 1,299,877 1,045,244 907,695
Interest 99,956 135,847 127,680
Depreciation 94,500 56,059 79,045
Professional fees 280,297 275,589 131,366
Insurance 89,328 34,829 41,083
Directors' fees and expenses 107,184 104,149 99,760
Other indirect costs 628,874 522,866 428,873
---------- ---------- ----------
$2,600,016 $2,197,569 $1,792,516
========== ========== ==========
|
Direct expenses relate to the production and distribution of water, indirect expenses represent the administrative costs of the Company.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit attributable to stockholders by the weighted average number of ordinary shares of common stock in issue during the year.
The net income and weighted average number of ordinary shares of common stock and potential ordinary shares figures used in the determination of the basic and diluted earnings per ordinary share of common stock are summarized as follows:
2001 2000 1999
----------- ----------- -----------
Net income used in determination of diluted
earnings per ordinary share of common stock $ 2,764,573 $ 2,404,820 $ 1,569,717
Less:
Dividends paid on non-vested
redeemable preferred stock (9,131) (8,040) (8,025)
Earnings attributable to vested
redeemable preferred stock (1,663) (6,180) (461)
----------- ----------- -----------
Net income available to holders of ordinary shares
of common stock in the determination of basic
earnings per ordinary share of common stock $ 2,753,779 $ 2,390,600 $ 1,561,231
=========== =========== ===========
Weighted average number of ordinary shares
of common stock in the determination of basic
earnings per ordinary share of common stock 3,897,969 3,532,501 3,044,293
Plus:
Weighted average number of redeemable
preferred stock outstanding during the year 31,213 37,145 44,707
Potential dilutive effect of unexercised options 70,509 41,147 48,954
Potential dilutive effect of unexercised warrants -- 5,478 50,094
----------- ----------- -----------
Weighted average number of shares
used for determining diluted earnings
per ordinary share of common stock 3,999,691 3,616,271 3,188,048
=========== =========== ===========
|
As detailed in Note 17, 30,000 options were granted to an investment company on December 15, 1998 with an exercise price of $7.88. In addition, 85,259 options were granted to executive directors and senior management of the Company on December 31, 2000 with an exercise price of $7.10. At December 31, 2000, these options were antidilutive for the purpose of determining diluted earnings per share. However, as at December 31, 2001 these options were no longer antidilutive and were included in the determination of diluted earnings per share.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. SEGMENTED INFORMATION
On July 21, 2000, the Company acquired a 100% stake in Belize Water Limited (Note 5 and 16) that has been consolidated in these financial statements. In addition, on December 18, 2000, the Company entered into an agreement with South Bimini International Ltd., a Bahamian company, to provide water to property in South Bimini Island, Bahamas (Note 17) and began operations on July 11, 2001.
Under FAS 131 "Disclosure about Segments of an Enterprise and Related Information" the supply of water to Belize and Bahamas are considered by management as separate business segments. The basis of measurement of segment information is similar to that adopted for the financial statements.
AS AT DECEMBER 31 AND FOR THE YEAR THEN ENDED
CAYMAN ISLANDS BELIZE BAHAMAS TOTAL
----------------------- ---------------------- -------------------- -----------------------
2001 2000 2001 2000 2001 2000 2001 2000
---------- ---------- ---------- ---------- ---------- ------- ---------- ----------
Water sales 9,769,815 9,112,031 1,230,775 464,928 26,333 -- 11,026,923 9,576,959
Other income 417,786 448,727 28,554 -- 443 -- 446,783 448,727
Cost of water 5,344,370 5,172,945 718,121 250,352 46,626 -- 6,109,117 5,423,297
sales
Indirect expenses 2,404,977 2,164,147 190,913 33,422 4,126 -- 2,600,016 2,197,569
Cost of water
sales and
indirect expenses
include:
Interest 99,865 152,757 91 -- -- -- 99,956 152,757
Depreciation 932,029 1,009,420 160,825 62,035 20,187 -- 1,113,041 1,071,455
Net income (loss) 2,438,254 2,223,666 350,295 181,154 (23,976) -- 2,764,573 2,404,820
Property Plant
and Equipment 15,770,560 15,735,330 1,541,795 1,601,166 1,102,580 307,395 18,414,935 17,643,891
|
13. RELATED PARTY TRANSACTIONS
A company, owned by a Director, provided professional services during the year ended December 31, 2001 for which it charged $4,523 (2000: $13,369). This company was also reimbursed for communication charges made by the Director on behalf of the Company in the amount of $1,355 (2000: $nil).
The Company sells water to a company in which a Director has a significant interest. During 2001 sales totaling $9,735 (2000: $5,647; 1999: $11,621) were made to that company. Accounts receivable for such sales at year end total $934 (2000: $411; 1999: $286).
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has committed to lease premises in the Cayman Islands for a period of one year from February 1, 2002 to January 31, 2003 at approximately $79,000 per annum, with the right to extend the term of this lease for two further terms of one year each ending on January 31, 2005.
The Company is subject to an ongoing obligation to supply water to new customers in the Cayman Islands within the areas in which it is licensed to operate and where the supply of such water is considered commercially feasible.
The Company is subject to a commitment in the Cayman Islands under the Water Purchase Agreement (Note 15).
The Group is subject to a commitment to supply certain minimum quantities of water under the terms of various customer supply agreements (Note 16).
The Company has entered into an agreement with Cayman Hotel and Golf Inc., a Canadian company, to purchase a seawater desalination plant, potable water storage tank and water distribution pumps, which supply water to a large hotel and golf course in West Bay Beach, Grand Cayman, Cayman Islands (Note 25). As a condition of this equipment purchase agreement, the Company has committed to an operating lease for $1 per year from Cayman Hotel and Golf Inc, for a term of 25 years, subject to renewal of Cayman Island water supply license, to lease a building and approximately 0.78 acres of land on which the water plant is situated, and to supply potable water to the Hyatt Hotel and Britannia Golf Course (Note 16). Upon commencement of supply the existing dispute settlement agreement with Cayman Hotel and Golf Inc., described in Note 2, will be extinguished.
CONTINGENCIES
The license that the Company has with the government of the Cayman Islands (the "Government") requires it to obtain approval from the Government for an issuance or transfer of shares which (a) exceeds 5% of the issued shares of our company, or (b) would, upon registration, result in any shareholder holding more than 5% of the issued share capital of the Company.
More than 5% of the ordinary shares of common stock are registered in the name of Cede and Co., the nominee for the Depository Trust Company, which is a clearing agency for shares held by participating banks and brokers. The Company does not believe that these shareholdings by Cede and Co. constitute a breach of the intent of the license. The Company believes that the purpose of this clause of the license is to allow the Government to approve significant shareholders of the Company. Cede and Co. and Depository Trust Company, however, act solely as the nominee for banks and brokers, and have no beneficial ownership in the ordinary shares of common stock. Nevertheless, the Company's Cayman Islands legal counsel ("Legal Counsel") has advised it that the shareholdings by Cede & Co. may be a technical breach of the Company's license.
In August and September 1994 and in September 1995, the Company completed private placements of an aggregate of 500,000 ordinary shares of common stock and warrants to purchase an additional 100,000 ordinary shares of common stock. In April 1996 and May 2000, the Company completed public offerings of 515,000 and 773,000 ordinary shares, respectively. Based upon the advice of Legal Counsel, the Company determined that the license did not require the Government's approval to complete these offerings. However, if a court determined that the Government's approval of these offerings was required under the license, the Company would be in breach of the license. Legal Counsel has advised the Company that in order to make this determination, a court would have to disagree with the Company's interpretation of the license and dismiss several defenses that would be available to the Company. These defenses include acquiescence and waiver on the part of the Government with respect to these offerings.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company received a letter dated June 1, 2000, from an official in the Government, stating that the Company's April 1996 public offering of the ordinary shares of common stock was a breach of the license. The letter is not clear as to whether the Government views the public offering completed in 2000 as a breach of our license. The Company has advised the Government that it does not believe that it is in breach of the license. The Company has been advised by Legal Counsel that the June 1st letter from the Government does not constitute a "notice of breach of the license" as contemplated in the license. In June 2000, December 2000, and January 2002 the Company met with representatives of the Government to discuss this matter. Other than providing the Company with it's June 1, 2000 letter the Government has not taken any other action in connection with the Company's license to date.
15. WATER PURCHASE AGREEMENT
The Company is party to a water purchase agreement (the "Water Purchase Agreement") with Ocean Conversion (Cayman) Limited ("OCL"), which expires on December 31, 2004. The Water Purchase Agreement effectively transferred the possession of a reverse osmosis ("RO") plant to the Company in 2001, although the operation and maintenance of the plant will be the responsibility of OCL until the termination of the agreement on December 31, 2004. On January 1, 2005 responsibility for the operation and maintenance of the plant will be assumed by the Company. Under the terms of the agreement, the Company must purchase a fixed minimum amount of water annually with a portion of the monthly payments to be applied toward the purchase of the plant. Implicit in the agreement are financing charges relating to the purchase of the plant, based on the Company's cost of capital at the inception of the agreement. With the purchase of the equipment in 2000 financing charges for 2001 are $nil.
As at December 31, 2001 minimum future payments are as follows:
2002 1,350,704
2003 1,350,704
2004 1,350,704
-----------
Total minimum payments $4,052,112
===========
|
The RO plant acquired under the Water Purchase Agreement is included in plant and equipment in Note 4 at a gross amount of $3,633,997 (2000: $3,550,897) and at December 31, 2001 had a net book value of $1,250,890 (2000: $1,336,126). Amortization of this plant is included in the depreciation charge for each of the three years ended December 31, 2001. During the year ended December 31, 2000 the Company fulfilled the equipment purchase obligation as calculated under the Water Purchase Agreement. Accounts payable includes $192,340 (2000: $204,076) outstanding under the Water Purchase Agreement.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. CUSTOMER SUPPLY AGREEMENTS
During 1993 the Company entered into a five year agreement to supply non-potable
water to Safe Haven Limited, the developers of a golf course in the Cayman
Islands. On November 1, 1997 this agreement was renegotiated and renewed for a
further five year period. Under the terms of the renewed supply agreement, the
Company must supply a minimum of 4 million US Gallons per month (48 million US
Gallons per year). The price of the water supplied is adjusted annually based on
Government Price Indices. Water sales for the year ended December 31, 2001
resulting from the supply agreement amounted to $374,965 (2000: $571,969; 1999:
$444,098). At December 31, 2001 the Company holds a non-interest bearing
security deposit of $52,763 (2000: $52,763) under the terms of the supply
agreement.
From October 15, 1995 the Company entered into a ten year agreement to supply a
minimum of 30,000 US Gallons per day (10.95 million US Gallons per year) of
potable water to Galleon Beach Resort Limited, the operator of the Westin Hotel
in the Cayman Islands, which initially opened in December 1995. The price of the
water supplied is adjusted annually based on Government Price Indices, and water
supplied in excess of the monthly maximum of 60,000 US Gallons per day is
invoiced at the Company's standard tariff rate. Water sales for the year ended
December 31, 2001 resulting from this agreement amounted to $298,160 (2000:
$299,333; 1999: $314,884).
From the acquisition date of Belize Water Ltd. in 2000, the Company is under contract to supply a minimum of 135,000 US Gallons per day (49.27 million US Gallons per year) to BWSL of Belize. The price of water supplied is adjusted annually based on Government indices. Water sales for the year ended December 31, 2001 resulting from this agreement amounted to $1,230,775 (2000: $464,928) (Note 12).
During the year ended December 31, 2000 the Company entered into a Water Supply Agreement with South Bimini International Ltd., a company incorporated in the Commonwealth of Bahamas. Under the agreement South Bimini International Ltd. is committed to pay for a minimum of 3,000 US Gallons of water per customer per month (36,000 US Gallons per year) on a take or pay basis in relation to the Bimini Sands Resort property in South Bimini Island, Bahamas. The price of water supplied is adjusted annually based on Government indices. On July 11, 2001 the Company began to supply water under the agreement and water sales for the period ended December 31, 2001 resulting from this agreement amounted to $26,333 (Note 12).
On December 10, 2001 the Company entered into a twenty-five year agreement to supply a minimum of 170,000 US gallons of potable water per day to Cayman Hotel and Golf Inc., the owners of the Hyatt Grand Cayman Resort and Britannia Golf Course in Grand Cayman. The price of the water supplied is adjusted annually based on Government Price Indices, and water supplied in excess of the monthly minimum of 170,000 US Gallons per day is invoiced at the Company's standard tariff rate. Water sales for the year ended December 31, 2001 resulting from this agreement amounted to $nil (Notes 14 and 25).
There are no other individually significant supply agreements.
17. STOCK COMPENSATION
The Company operates various stock compensation plans (described below) that
form part of employee's remuneration. Stock compensation expenses of $169,599
are recorded in accordance with APB 25 and included within employee costs (2000:
$124,772; 1999: $245,117).
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. STOCK COMPENSATION (CONTINUED)
EMPLOYEE SHARE INCENTIVE PLAN (PREFERRED STOCK)
The Company awards redeemable preferred stock (restricted stock) for $nil consideration under the Employee Share Incentive Plan as part of compensation for eligible employee services (excluding Directors and Executive Officers) that require future services as a condition to the delivery of the underlying shares of common stock. In addition options are granted to purchase preferred stock at a fixed price, determined annually, which will typically represent a discount to the market value of the underlying shares of common stock. In consideration for redeemed vested preferred stock, the Company issues ordinary shares of common stock on a share for share basis. Under the plan the conversion is conditional on the grantee's satisfying requirements outlined in the award agreements. The redeemable preferred stock is only redeemable with the Company's agreement. See Note 9 for the vesting schedule of outstanding preferred stock currently redeemable. The details of preferred stock and stock options granted and exercised under the Employee Share Incentive Plan is as follows:
YEAR OF STRIKE OPTIONS OPTIONS
GRANT GRANTED PRICE EXERCISED EXPIRED
----- ------- ----- --------- -------
Preferred stock granted 1999 9,768 $nil N/A N/A
2000 2,279 $nil N/A N/A
2001 3,963 $nil N/A N/A
Preferred stock options granted 1999 9,768 $5.71 2,220 7,548
2000 2,279 $5.47 1,136 1,143
2001 3,963 $5.32 1,858 2,105
|
Each employee's option to purchase preferred stock must be exercised within 40 days of the annual general meeting of the Company following the date of grant.
EMPLOYEE SHARE OPTION PLAN (ORDINARY STOCK OPTIONS)
In 2001, the Company introduced an employee stock option plan for certain long-serving employees of the Company. Under the plan these employees are granted in each calendar year, as long as the employee is a participant in the Employee Share Incentive Plan, options to purchase ordinary shares of common stock. The price at which the option may be exercised will be the closing market price on the grant date, which is 40 days after the date of the Company's annual shareholder meeting. The number of options each employee is granted is equal to five times the sum of (i) the number of Redeemable Preferred Stock which that employee receives for $nil consideration and (ii) the number of Redeemable Preferred Stock option which that employee exercises in that given year. The option may be exercised during the period commencing on the fourth anniversary of the grant date and ending on the thirtieth day after the fourth anniversary of the grant date.
NON-EXECUTIVE DIRECTORS' SHARE PLAN
In 1999, the Company introduced a stock grant plan, which forms part of Directors' remuneration. Under the plan Directors receive a combination of cash and ordinary shares of common stock in consideration of remuneration for their participation in Board meetings. All Directors are eligible except Executive Officers (who are covered by individual employment contracts) and the Government elected board member. Ordinary shares of common stock granted is calculated with reference to a strike price that is set by the Board of Directors on October 1 of the year preceding the grant. Stock granted on September 30, 2001 totaled 7,860 (2000: 6,890). The strike price set on October 1, 2001 was $10.70 (October 1, 2000 $7.25).
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. STOCK COMPENSATION (CONTINUED)
DIRECTORS AND SENIOR MANAGEMENT STOCK COMPENSATION
The Chairman and Chief Executive Officer ("CEO"), the President, Chief Operating
Officer ("COO") and Chief Financial Officer ("CFO"), the Vice President -
Operations, and Director of Special Projects are entitled to receive, as part of
the compensation for their services to the Company, options to purchase ordinary
shares of common stock. One other director was granted options as remuneration
for services rendered to the Company. Details of the options granted to and
exercised by these directors and senior management are included in the table
below. In addition, another member of senior management is entitled to receive,
as part of compensation for services to the Group, ordinary shares of common
stock of the Company. As at December 31, 2001 an amount of 3,172 shares (2000:
1,092) was due to this employee.
NON-EMPLOYEE
As part of an agreement for market representation, the Company issued options to purchase common stock to an investment company for $nil consideration. These options have an expiry date of one year commencing on the termination of the agreement, which management intends to formally terminate on April 3, 2002. The fair value of these options was determined by management to be $30,000, based on the fair value of the services to be received. Stock compensation expenses arising on these options were included within other indirect costs.
SUMMARY OF OPTION PLANS:
OPTIONS STRIKE OPTIONS DATE
GRANT DATE GRANTED PRICE EXPIRY DATE EXERCISED EXERCISED
---------- ------- ----- ----------- --------- ---------
CHAIRMAN AND CEO:
December 31, 1999 7,786 US$2.50 20-Mar-03 -- --
December 31, 2000 26,924 US$7.10 15-Mar-04 -- --
December 31, 2001 28,507 US$10.84 10-Mar-05 -- --
PRESIDENT, COO AND CFO:
December 31, 2000 5,609 US$7.10 15-Mar-04 -- --
December 31, 2001 28,533 US$10.84 10-Mar-05 -- --
VICE PRESIDENT - OPERATIONS:
December 31, 2000 20,193 US$7.10 15-Mar-04 -- --
December 31, 2001 20,800 US$10.84 10-Mar-05 -- --
DIRECTOR OF SPECIAL PROJECTS:
December 31, 1997 20,000 US$2.50 24-Feb-01 20,000 23-Feb-01
December 31, 1998 20,000 US$2.50 01-Mar-02 20,000 17-July-01
December 31, 1999 20,000 US$2.50 20-Mar-03 20,000 17-July-01
December 31, 2000 5,609 US$7.10 15-Mar-04 -- --
December 31, 2001 27,646 US$10.84 10-Mar-05 -- --
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. STOCK COMPENSATION (CONTINUED)
OPTIONS STRIKE OPTIONS DATE
GRANT DATE GRANTED PRICE EXPIRY DATE EXERCISED EXERCISED
---------- ------- ----- ----------- --------- ---------
OTHER DIRECTOR:
July 20, 1999 30,000 US$6.00 01-May-02 -- --
May 1, 2000 30,000 US$6.75 01-May-03 -- --
December 10, 2001 30,000 US$11.17 09-Dec-04 -- --
FORMER OFFICER:
December 31, 2000 26,924 US$7.10 15-Mar-04 -- --
NON-EMPLOYEE:
December 15, 1998 30,000 US$7.88 03-Apr-03 -- --
EMPLOYEES:
July 6, 2001 22,605 US$ 9.20 04-Aug-05 -- --
|
Weighted average number and exercise price of options (all plans):
2001 2000 1999
-------------------- -------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE PER PRICE PER PRICE PER
OF SHARE NUMBER OF SHARE NUMBER OF SHARE
OPTIONS US$ OPTIONS US$ OPTIONS US$
------- --------- --------- --------- ------- ---------
Outstanding at beginning of year 243,045 $ 5.73 127,786 $4.58 159,010 $3.51
Granted 162,054 $10.55 117,538 $6.98 67,554 $4.96
Exercised (61,858) $ 2.58 (1,136) $5.47 (91,230) $5.32
Forfeited (2,105) $ 5.32 (1,143) $5.47 (7,548) $5.32
------------- ----------- -----------
Outstanding and exercisable at
end of year 341,136 $ 8.59 243,045 $5.73 127,786 $4.58
============= =========== ===========
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. STOCK COMPENSATION (CONTINUED)
The Company determines stock compensation costs according to the methodology outlined in APB Opinion No. 25. The table below summarizes the proforma effect if FASB Statement No. 123, the alternative applicable standard, was adopted:
2001 2000 1999
------------ ------------- -------------
Net income $2,288,882 $2,111,755 $1,498,105
Basic earnings per ordinary share $ 0.59 $ 0.59 $ 0.48
Diluted earnings per ordinary share $ 0.57 $ 0.58 $ 0.47
|
Weighted average fair value per share under FAS 123 for options granted during the year:
Options granted with an exercise price below market price on the date of grant:
2001 2000 1999
---- ---- ----
Chairman and CEO $3.78 -- $4.07
President, COO and CFO $3.78 -- $4.07
Vice President - Operations $3.78 -- --
Director of Special Projects $3.78 -- --
Non-executive director $3.89 $2.69 $3.69
Former Officer -- -- $1.84
Employees - preferred stock $3.88 $2.66 --
Employees - ordinary share options $3.08 -- --
Overall weighted average $3.71 $2.69 $3.80
|
Options granted with an exercise price above market price on the date of grant:
Chairman and CEO -- $2.57 -- President, COO and CFO -- $2.57 -- Vice President - Operations -- $2.57 -- Director of Special Projects -- $2.57 -- Non-executive director -- -- -- Former Officer -- $2.57 -- Employees - preferred stock -- -- -- Employees - ordinary share options -- -- -- Overall weighted average $2.57 -- |
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. STOCK COMPENSATION (CONTINUED)
In calculating the fair value for these options under FAS 123 the Black-Scholes model was used with the following weighted average assumptions:
Options granted with an exercise price below market price on the date of grant:
2001 2000 1999
---- ---- ----
Exercise price $ 10.55 $ 6.70 $ 4.37
Grant date market value $ 10.97 $ 6.97 $ 6.98
Risk free interest rate 3.93% 6.56% 5.75%
Expected life 3.21 years 3.0 years 2.8 years
Expected volatility 52.79% 62.64% 72.55%
Expected dividend yield 3.67% 4.59% 3.46%
|
Options granted with an exercise price above market price on the date of grant:
2001 2000 1999
---- ---- ----
Exercise price -- $ 7.1 --
Grant date market value -- $ 7.0 --
Risk free interest rate -- 5.0% --
Expected life -- 3.2 years --
Expected volatility -- 62.57% --
Expected dividend yield -- 4.57% --
|
Weighted average fair value per share under FAS 123 for shares issued during the year below market price on the date of grant:
2001 2000 1999
-------------------- ------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER FAIR VALUE NUMBER FAIR VALUE NUMBER FAIR VALUE
OF PER SHARE OF PER SHARE OF PER SHARE
SHARES US$ SHARES US$ SHARES US$
------ ---------- ------ ---------- ------ ----------
Employee Share Incentive Plan 3,963 $9.00 2,279 $7.00 9,768 $5.83
Directors Share Plan 7,860 $7.25 6,889 $7.13 2,400 $6.75
Overall weighted average 11,456 $7.86 9,168 $7.09 12,168 $6.01
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. TAXATION
Under current laws of the Cayman Islands, there are no income, estate, corporation, capital gains or other taxes payable by the Company. The Company has received a tax exemption with respect to their Belize operations. The exemption expires in 2006 and is renewable in accordance with the provisions of the BWSL contract. Services to our customer in the Bahamas are provided by the Company, which is a Cayman Islands company that is not subject to taxation in the Commonwealth of the Bahamas.
19. GOVERNMENT ROYALTIES
Royalty expenses incurred during the year under the terms of the license to process and supply potable water, granted by the Government of the Cayman Islands, amounted to $694,351 (2000: $641,428; 1999: $560,441). In accordance with the terms of the license, royalties are payable at the rate of 7.5% of gross US gallon water sales. Payments are made monthly in arrears.
20. PENSION BENEFITS
A staff pension scheme commenced during June 1995 and was offered to all employees, both full and part-time. The scheme is administered by the Cayman Islands Chamber of Commerce and is a defined contribution plan, whereby the Company matches the contribution of the first 5% of each participating employee's salary. The total amount recognized as an expense under the scheme during 2001 was $63,740 (2000: $67,760 1999: $48,554).
21. FINANCIAL INSTRUMENTS
CREDIT RISK:
Financial assets that potentially subject the Group to concentrations of credit risk consist principally of cash and accounts receivable. The majority of the Group's cash balances are placed with high credit quality financial institutions. With respect to accounts receivable, the Group's operations in Belize as described in Note 1 are concentrated with one customer. In addition, the Group's operations in Bahamas also described in Note 1 are also concentrated with one customer. As a result, the Group is subject to credit risk to the extent of any non-performance by these customers. As at December 31, 2001 the Group was owed $213,647 from the Belize customer and $448 from the Bahamian customer. Credit risk with respect to the remainder of the accounts receivable balance is limited due to the large number of customers comprising the Company's customer base and the ability of the Company to withdraw supply in the event of non-payment.
INTEREST RATE RISK:
The interest rates and terms of the Company's loans and Water Purchase Agreement are presented in Notes 8 and 15 respectively.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. FINANCIAL INSTRUMENTS (CONTINUED)
FAIR VALUES:
At December 31, 2001 and 2000 the carrying amounts of cash and short term bank deposits and bank overdrafts, accounts receivable, accounts payable and accrued expenses approximated their fair values due to the short term maturities of these assets and liabilities. The Directors consider that the carrying amount for long term debt (Note 8) due to Royal Bank of Canada approximates fair value due to the characteristics of this debt. The fair value for long term debt due to European Investment Bank is approximately $1,041,000 (2000: $1,207,000) although this does not necessarily indicate that the Company could extinguish this debt for an amount lower than the carrying value. Fair value of this long term debt for which no market value is readily available is determined by the Company using predetermined future cash flows discounted at an estimated current incremental rate of borrowing for a similar liability. In establishing an estimated incremental rate, the Company has evaluated the existing transactions, as well as comparable industry and economic data and other relevant factors such as pending transactions, subsequent events and the amount the Company would have to pay a credit worthy third party to assume the liability, with the creditors legal consent.
22. NON-CASH TRANSACTIONS
The Company made the following non-cash transactions:
2001 2000 1999
-------- --------- --------
Redemption of preferred stock and issue of
replacement ordinary shares of common
stock at $nil consideration (14,260, 10,639,
and 14,835 shares respectively) (Note 9) $ 17,112 $ 12,767 $ 17,802
======== ========= ========
Preferred stock issued to employees at $nil
consideration (3,963, 2,279, and 9,768 shares
respectively) (Notes 9 and 17) $ 4,756 $ 2,735 $ 11,722
Redemption of non-vested preferred stock at $nil
consideration (nil, 200, and nil shares
respectively) (Note 9) -- (240) --
Ordinary shares of common stock issued under the
Directors Share Plan at $nil consideration
(7,861, 6,890, and 2,400, respectively) (Note 17) 56,998 49,084 14,850
Additional paid in capital from stock options 227,420 -- 350,688
-------- --------- --------
$289,174 $ 51,579 $377,260
======== ========= ========
Reduction in ordinary shares and additional
paid in capital from cancellation of shares
repurchased (Note 9) $271,595 $ 494,375 $758,928
======== ========= ========
Dividends declared but not paid (Note 7) $499,383 $ 401,965 $266,585
======== ========= ========
Depreciation charges capitalized (Note 4) $ 24,764 $ 33,682 $ 35,749
======== ========= ========
|
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23. IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
During the year ended December 31, 2001, the Financial Accounting Standards Board issued four standards. A summary of these standards is given below:
Statement of Financial Accounting Standard No. 141, "Business Combinations" (FAS 141) addresses financial accounting and reporting for business combinations. It requires all business combinations covered by the scope of the Standard to be accounted for using the purchase method. It is effective for business combinations initiated after June 30, 2001 and business combinations completed on July 1, 2001 and later which use the purchase method of accounting. Although the Company has no pending business combinations that would be affected by this statement, the requirements of this statement will be considered in any business combination contemplated in the future.
Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" (FAS 142) addresses financial accounting and reporting for goodwill and other intangible assets subsequent to their acquisition. It requires that goodwill and other intangible assets having indefinite useful lives be tested annually for impairment using a fair-value based test and prohibits amortization. Assets having finite useful lives would continue to be amortized over those lives. The Standard also provides specific guidance for testing goodwill and other intangible assets for impairment and also requires additional disclosures concerning goodwill and other intangible assets. FAS 142 is effective for fiscal years beginning after December 15, 2001 and must be applied to all goodwill and other intangible assets recognized in financial statements as of the start of that fiscal year. Impairment losses resulting from the initial application of the Standard are to be reported as resulting from a change in accounting principle. At this time, the Company does not believe the adoption of the Standard will have an impact on its financial position or results of operations.
Statement of Financial Accounting Standard No. 143, "Accounting for Asset Retirement Obligations" (FAS 143) addresses the recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement costs. It requires that an existing legal obligation associated with the retirement of a tangible long-lived asset be recognized as a liability when incurred and outlines the method of measuring that liability. It is effective for financial years beginning after June 15, 2002. Currently the Company has no legal obligations relating to asset retirement, however the requirements of this statement will be considered if any legal obligations relating to the retirement of long-lived assets arise in the future.
Statement of Financial Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (FAS 144) addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. It requires that an impairment loss be recognized if the carrying amount of a long-lived asset is not recoverable and exceeds the fair value of the long-lived asset. The Standard also provides guidance on estimating future cash flows used to test a long-lived asset for recoverability. The test for impairment should be performed whenever events or circumstances indicate that its carrying value may not be recoverable. Restoration of previously recognized impairment loss is prohibited. FAS 144 is effective for fiscal years beginning after December 15, 2001. For the year ended December 31, 2001 the Company performed an impairment test on its long-lived assets of which no impairment was found.
CONSOLIDATED WATER CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24. COMPARATIVE FIGURES
Certain of the prior years figures have been adjusted to conform to the current years presentation.
25. SUBSEQUENT EVENT
Subsequent to the year end, on February 1, 2002 the Company acquired and took
possession of the reverse osmosis plant, equipment and water storage facilities
comprising the potable water production plant at the Hyatt Grand Cayman Hotel
and Ellesmere Britannia Golf Course located on Grand Cayman, Cayman Islands. The
consideration for the operations acquired was a cash payment of $1,500,000.
(Notes 14 and 16)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
OUR DIRECTORS AND EXECUTIVE OFFICERS
Under our license with the Cayman Islands government, the Cayman Islands government must approve all of our executive officers and directors. This table lists information concerning our executive officers and directors:
NAME AGE POSITION WITH CONSOLIDATED WATER
---- --- --------------------------------
Jeffrey M. Parker 57 Director, Chairman of the board of directors
and Chief Executive Officer
Frederick W. McTaggart 39 Director, President, Chief Operating
Officer and Chief Financial Officer
Peter D. Ribbins 54 Director - Special Projects and Company
Secretary
Gregory S. McTaggart 38 Vice President - Operations
J. Bruce Bugg, Jr. 47 Director and Vice Chairman of the board of
directors
Brian E. Butler 52 Director
Steven A. Carr 51 Director
Richard L. Finlay 43 Director
Clarence B. Flowers, Jr. 44 Director
Wilmer Pergande 62 Director
Raymond Whittaker 48 Director
Carson J. Ebanks, JP 45 Director
|
JEFFREY M. PARKER has been a director of our company since 1980, the Chairman of the Board since 1982 and Chief Executive Officer since 1994. In addition to serving as our Chief Executive Officer and Chairman of the Board, Mr. Parker is a Chartered Accountant and practices at Moore Stephens in the Cayman Islands, a member of Moore Stephens International Ltd. From 1993 to 1995, Mr. Parker served as a director of The International Desalination Association representing the Caribbean & Latin America. Mr. Parker received his ACA designation as a chartered accountant in England and Wales in 1967, and his FCA designation in 1977.
FREDERICK W. MCTAGGART has been a director of our company since 1998, and the President and Chief Operating Officer since October 2000 and Chief Financial Officer since February 2001. From April 1994 to October 2000, Mr. McTaggart was the Managing Director of the Water Authority-Cayman, the government-owned water utility serving certain areas of the Cayman Islands. He received his B.S. degree in Building Construction from the Georgia Institute of Technology in 1985. Mr. McTaggart is the brother of Mr. Gregory S. McTaggart, the Vice President - Operations.
PETER D. RIBBINS is our Director-Special Projects and Company Secretary and has served as a director since 1989. Mr. Ribbins joined our company in 1983 as its General Manager, a position he held until 1989, when he was appointed Managing Director. He was appointed President and Chief Operating Officer in 1994 and resigned from that position in October 2000 for personal reasons. Mr. Ribbins obtained his B.S. degree in Kinanthropology from the University of Ottawa, Canada in 1971.
GREGORY S. MCTAGGART is our Vice President-Operations. Mr. McTaggart joined our company in January 1991 as our resident engineer and has served in his current capacity since 1994. For three years before joining us, Mr. McTaggart worked for the Caribbean Utilities Company as a mechanical engineer. Mr. McTaggart obtained his B.S. degree in Mechanical Engineering from the Georgia Institute of Technology in 1986. Mr. McTaggart is the brother of Frederick W. McTaggart, the President, Chief Operating Officer, Chief Financial Officer and director.
J. BRUCE BUGG, JR. has been a director and our Vice-Chairman of the Board since 1998. Mr. Bugg is also, and has been since 1997, the Chairman of the board of directors and Chief Executive Officer of Argyle Investment Co., the general partner of Argyle Partners Ltd., the sole general partner of Argyle/Cay-Water, Ltd. From 1996 to 1997, Mr. Bugg served as Vice Chairman of First Southwest Company and Chairman of its Investment Banking Group.
BRIAN E. BUTLER has been a director of our company since 1983. Since 1977, Mr. Butler has been the principal of Columbus Developments Ltd., a property development company specializing in luxury resort projects in the Cayman Islands.
STEVEN A. CARR has served as a director of our company since May 2000. Since 1994, Mr. Carr has been the President of Carr & Associates, a private investment firm located in Bryan, Texas. Before joining Carr & Associates, Mr. Carr held a variety of executive positions and participated in the ownership and management of a number of telecommunications ventures throughout the United States. Mr. Carr has served as an alternate director on our board of directors for his father, Hal N. Carr, since 1998. Mr. Carr is also currently a director of the First National Bank of Bryan. In addition to his business interests, Mr. Carr is a senior lecturer at the Mays College and Graduate School of Business at Texas A&M University and a councilor of the Texas A&M Research Foundation.
RICHARD L. FINLAY has served as a director of our company since 1995. Mr. Finlay is an attorney and partner with the Cayman Islands law firm of Charles Adams, Ritchie and Duckworth. Before joining this firm in 1993, he served as Director of Legal Studies of the Cayman Islands Government from 1989 to 1992. From 1983 to 1989, Mr. Finlay was a partner with the Canadian law firm of Olive, Waller, Zinkhan and Waller. Mr. Finlay has served as the Cayman Islands' representative to the International Company and Commercial Law Review and is a former editor of the Cayman Islands Law Bulletin.
CLARENCE B. FLOWERS, JR. has been a director of our company since 1991. Mr. Flowers is, and has been since 1985, the principal of Orchid Development Company, a real estate developer in the Cayman Islands. Mr. Flowers also serves as a director of C.L. Flowers & Son, which is the largest manufacturer of concrete blocks in the Cayman Islands.
WILMER PERGANDE has been a director of our company since 1978. Mr. Pergande is the Vice-President of Special Projects of Osmonics, Inc. of Minnetonka, Minnesota, a publicly traded company and the third largest water treatment company in North America. Before joining Osmonics, Mr. Pergande was the Chief Executive Officer of Licon International, Inc., a publicly traded manufacturer of liquid processing equipment. Previously, Mr. Pergande held several executive positions with Mechanical Equipment Company, Inc., a manufacturer of seawater conversion equipment.
RAYMOND WHITTAKER has served as a director of our company since 1988. Mr. Whittaker was the Managing Director of TransOcean Bank & Trust, Ltd., a bank and trust company located in the Cayman Islands and a subsidiary of Johnson International, Inc., a bank holding company located in Racine, Wisconsin from 1984 to December 2000. He is now the principal of his own company and management firm.
CARSON K. EBANKS, JP, became the government nominated Director of our company in May of 2001. Mr. Ebanks was the Director of Planning for the Cayman Islands from 1991 - 1997. Since 1997, he has served the Cayman Islands Government as a Permanent Secretary currently for the Ministry of Community Services, Women's Affairs, Youth and Sports. Mr. Ebanks is a Justice of the Peace, a Fellow of the Royal Geographic Society and a member of the American Planning Association. He holds a Bachelor of Environmental Studies (Hons. Urban and Regional Planning - Peace and Conflict Studies Minor) from the University of Waterloo and a Master of Arts - Planning in Community and Regional Planning from the University of British Columbia. He is a Director of the Water Authority - Cayman and a trustee of the National Gallery of the Cayman Islands. Mr. Ebanks has served on the Boards of the Trustees for the Cayman Islands Museum, the Cayman Islands Civil Service Co-operative Credit Union, the Housing Development Corporation and the Vice President of the Cayman Islands Olympic Committee.
COMPOSITION OF THE BOARD OF DIRECTORS
The board of directors is organized into three groups. Each group holds office for a three year period and re-election of the board members is staggered so that two-thirds of the board members are not subject to re-election in any given year. The groups are organized alphabetically as follows:
GROUP 1 GROUP 2 GROUP 3
------- ------- -------
J. Bruce Bugg Jr. Carson K. Ebanks, JP Wilmer Pergande
Brian Butler Richard Finlay Peter D. Ribbins
Steven A. Carr Clarence Flowers, Jr. Raymond Whittaker
Frederick McTaggart
Jeffrey M. Parker
|
Group 1 was re-elected at our annual shareholders' meeting in May 2001. Group 2 will be proposed for re-election during the year ending December 31, 2002 and then Group 3 during the year ending December 31, 2003.
Under our license, the Cayman Islands government may nominate three persons to serve on our board of directors. We must cause one of the persons nominated by the government to be elected as a director. In May 2001, Carson K. Ebanks, JP was elected as the government's nominee.
On April 17, 1997, Argyle/Cay-Water, Ltd. filed an application with the Cayman Islands government for permission to acquire up to 50% of our issued and outstanding shares. We did not support Argyle's attempt to gain control of our company. On July 22, 1997, the Cayman Islands government approved Argyle's application. J. Bruce Bugg, Jr. is the sole shareholder and Chairman and Chief Executive Officer of Argyle Investment Co., the general partner of Argyle Partners Ltd., the sole general partner of Argyle/Cay-Water, Ltd.
On March 31, 1998, we reached an agreement with Argyle/Cay-Water, Ltd. During the five-year term of this agreement, we agreed to appoint Mr. Bugg as Vice Chairman of our board of directors in exchange for which Mr. Bugg and Argyle/Cay-Water, Ltd. agreed not to acquire more than 19.9% of the ordinary shares. Our main obligations under the agreement are to recommend to our shareholders the appointment of Mr. Bugg (or his successor) to the board of directors and, with several exceptions, to obtain Argyle/Cay-Water, Ltd.'s consent before issuing any of our securities.
During the term of the agreement, Argyle/Cay-Water, Ltd. and Mr. Bugg may not participate in proxy solicitation, seek to control or influence our management, except in accordance with Mr. Bugg's duties as a director, or challenge the validity of the option deed.
ITEM 11. EXECUTIVE COMPENSATION
The following table provides summary information concerning the annual and long-term compensation earned by the company's chief executive officer and each of the three other most highly compensated executive officers of the company during the fiscal years ended December 31, 2001, 2000 and 1999:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------- ----------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
YEAR SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION ($) ($) ($) ($) OPTIONS(#) ($)
--------------------------- --- --- --- ------------ ---------- ------------
Jeffrey M. Parker 1999 90,000 91,262 -- 7,786 --
Chairman and Chief Executive 2000 94,590 143,314 -- 26,294 --
Officer 2001 95,895 86,176 -- 28,507 --
Frederick W. McTaggart 1999 -- -- -- -- --
Director, President and 2000 116,400 21,171 -- 5,609 --
Chief Operating Officer 2001 118,006 88,765 -- 28,533 --
Peter D. Ribbins 1999 116,496 66,265 -- 20,000 --
Director - Special Projects 2000 121,447 80,448 -- 5,609 --
2001 118,006 -- -- 27,646 --
Gregory S. McTaggart 1999 79,209 10,730 8,678 -- --
Vice President Operations 2000 83,248 17,155 1,808 20,193 --
2001 85,932 8,759 -- 20,800 --
|
The salary shown in 2000 for Mr. Frederick McTaggart, who joined the company in October 2000, is annualized based upon a full year of employment for comparative purposes. Mr. Frederick McTaggart's actual salary for 2000 was $24,772.
All options granted to Messrs. Parker, Frederick McTaggart, Ribbins and Gregory McTaggart in 1999 have an exercise price of $2.50 per share, in 2000 they have an exercise price of $7.10 per share and in 2001 they have an exercise price of $10.84 per share.
The other annual compensation granted to Gregory McTaggart is comprised of redeemable preferred shares issued to them under our share incentive plan. Under our share incentive plan, half of the redeemable preferred shares are issued at no cost to the employee and the employee may purchase, for cash, an equal number of redeemable preferred shares at an exercise price of approximately 75% of the market price of the ordinary shares at the time of issuance. These shares issued to Mr. Gregory McTaggart had a market price of $5.71 per share and $5.47 per share, in 1999 and 2000, respectively, on the date of grant.
STOCK OPTION GRANTS
The following table provides information, with respect to the chief
executive officer and the other named executive officers listed in the Summary
Compensation Table, concerning stock options granted on ordinary shares in
fiscal year 2001:
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
OPTIONS OF STOCK PRICE APPRECIATION
GRANTED FOR OPTION TERM
TO ------------------------------
OPTIONS EMPLOYEES EXERCISE OR AT 5% ANNUAL AT 10% ANNUAL
GRANTED IN FISCAL BASE PRICE EXPIRATION GROWTH RATE GROWTH RATE
NAME (#) YEAR ($/SH) DATE ($) ($)
---- --- --------- ----------- ---------- ----------- -------------
Jeffrey M. Parker 28,507 18% 10.84 03/10/05 65,844 117,434
Frederick W. McTaggart 28,533 18% 10.84 03/10/05 65,904 117,541
Peter D. Ribbins 27,646 17% 10.84 03/10/05 63,855 113,887
Gregory S. McTaggart 20,800 13% 10.84 03/10/05 48,043 85,685
|
Market value on grant date (December 31, 2001) of these options was U.S. $11.34.
STOCK OPTION HOLDINGS
The following table provides information, with respect to the chief executive officer and the other named executive officers listed in the Summary Compensation Table, concerning the holding of unexercised options at the end of, fiscal year 2001:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END
ACQUIRED VALUE ----------------------------- -----------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- --------- ----------- ------------- ----------- -------------
Jeffrey M. Parker -- -- 63,217 -- 197,240 --
Frederick W. McTaggart -- -- 34,142 -- 38,049 --
Peter D. Ribbins 60,000 427,600 33,255 -- 37,605 --
Gregory S. McTaggart -- -- 40,993 -- 96,018 --
|
EMPLOYEE SHARE INCENTIVE PLAN
Since April 8, 1987, we have maintained an employee share incentive plan for our long-term employees who are not directors. To become eligible for the employee share incentive plan, an employee must complete four years of service with us and then retain the shares for an additional four years before he can transfer or sell the shares. We may, at our option, offer to exchange the redeemable preferred shares issued to the employee for an equal number of freely tradable ordinary shares at any time during the four year holding period. Within the four year holding period, if an employee ceases to be employed by our company, our company, at the sole discretion of the board of directors, may redeem the redeemable shares held by that employee for less than four years at the price which the employee originally paid for the shares.
Under the plan, employees are issued redeemable preferred shares on an annual basis at no cost based on a formula which takes into consideration the employee's salary and the total dividend paid to ordinary shareholders as a percentage of the total shareholder's equity in each year. If an employee remains employed by us for at least four years, or a person or affiliated group of persons acquires 30% or more of our ordinary shares, we are obligated to exchange the redeemable preferred shares (whether or not the redeemable preferred shares have been held for four years) for the same number of ordinary shares. We are also obligated to exchange the redeemable preferred shares for an equal number of ordinary shares if an employee's employment with us or any of our affiliates terminates by reason of the employee's death, permanent disability or the employee reaches the age of 65 years. However, if an employee's employment with us or any of our affiliates terminates for any other reason, we may at any time up to and including the first anniversary of such termination, redeem the employee's redeemable preferred shares for cash equal to 75% of the average of the closing market price for our ordinary shares on each of the first seven trading days in the month of October of the year in which the redeemable preferred shares were issued to the employee.
Under the plan, when an employee is issued redeemable preferred shares, the employee is also granted an option to purchase an equal number of redeemable preferred shares at approximately 75% of the average market price of the ordinary shares. The exercise price is determined during the ten days after our annual shareholder's meeting. This option expires, unless exercised by the employee, within forty (40) days after the date of our annual shareholders' meeting. Since we adopted the employee share incentive plan, our employees, who are currently in the plan, have acquired 98,929 redeemable preferred shares, of which 73,734 have been redeemed for an equal number of ordinary shares.
EMPLOYEE SHARE OPTION PLAN
In 2001 we established an employee share option plan for certain long-term employees who participate in the share incentive plan. This plan was introduced in order to compensate these employees for adjustments in the employee share incentive plan. Under the share option plan, these employees are granted in each calendar year, as long as the employee is a participant in the employee share incentive plan, options to purchase ordinary shares of common stock. The price at which the option may be exercised will be the closing market price on the grant date, which is 40 days after the date of the Company's annual shareholder meeting. The number of options each employee is granted is equal to five times the sum of (i) the number of redeemable preferred stock which that employee receives for $nil consideration and (ii) the number of redeemable preferred stock options which that employee exercises in that given year. The option may be exercised during the period commencing on the fourth anniversary of the grant date and ending on the thirtieth day after the fourth anniversary of the grant date.
NON-EXECUTIVE DIRECTORS' SHARE PLAN
In 1999, we implemented a share grant plan for our directors who are not executive officers or serving as the Cayman Islands' government representative on our board. Under this plan, a director receives ordinary shares based upon the number of board and committee meetings that the director attends during the year. Each board meeting is worth the share equivalent of a $1,200 fee and each committee meeting is worth the share equivalent of a $600 fee. Attendance fees are accumulated throughout the year and then divided by the prevailing market price on October 1st of the preceding year to determine the number of shares to be granted for the current year. On October 1, 2001, the directors as a group received 7,860 ordinary shares at the prevailing market price on October 1, 2000 of $7.25 per share. The strike price set on October 1, 2001 was $10.70. The necessary accrual has been made as at December 31, 2001 for the last 3 months attendance costs.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with Jeffrey M. Parker, our Chairman of the board of directors and Chief Executive Officer. Mr. Parker devotes at least 75% of his working time to our company and the remainder of his working time to his accountancy practice. This agreement, as amended, was originally scheduled to expire on December 31, 2001, although it extends automatically each year for an additional one year term. If we terminate Mr. Parker without cause, he is entitled to all financial benefits under the agreement for a period of two years and any unvested stock options for the year in which Mr. Parker is terminated automatically vest and become fully exercisable. Under prior employment agreements, in each of the four years ended December 31, 1995, 1996, 1997 and 1998, Mr. Parker was granted an option to purchase that number of ordinary shares which was equal to 2.5% of our net profit before dividends or extraordinary items for that year. The exercise price of these options was $2.50 per share. For each of the three years ended December 31, 1999, 2000 and 2001, Mr. Parker has been granted an option to purchase that number of ordinary shares which equals 1% of our net profit for that year. The exercise price of the options granted in 1999 is $2.50 per share, and the exercise price of the options to be granted from 2000 and on will be equal to the average of the closing market price of the ordinary shares on each of the first seven trading days in the month of October of that financial year. In 1999, Mr. Parker was granted an option to purchase 7,786 ordinary shares at an exercise price of $2.50. In 2000, Mr. Parker was granted an option to purchase 26,924 ordinary shares at an exercise price of $7.10. For the year ended December 31, 2001, Mr. Parker was granted an option to purchase 28,507 ordinary shares at an exercise price of $10.84. In August 1997 and March 1999, Mr. Parker exercised options to purchase 101,705 and 29,010 ordinary shares, respectively, representing all the options that were held by Mr. Parker on those dates. All options granted to Mr. Parker after March 1999 expire on the third anniversary of the date of the Auditor's Report on the financial statements for the year of grant.
In addition to serving as our Chairman of the Board and Chief Executive Officer, Mr. Parker owns an accountancy practice in the Cayman Islands. Until 1999, we paid the accountancy practice for services rendered to us by Mr. Parker through his practice. In 1999, we began paying Mr. Parker directly for his services. During 2001, his accounting practice provided us professional services in the amount of $4,523. In addition, we reimbursed his accounting practice $1,355 for communication charges made on our behalf.
We entered into an employment agreement with Frederick W. McTaggart, our President, Chief Operating Officer and Chief Financial Officer. The agreement is scheduled to expire on October 16, 2003, although it extends automatically each year for an additional one year term. If we terminate Mr. Frederick McTaggart without cause, he is entitled to all financial benefits under the agreement for a period of two years and any unvested stock options for the year in which Mr. Frederick McTaggart is terminated automatically vest and become fully exercisable. Mr. Frederick McTaggart shall be granted an option to purchase that number of ordinary shares which equals 1% of our net profit for each year. The exercise price of the options to be granted will be equal to the
average of the closing market price of the ordinary shares on each of the first seven trading days in the month of October of that financial year. In 2000, Mr. Frederick McTaggart was granted an option to purchase 5,609 ordinary shares at an exercise price of $7.10. For the year ended December 31, 2001, Mr. Frederick McTaggart was granted an option to purchase 28,533 ordinary shares at an exercise price of $10.84. All options granted to Mr. Frederick McTaggart expire on the third anniversary of the date of the Auditor's Report on the financial statements for the year of grant.
We entered into an employment agreement with Peter D. Ribbins, our former President and Chief Operating Officer and currently Director - Special Projects. The agreement fixes the salary of Mr. Ribbins until October 31, 2003 and thereafter it will be determined by mutual consent. In each of the five years ended December 31, 1995, 1996, 1997, 1998 and 1999, Mr. Ribbins was granted an option to purchase 20,000 ordinary shares at an exercise price of $2.50 per share. In 2000, Mr. Ribbins was granted an option to purchase 5,609 ordinary shares at an exercise price of $7.10. Mr. Ribbins was granted an option to purchase that number of ordinary shares which equals 1% of our net profit for each year. The exercise price of the options to be granted will be equal to the average of the closing market price of the ordinary shares on each of the first seven trading days in the month of October of that financial year. For the year ended December 31, 2001, Mr. Ribbins was granted an option to purchase 27,646 ordinary shares at an exercise price of $10.84. In May 1999, February 2001 and July 2001, Mr. Ribbins exercised options to purchase 60,000, 20,000 and 40,000 ordinary shares, respectively. All options granted to Mr. Ribbins expire on the third anniversary of the date of the Auditor's Report on the financial statements for the year of grant.
We entered into an employment agreement with Gregory McTaggart, our Vice President of Operations. This agreement was originally scheduled to expire on August 19, 2001, although it extends automatically each year for an additional one year term. Under the agreement, if we terminate Mr. Gregory McTaggart without cause, he is entitled to all financial benefits under the agreement for a period of one year. For each year beginning in 2000, Mr. Gregory McTaggart will be granted an option to purchase that number of ordinary shares which equals 0.75% of our net profit for that year. The exercise price of the options to be granted to Mr. Gregory McTaggart will be equal to the average of the closing market price of the ordinary shares on each of the first seven trading days in the month of October of the year in which the options are granted. In 2000, Mr. Gregory McTaggart was granted an option to purchase 20,193 ordinary shares at an exercise price of $7.10. For the year ended December 31, 2001, Mr. Gregory McTaggart was granted an option to purchase 20,800 ordinary shares at an exercise price of $10.84. All options granted to Mr. Gregory McTaggart expire on the third anniversary of the date of the Auditor's Report on the financial statements for the year of grant. As a result of the option grant described above, Mr. Gregory McTaggart will no longer be eligible to participate in the employee share incentive plan for fiscal years after 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth the beneficial ownership of our ordinary shares, par value CI$1.00 per share, of which 3,920,313 are outstanding as of March 19, 2002, and our redeemable preferred shares, par value CI$1.00 per share, of which 25,195 are outstanding as of March 19, 2002 by:
o each person or entity that we know beneficially owns more than 5% of our ordinary shares or redeemable preferred shares;
o each of our executive officers and directors; and
o all of our officers and directors as a group.
TITLE OF IDENTITY OF AMOUNT PERCENTAGE
CLASS PERSON OR GROUP OWNED OF CLASS
----- --------------- ----- --------
Ordinary Shares Argyle/Cay-Water, Ltd. 477,662 12.2%
Ordinary Shares Jeffrey M. Parker, 210,432 5.4%
Chairman of the board, and CEO
Ordinary Shares Frederick W. McTaggart, 34,242 *
Director, President, Chief
Operating Officer and Chief
Financial Officer
Ordinary Shares Peter D. Ribbins, 132,855 3.4%
Director - Special Projects
and Company Secretary
Ordinary Shares Gregory S McTaggart, 51,806 1.3%
Vice President Operations
Ordinary Shares J. Bruce Bugg, Jr., 569,622 14.5%
Director and Vice Chairman of
the board of directors
Ordinary Shares Brian E. Butler, 16,250 *
Director
Ordinary Shares Steven A. Carr, 44,235 1.1%
Director
Ordinary Shares Richard L. Finlay, 8,417 *
Director
Ordinary Shares Clarence B. Flowers, Jr., 3,340 *
Director
Ordinary Shares Wilmer Pergande, 3,877 *
Director
Ordinary Shares Raymond Whittaker, 10,655 *
Director
Ordinary Shares Carson K. Ebanks, -- --
Director
Ordinary Shares Directors and Executive 1,085,731 27.7%
Officers as a Group
(12 persons)
|
TITLE OF IDENTITY OF AMOUNT PERCENTAGE CLASS PERSON OR GROUP OWNED OF CLASS ----- --------------- ----- -------- Redeemable Gregory McTaggart 297 1.2% Preferred Shares Vice President Operations Redeemable Directors and Executive 297 1.2% Preferred Shares Officers as a group (1 person) Redeemable Abel Castillo 3,582 14.2% Preferred Shares Operations Manager Redeemable Margaret Julier, 2,707 10.7% Preferred Shares Office Manager Redeemable William Banker 4,880 19.4% Preferred Shares Operations Manager Redeemable Rayburn Conolly 2,877 11.4% Preferred Shares Retired employee Redeemable Chet Ritch 1,496 5.9% Preferred Shares Operations Redeemable Rudy Ritch 2,367 9.4% Preferred Shares Operations Redeemable Helbert Rodriquez 1,496 5.9% Preferred Shares Operations Redeemable Ivan Tabora 1,342 5.3% Preferred Shares Operations |
An asterisk (*) in the above table indicates less than one percent
The address for Jeffrey Parker, Frederick McTaggart, Peter Ribbins, Gregory McTaggart, Abel Castillo, Margaret Julier, William Banker, Chet Ritch, Rudy Ritch, Helbert Rodriquez and Ivan Tabora is as follows: c/o Consolidated Water Co. Ltd., Trafalgar Place, West Bay Road, P.O. Box 1114GT, Grand Cayman, B.W.I. The address for each of J. Bruce Bugg Jr. and Argyle/Cay-Water, Ltd. is c/o Argyle Investment Corp., 1500 Nations Bank Plaza, 300 Convent Street, San Antonio, Texas 78205. The address for Brian Butler is P.O. Box 2581GT, Grand Cayman, B.W.I.. The address for Steven A. Carr c/o Carr & Associates, 4103 South Texas Avenue, Suite 209, Bryan, Texas 77802. The address for Richard Finlay is P.O. Box 709GT, Grand Cayman, B.W.I.. The address for Clarence Flowers, Jr. is P.O. Box 2581GT, Grand Cayman, B.W.I.. The address for Wilmer Pergande is 3724 Bengal Road, Gulf Breeze, Florida 32561. The address for Raymond Whittaker is P.O. Box 1982GT, Grand Cayman, B.W.I. The address from Rayburn Conolly is P.O Box 27 East End, Grand Cayman, B.W.I.
Unless otherwise indicated, to our knowledge, the persons named in the table above have sole voting and investment power with respect to the shares listed. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares issuable under stock options exercisable within 60 days after March 19, 2002 are deemed outstanding for that person but are not deemed outstanding for computing the percentage of ownership of any other person. Of the 210,432 ordinary shares owned by Mr. Parker, 63,217 of these shares are ordinary shares underlying options granted to Mr. Parker, which may be exercised within 60 days after March 19, 2002. Of the 34,242 ordinary shares owned by Mr. Frederick McTaggart, 34,142 are ordinary shares underlying options granted to Mr. Frederick McTaggart, which may be exercised within 60 days after March 19, 2002. Of the 132,855 ordinary shares owned by Mr. Ribbins, 33,255 are ordinary shares underlying options granted to Mr. Ribbins, which may be exercised within 60 days after March 19, 2002. Mr. Bugg is deemed the beneficial owner of the 477,662 ordinary shares held by Argyle/Cay-Water, Ltd. Of the 569,622 ordinary shares beneficially owned by Mr. Bugg, 90,000 are ordinary shares underlying options granted to Mr. Bugg, which may be exercised within 60 days after March 19, 2002. Of the 51,806 ordinary shares owned by Mr. Gregory McTaggart, 40,993 are ordinary shares underlying options granted to Mr. Gregory McTaggart, which may be exercised within 60 days after March 19, 2002 and 297 are redeemable preferred shares, which may be exercised or converted within 60 days after March 19, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As consideration for J. Bruce Bugg, Jr.'s services to us as in an additional capacity to us other than a director and Vice-Chairman of the board of directors we granted to Mr. Bugg various options. On July 20, 1999, we granted to Mr. Bugg options to purchase 30,000 ordinary shares at $6.00 per share, exercisable until May 1, 2002 for services provided for work on the U.S. Filter project. There was no trading of the company's ordinary shares on July 20, 1999. The market price of the ordinary shares was $7.50 on July 21, 1999. On May 1, 2000, we granted to Mr. Bugg options to purchase an additional 30,000 ordinary shares at $6.75 per share, which was the market price of the ordinary shares on October 1, 1999. These options were for services provided for work on the settlement agreement concerning the Ellesmere Britannia lawsuit. These additional 30,000 options are exercisable until May 1, 2003. On December 10, 2001, we granted further options to Mr. Bugg to purchase 30,000 ordinary shares at $11.17 per share. These were provided as payment of services in negotiating the purchase of the Hyatt water production facilities on Grand Cayman, Cayman Islands. The market price on December 10, 2001 was $11.17 per share. These options are exercisable until December 9, 2004.
The options granted to Mr. Bugg, Jr., in 1999 and 2000, as well as all the employment agreements with Messrs. Frederick W. McTaggart, Ribbins, Parker, and Gregory S. McTaggart, were approved by a majority of the disinterested members of the board of directors and ratified by the shareholders at the Annual General Meeting held in 2001. Mr. Bugg's 2001 options were approved by a majority of the disinterested members of the board of directors and are to be put to the shareholders for ratification in the Annual General Meeting to be held in 2002. It is management's opinion that all agreements set forth in this section were on terms no less favorable than could have been obtained from unaffiliated parties.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements found in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA for the year ended December 31, 2001 is incorporated herein by reference.
2. Financial Statement Schedules
None
3. EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
3.1 Amended and Restated Memorandum of Association of
Consolidated Water Co. Ltd., dated December 4, 1998
(incorporated by reference to the exhibit filed as part of
our Form 20-F for the fiscal year ended December 31, 1998,
Commission File No. 0-25248).
3.2 Amended and Restated Articles of Association of
Consolidated Water Co. Ltd., dated December 4, 1998
(incorporated by reference to the exhibit filed as part of
our Form 20-F for the fiscal year ended December 31, 1998,
Commission File No. 0-25248).
10.1 License Agreement, dated July 11, 1990, between Cayman
Water Company Limited and the Government of the Cayman
Islands (incorporated herein by reference to the exhibit
filed as a part of our Form 20-F dated December 7, 1994,
Commission File No. 0-25248).
10.2 First Amendment to License Agreement, dated September 18,
1990, between Cayman Water Company Limited and the
Government of the Cayman Islands. (incorporated herein by
reference to the exhibit filed as a part of our Form 20-F
dated December 7, 1994, Commission File No. 0-25248).
10.3 Second Amendment to License Agreement, dated February 14,
1991, between Cayman Water Company Limited and the
Government of the Cayman Islands. (incorporated herein by
reference to the exhibit filed as a part of our Form 20-F
dated December 7, 1994, Commission File No. 0-25248).
10.4 An Amendment to a License to Produce Potable Water, dated
August 15, 2001, between Consolidated Water Co. Ltd. by The
Government of The Cayman Islands.
|
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
10.5 License Agreement, dated October 26, 1992, between Cayman
Island Government-Portfolio of Communications, Works and
Agriculture and Cayman Water Company Limited for the supply
of non-potable water to SafeHaven Ltd. (incorporated herein
by reference to the exhibit filed as a part of our Form
20-F dated December 7, 1994, Commission File No. 0-25248).
10.6 Amendment to License Agreement, dated November 12, 1992,
between Cayman Island Government -- Portfolio of
Communications, Works and Agriculture and Cayman Water
Company Limited for the supply of non-potable water to
SafeHaven Ltd. (incorporated herein by reference to the
exhibit filed as a part of our Form 20-F dated December 7,
1994, Commission File No. 0-25248).
10.7 Service Agreement, dated October 27, 1992, between Cayman
Water Company Limited and SafeHaven Ltd. (incorporated
herein by reference to the exhibit filed as a part of our
Form 20-F dated December 7, 1994, Commission File No.
0-25248).
10.8 Amendment to Service Agreement, dated November 25, 1992,
between Cayman Water Company Limited and SafeHaven Ltd.
(incorporated herein by reference to the exhibit filed as a
part of our Form 20-F dated December 7, 1994, Commission
File No. 0-25248).
10.9 Amendment to Service Agreement, dated September 4, 1995,
between Cayman Water Company Limited and SafeHaven Ltd.
(incorporated herein by reference to the exhibit filed as a
part of our Registration Statement on Form F-1 dated March
26, 1996, Commission File No. 333-00038).
10.10 Water Purchase Agreement #2, dated October 14, 1994,
between Cayman Water Company Limited and Ocean Conversion
(Cayman) Limited. (incorporated herein by reference to the
exhibit filed as a part of our Form 20-F dated December 7,
1994, Commission File No. 0-25248).
10.11 Water Purchase Agreement #3, dated October 21, 1994,
between Cayman Water Company Limited and Ocean Conversion
(Cayman) Limited. (incorporated herein by reference to the
exhibit filed as a part of our Form 20-F dated December 7,
1994, Commission File No. 0-25248).
10.12 Water Purchase Agreement #3 (Revision #1), dated January
10, 1995, between Cayman Water Company Limited and Ocean
Conversion (Cayman) Limited. (incorporated herein by
reference to the exhibit filed as a part of our Form 10-K
dated March 30, 2001, Commission File No. 0-25248).
10.13 Water Purchase Agreement #3 (Revision #2), dated December
29, 2000, between Consolidated Water Co. Ltd. and Ocean
Conversion (Cayman) Limited. (incorporated herein by
reference to the exhibit filed as a part of our Form 10-K
dated March 30, 2001, Commission File No. 0-25248).
10.14 Water Supply Agreement, dated December 18, 2000, between
Consolidated Water Co. Ltd. and South Bimini International
Ltd. (incorporated herein by reference to the exhibit filed
as a part of our Form 10-K dated March 30, 2001, Commission
File No. 0-25248).
|
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
10.15 Employment Agreement, dated August 30, 2000, between
Consolidated Water Co. Ltd. and Peter D. Ribbins.
(incorporated herein by reference to the exhibit filed as a
part of our Form 10-K dated March 30, 2001, Commission File
No. 0-25248).
10.16 Engagement Agreement, dated December 30, 1998 between
Consolidated Water Co. Ltd. and Jeffrey Parker
(incorporated herein by reference to the exhibit filed as
part of our Registration Statement on Form F-2 dated May
17, 2000, Commission File No. 333-35356).
10.17 Amendment of Engagement Agreement, dated October 26, 1999,
between Consolidated Water Co. Ltd. and Jeffrey Parker
(incorporated herein by reference to the exhibit filed as
part of our Registration Statement on Form F-2 dated May
17, 2000, Commission File No. 333-35356).
10.18 Second Amendment of Engagement Agreement, dated March 21,
2000, between Consolidated Water Co. Ltd. and Jeffrey
Parker (incorporated herein by reference to the exhibit
filed as part of our Registration Statement on Form F-2
dated May 17, 2000, Commission File No. 333-35356).
10.19 Employment Contract, dated July 12, 2000, between
Consolidated Water Co. Ltd. and Frederick W. McTaggart.
(incorporated herein by reference to the exhibit filed as a
part of our Form 10-K dated March 30, 2001, Commission File
No. 0-25248).
10.20 Employment Contract, dated August 19, 1998, between Cayman
Water Company Limited and Gregory Scott McTaggart
(incorporated herein by reference to the exhibit filed as
part of our Registration Statement on Form F-2 dated May
17, 2000, Commission File No. 333-35356).
10.21 First Amendment to Employment Contract, dated April 17,
2000, between Consolidated Water Co. Ltd. and Gregory Scott
McTaggart (incorporated herein by reference to the exhibit
filed as part of our Registration Statement on Form F-2
dated May 17, 2000, Commission File No. 333-35356).
10.22 Letter Agreement, dated August 2, 1999, between
Consolidated Water Co. Ltd. and J. Bruce Bugg (incorporated
herein by reference to the exhibit filed as part of our
Registration Statement on Form F-2 dated May 17, 2000,
Commission File No. 333-35356).
10.23 Letter Agreement, dated January 19, 2002, between
Consolidated Water Co. Ltd. and J. Bruce Bugg.
10.24 Specimen Service Agreement, between Cayman Water Company
Limited and consumers (incorporated herein by reference to
the exhibit filed as part of our Registration Statement on
Form F-1 dated March 26, 1996).
10.25 Summary Share Grant Plan for Directors (incorporated herein
by reference to the exhibit filed as part of our
Registration Statement on Form F-2 dated May 17, 2000,
Commission File No. 333-35356).
|
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
10.26 Employee Share Option Plan.
10.27 Agreement, dated March 31, 1998, among Argyle/Cay-Water
Limited, J. Bruce Bugg and Cayman Water Company Limited
(incorporated herein by reference to the exhibit filed as
part of our Form 20-F for the fiscal year ended December
31, 1997, Commission File No. 0-25248).
10.28 Option Deed, dated August 6, 1997, between Cayman Water
Company Limited and American Stock Transfer & Trust Company
(incorporated herein by reference to the exhibit filed on
our Form 6-K, dated August 7, 1997, Commission File No.
0-25248).
10.29 Stock Option Agreement, dated December 15, 1998, between
Consolidated Water Co. Ltd. and R. Jerry Falkner
(incorporated herein by reference to the exhibit filed as
part of our Registration Statement on Form F-2 dated May
17, 2000, Commission File No. 333-35356).
10.30 Purchase and Sale Agreement, dated December 10, 2001,
between Consolidated Water Co. Ltd., Cayman Hotel and Golf
Inc., Ellesmere Britannia Limited and Hyatt Britannia
Corporation Ltd.
10.31 Agreement, dated February 1, 2002, between Consolidated
Water Co. Ltd. and Cayman Hotel and Golf Inc.
10.32 Consulting Agreement, dated November 17, 1998, between
Cayman Water Company Limited and R.J. Falkner & Company,
Inc. (incorporated herein by reference to the exhibit filed
as part of our Registration Statement on Form F-2 dated May
17, 2000, Commission File No. 333-35356).
10.33 Agreement, dated July 24, 1995, between Cayman Water
Company Limited and Galleon Beach Resort Limited
(incorporated herein by reference to the exhibit filed as
part of our Registration Statement on Form F-2 dated May
17, 2000, Commission File No. 333-35356).
10.34 Agreement, dated February 9, 1994, between Cayman Water
Company Limited and Widar Ltd. (incorporated herein by
reference to the exhibit filed as part of our Registration
Statement on Form F-2 dated May 17, 2000, Commission File
No. 333-35356).
10.35 Finance Contract, dated October 3, 1991, between European
Investment Bank and Cayman Water Company Limited
(incorporated herein by reference to the exhibit filed as
part of our Form 20-F, dated December 7, 1994, Commission
File No. 0-25248).
10.36 Debenture, dated June 1, 1979, among Cayman Water Company
Limited, The Royal Bank of Canada, Philip Lustig and Cayman
Public Utilities, Ltd. (incorporated herein by reference to
the exhibit filed as part of Post-Effective Amendment No. 1
to our Registration Statement on Form F-2 dated May 22,
2000).
|
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
10.37 Deed, dated April 30, 1981, between Cayman Water Company
Limited and The Royal Bank of Canada (incorporated herein
by reference to the exhibit filed as part of Post-Effective
Amendment No. 1 to our Registration Statement on Form F-2
dated May 22, 2000).
10.38 Second Deed, dated March 10, 1983, between Cayman Water
Company Limited and The Royal Bank of Canada (incorporated
herein by reference to the exhibit filed as part of
Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.39 Third Deed, dated December 6, 1984, between Cayman Water
Company Limited and The Royal Bank of Canada (incorporated
herein by reference to the exhibit filed as part of
Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.40 Fourth Deed, dated August 31, 1989, between Cayman Water
Company Limited and The Royal Bank of Canada (incorporated
herein by reference to the exhibit filed as part of
Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.41 Fifth Deed, dated June 16, 1992, between Cayman Water
Company Limited and The Royal Bank of Canada (incorporated
herein by reference to the exhibit filed as part of
Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.42 Variation of Debenture, dated October 11, 1999, between
Consolidated Water Co. Ltd. and The Royal Bank of Canada
(incorporated herein by reference to the exhibit filed as
part of Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.43 Collateral Charge, dated June 1, 1979, between Cayman Water
Company Limited and The Royal Bank of Canada (incorporated
herein by reference to the exhibit filed as part of
Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.44 Deed, dated June 1, 1979, between Cayman Water Company
Limited, The Royal Bank of Canada and Philip Lustig
(incorporated herein by reference to the exhibit filed as
part of Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.45 Variation of Charge, dated April 30, 1981, between Cayman
Water Company Limited and The Royal Bank of Canada
(incorporated herein by reference to the exhibit filed as
part of Post-Effective Amendment No. 1 to our Registration
Statement on Form F-2 dated May 22, 2000).
10.46 Collateral Charge to a Variation of Debenture, dated
October 11, 1999, between Consolidated Water Co. Ltd. and
Royal Bank of Canada (incorporated herein by reference to
the exhibit filed as part of Post-Effective Amendment No. 1
to our Registration Statement on Form F-2 dated May 22,
2000).
|
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
10.47 Second Debenture of Cayman Water Company Limited, dated
July 16, 1992, together with Second Collateral Charge dated
July 23, 1992 (incorporated by reference to the exhibit
filed as part of our Form 20-F, dated December 7, 1994,
Commission file No. 0-25248).
10.48 Credit Facility Agreement, dated April 25, 2001 between
Consolidated Water Co. Ltd. and the Royal Bank of Canada.
10.49 Variation of Debenture, dated February 22, 2002 between
Consolidated Water Co. Ltd. and the Royal Bank of Canada.
10.50 Second Collateral Change to a Variation of Debenture, dated
February 22, 2002 between Consolidated Water Co. Ltd. and
the Royal Bank of Canada.
10.51 Lease of Part, dated October 13, 2000, between Consolidated
Water Co. Ltd. and Colmar LTD. (incorporated herein by
reference to the exhibit filed as a part of our Form 10-K
dated March 30, 2001, Commission File No. 0-25248).
10.52 Lease, dated December 10, 2001, between Cayman Hotel and
Golf Inc. and Consolidated Water Co. Ltd.
10.53 Lease, dated April 27, 1993, between Government of Belize
and Belize Water Ltd.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers.
|
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED WATER CO. LTD.
By: /s/ Jeffrey M. Parker
------------------------------------------
Jeffrey M. Parker
Chairman of the board of directors and
Chief Executive Officer
Dated: March 27, 2002
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
By: /s/ Jeffrey M. Parker
---------------------------------- Chairman of the board of directors March 27, 2002
Jeffrey M. Parker and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Frederick W. McTaggart
---------------------------------- Director, President, Chief March 27, 2002
Frederick W. McTaggart Operating Officer and Chief
Financial Officer (Principal
Financial and Accounting Officer)
By: /s/ Peter D. Ribbins
---------------------------------- Director - Special Projects March 27, 2002
Peter D. Ribbins
By: /s/ J. Bruce Bugg, Jr.
---------------------------------- Director and Vice Chairman of the March 27, 2002
J. Bruce Bugg, Jr. board of directors
By: /s/ Brian E. Butler
---------------------------------- Director March 27, 2002
Brian E. Butler
|
SIGNATURE TITLE DATE
--------- ----- ----
By: /s/ Steven A. Carr
---------------------------------- Director March 27, 2002
Steven A. Carr
By: /s/ Richard L. Finlay
---------------------------------- Director March 27, 2002
Richard L. Finlay
By: /s/ Clarence B. Flowers, Jr.
---------------------------------- Director March 27, 2002
Clarence B. Flowers, Jr.
By: /s/ Wilmer Pergande
---------------------------------- Director March 27, 2002
Wilmer Pergande
By: /s/ Raymond Whittaker
---------------------------------- Director March 27, 2002
Raymond Whittaker
By: /s/ Carson K. Ebanks
---------------------------------- Director March 27, 2002
Carson K. Ebanks
|
CONSOLIDATED WATER CO. LTD.
INDEX TO EXHIBITS FILED WITH 10-K
10.4 An Amendment to a License to Produce Potable Water, dated August 15,
2001, between Consolidated Water Co. Ltd. by The Government of The
Cayman Islands.
10.23 Letter Agreement, dated January 19, 2002, between Consolidated Water
Co. Ltd. and J. Bruce Bugg.
10.26 Employee Share Option Plan.
10.30 Purchase and Sale Agreement, dated December10, 2001, between
Consolidated Water Co. Ltd., Cayman Hotel and Golf Inc., Ellesmere
Britannia Limited and Hyatt Britannia Corporation Ltd.
10.31 Agreement, dated February 1, 2002, between Consolidated Water Co. Ltd.
and Cayman Hotel and Golf Inc.
10.48 Credit Facility Agreement, dated April 25, 2001 between Consolidated
Water Co. Ltd. and the Royal Bank of Canada.
10.49 Variation of Debenture, dated February 22, 2002 between Consolidated
Water Co. Ltd. and the Royal Bank of Canada.
10.50 Second Collateral Change to a Variation of Debenture, dated February
22, 2002 between Consolidated Water Co. Ltd. and the Royal Bank of
Canada.
10.52 Lease, dated December 10, 2001, between Cayman Hotel and Golf Inc. and
Consolidated Water Co. Ltd.
10.53 Lease, dated April 27, 1993, between Government of Belize and Belize
Water Ltd.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers.
|
Exhibit 10.4
An amendment To A License To Produce Potable Water From Seawater
Provided to
Consolidated Water Co. Ltd.
(Formerly Cayman Water Company Limited)
by
The Government of The Cayman Islands
The Water (Production and Supply) Law (Law No 15 of 1979)
(1996 Revision)
IT IS AGREED AND DECLARED by and between the parties hereto that Schedules Three and Five of the License, signed by the parties on eleventh day of July 1990, are deleted with effect from the date hereof and replaced by the Schedule Three and Schedule five hereto attached.
Dated 15th August 2001
IN WITNESS WHEREOF this amendment has been made on the date above written.
FOR THE GOVERNMENT OF THE CAYMAN ISLANDS
THE PUBLIC SEAL OF THE GOVERNMENT
Of the Cayman Islands was affixed in the presence of: -
/s/ PETER SMITH
-------------------------------------------------------
HIS EXCELLENCY THE GOVERNOR PETER SMITH C.B.E.
|
FOR CONSOLIDATED WATER CO. LTD.
(Formerly CAYMAN WATER COMPANY LIMITED)
/s/ JEFFREY M. PARKER
-------------------------------------------------------
Mr. Jeffrey M. Parker, Chairman
/s/ FREDERICK W. MCTAGGART
-------------------------------------------------------
Mr. Frederick W. McTaggart, President and COO
|
FOR THE WATER AUTHORITY- CAYMAN ISLANDS
/s/ BRAINARD WALTER
-------------------------------------------------------
Mr. Brainard Watler, Chairman
/s/ OTTO WALTER
-------------------------------------------------------
Mr. Otto Watler, Director
|
SCHEDULE THREE
PRICES
In accordance with clauses 6.1, 6.4 and 6.5 the following prices shall apply: -
1. BASE PRICE OF WATER
The Base Price of Water sold to any customer by means of the Company's pressurized pipeline in the Revoked License Area shall be as follows: -
Residential consumer first 3,000 CI$ 17.45 per 1,000 gallons Gallons supplied in any one month Residential consumer any amount CI$ 18.32 per 1,000 gallons over 3,000 Gallons supplied in any one-month Commercial consumer CI$ 18.32 per 1,000 gallons Public Authority consumer CI$ 17.45 per 1,000 gallons
The Base Price of Water sold to the category of customer as described below in the Additional Area shall be as follows: -
Residential consumer first 3,000 CI$ 15.27 per 1,000 gallons Gallons supplied in any one month Residential consumer any amount CI$ 18.32 per 1,000 gallons over 3,000 gallons supplied in any one month Commercial consumer CI$ 18.32 per 1,000 gallons Public Authority consumer CI$ 16.57 per 1,000 gallons
2. WATER METER RENTAL
A monthly meter rental fee shall be levied at the following rates for the
various sizes of meter: -
20 mm CI$ 3.50
25mm CI$ 5.00
38mm CI$ 7.50
50mm CI$ 10.00
75mm CI$ 15.00
100mm CI$ 25.00
150mm CI$ 40.00
3. FEE FOR RECONNECTION OF SUPPLY
|
A Water supply that has been disconnected for non-payment or by request of the customer shall be reconnected on payment of the following fees which
fee shall depend on the size of the meter: -
20 mm CI$ 50.00
25mm CI$ 75.00
38mm CI$ 110.00
50mm CI$ 150.00
75mm CI$ 225.00
100mm CI$ 300.00
150mm CI$ 350.00
4. FEES FOR FIRE HYDRANTS
CI$ 20.00 per hydrant per month
|
SCHEDULE FIVE
INFLATION
In accordance with clause 6.3, the Base Rate shall be annually adjusted to take into account the effects of inflation, by subtracting there from an amount equal to fifty five percentum thereof and adding to the resulting sum an amount equal to: -
Where: -
BP is the Base Price
CI CURRENT and CI BASE are the Cayman Islands Consumer Price Indexes at September 30 immediately preceding the Adjustment Date and at September 30,1999 respectively;
USCURRENT and US BASE are the United States Producer Price Indexes at September 30 immediately preceding the Adjustment Date and at September 30, 1999 respectively
PROVIDED that in the event that the Cayman Islands Government fails to publish a Consumer Price Index at September 30, then the United States Producer Price Index shall be used.
For the avoidance of doubt the intent of the above formula is to provide that twenty percentum of the Base Price is adjusted to accommodate any changes in the Cayman Islands Consumer Price Index, thirty five percentum of the Base Price is adjusted to accommodate any changes in the United States Producer Price Index and forty five percentum of the Base Price remains constant.
If at any time the parties hereto agree that the formula for calculating the inflation is no longer appropriate to the operation of the Company, the formula shall be changed by an amendment to the License.
Exhibit 10.23
January 19, 2002
VIA FAX: 1 210 224 6491
J. Bruce Bugg Jr.,
Vice Chairman,
Consolidated Water Co. Ltd.
Dear Bruce,
Thank you for your fax of January 18, 2002.
I am pleased to confirm that, in accordance with the resolution of the Board on May 22, 2001, on December 10, 2001, you were granted an option to purchase 30,000 Ordinary Shares of the Company at US$ 11.17 per share. The option may be exercised by you at any time up to 4:30 p.m. Cayman time on December 10, 2004.
I would add that I have placed an item on the Agenda of the February 1, 2002 Board Meeting in order that these terms may be noted in the Minutes thereof.
We appreciate your continuing efforts on behalf of the Company.
Yours sincerely,
CONSOLIDATED WATER CO. LTD.
/s/ Jeffrey M. Parker Jeffrey M. Parker Chairman & C.E.O. |
Exhibit 10.26
CONSOLIDATED WATER CO. LTD.
RESOULTION RE EMPLOYEE SHARE OPTIONS
WHEREAS: -
(1) over the past several years, miscalculations were made by the Company in the number of shares due to employees of the Company free of charge and the number of shares which they were entitled to purchase at a beneficial price under the Company's Share Incentive Plan ("the Plan"), resulting in over-allocations to certain employees;
(2) on that miscalculation being corrected, certain of the employees expressed dissatisfaction with the reduced number of shares to which they became entitled to receive free of charge and to purchase under the Plan; and
(2) the Directors and the relevant employees are prepared to compromise their differences by the grant to those employees of the options set out below
BE IT RESOLVED:
"THAT the Company grant to each of the following employees (which expression includes each employee's personal representatives):
Abel Castillo
Billy Banker
Rayburn Conolly
Ivan Tabora
Maggie Julier
Helverth Rodriquez
Chet Ritch
Louis Wood
Elizabeth Triana
Dave Hooker
an option to purchase the Number of Shares on the following terms and conditions:
1. Options are granted in 2001 and in each calendar year thereafter so long as the employee is, at the Grant Date, a Participant (as defined therein) in the Plan.
2. The price at which the option may be exercised will be the closing market price of the Company's Ordinary Shares on the Grant Date (or on the next Trading Day if the Grant Date is not a Trading Day)
3. An option may be exercised by written notice to the company, accompanied by a remittance for the full amount, at any time during the period commencing on the earliest of the following dates:
a.) the date of death of the employee, or
b.) the date on which the employment of the employee is terminated
as a result of permanent disability, or
c.) the date on which the employee retires having reached the age
of 65 years, or,
d.) the fourth anniversary of the Grant Date
and ending at 5 p.m. on the thirtieth day after the fourth anniversary of the Grant Date or, in the case of the death of the employee only, 5 p.m. on the date which is 180 days after the date of his or her death, whichever is later.
For the purposes of this resolution, the following terms have the following meanings: -
"GRANT DATE" means in each year 40 days after the date of the Company's Annual Shareholders' Meeting.
" NUMBER OF SHARES" means, in respect of each calendar year and in relation to each employee, the number of Ordinary shares in the Company, which is five times:
(a) that number of Redeemable Preference Shares which that employee receives without payment, plus
(b) that number of Redeemable Preference Shares which that employee purchases pursuant to the Plan in that calendar year.
"PERMANENT DISABILITY" means the inability due to injuries or illness to perform the duties for which the employee was employed to the Company which inability a physician licensed to practice in the Cayman Islands and nominated by the Company advises in his opinion will be permanent.
" TRADING DAY," means a day on which the Company's shares are traded on the NASDAQ National Market.
AGREEMENT A-D/BA CWC ELLESMERE WATER PLANT
Exhibit 10.30
PURCHASE AND SALE AGREEMENT
PREPARED BY MYERS & ALBERGA
ATTORNEYS-AT-LAW
THIS AGREEMENT is made BETWEEN THE SELLER, THE BUYER, ELLESMERE AND HYATT BRITANNIA.
1. In this Agreement and the First Schedule, unless inconsistent with the context or subject matter or circumstances:-
(1) "AFFILIATE" means with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with that person. For purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by" and "under common control with") as used with respect to any person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that person, by any means whatever, including without limitation through the ownership of voting shares or securities, or by contract;
(2) "THE BRITANNIA DEVELOPMENT" means the land on West Bay Road, Grand Cayman on which are situated the Plant, the Hotel, the Britannia Residences and the Undeveloped Lot, comprised in the Land Registers referred to in Part II of the Second Schedule;
(3) "THE BRITANNIA RESIDENCES" means the houses, villas and condominiums in the Britannia Development Phases I (53 strata lots) and II (72 strata lots and 2 houses), Britannia Estates (25 lots) and Kings Court (42 strata lots) comprised in the Land Registers referred to in Section A of Part II of the Second Schedule;
(4) "THE BUYER" means CONSOLIDATED WATER CO. LTD. a Cayman Islands company of P.O. Box 1114, George Town, Grand Cayman B.W.I.
Tel: 945-4277
Fax: 945-4191
and includes the Buyer's nominees, successors and assigns;
(5) "COMPLETION DATE" means the first day of the next succeeding calendar month after the satisfaction of the condition in Clause 14 (unless this Agreement is earlier terminated in accordance with that Clause);
(6) "THE CONCESSION" means the concession granted to the Buyer under the Water (Production & Supply) Law, as amended from time to time.
(7) "THE DATE OF THIS AGREEMENT" is the 10TH day of DECEMBER, 2001;
(8) "DEPOSIT" means the sum of US$50,000.00 paid to the Seller's Attorneys-at-Law as stakeholder as a deposit under this Agreement;
(9) "ELLESMERE" means Ellesmere Britannia Limited of P.O. Box 1994 GT, Grand Cayman B.W.I.;
(10) "THE HOTEL" means the hotel situated on part of the Britannia
Development presently known as the Hyatt Regency, the Britannia golf
course, the Hyatt beach club and Hemingway's restaurant and the Rum
Point restaurant comprised in the Land Registers referred to in
Section B of Part II of the Second Schedule;
(11) "HYATT BRITANNIA" means Hyatt Britannia Corporation Ltd. of P.O. Box 1698 GT, Grand Cayman B.W.I.;
(12) "THE LEASE" means the lease from the Seller to the Buyer of the Property in the form of the lease in the Fourth Schedule;
(13) "THE MAIN METER" means the water meter edged purple on the Plan metering the supply of water to that part of the Britannia Development known as "Britannia Villas";
(14) "THE PLAN" means the plan attached to this Agreement marked `Property Plan' and initialled by the parties for the purposes of identification
(15) "THE PLANT" means the machinery, equipment and personal property described and listed in Part I of the Second Schedule;
(16) "THE PRICE" means the total amount payable for the Plant, being One Million Five Hundred Thousand United States Dollars (US$1,500,000.00);
(17) "THE PROPERTY" means the land situated in Grand Cayman being that part of the land registered at Block 12D Parcel 79REM1 in the West Bay Beach South Registration Section of Grand Cayman, Cayman Islands (including that part of the building containing the Plant, an office and bathroom erected on the Property and indicated on the Plan) as appears outlined in red on the Plan;
(18) "THE PROPERTY METER" means the water meter at the boundary of the Property to which the Water Pipe is connected, the location of which is marked in pink on the Plan;
(19) "THE SELLER" means CAYMAN HOTEL & GOLF INC., a Canada corporation of P.O. Box 1994 GT, Grand Cayman B.W.I.; Tel: (345)949-7440 Fax: (345)949-8032
and includes the Seller's successors in title and transferees.
(20) "THE SELLER'S ATTORNEYS AT LAW" means Messrs. Ritch & Conolly, P.O.
Box 1994 GT, Grand Cayman B.W.I.;
(21) "THE STRATA CORPORATIONS" means The Proprietors, Strata Plan No. 79, The Proprietors, Strata Plan No. 147 and The Proprietors, Strata Plan No. 215;
(22) "THE UNDEVELOPED LOT" means the land referred to in Section C of
Part II of the Second Schedule;
(23) "THE WATER PIPE" means the water pipe coloured brown on the Plan running from the Property Meter to the Main Meter;
(24) the Schedules form part of this Agreement;
(25) words of one gender include any other gender;
(26) singular words include the plural and vice versa;
(27) a commitment by more than one person is joint and separate; and
(28) the clause headings are included for convenience only and have no legal effect.
2. The Seller agrees to sell and the Buyer agrees to buy the Plant for the Price and on the terms and conditions set out in the First Schedule.
THE FIRST SCHEDULE
1. PAYMENT
The Price must be paid to the Seller's Attorneys-at-Law on behalf of the Seller as follows:-
(1) on execution of this Agreement the Deposit, to be held as stakeholder until completion or earlier termination of this Agreement.
(2) at completion, the balance of the Price.
2. COMPLETION
(1) Completion must take place on or before the Completion Date.
(2) Unless the Buyer otherwise agrees, completion must take place at the offices of Myers & Alberga, One Regis Place, 90 Fort Street, George Town, Grand Cayman, Cayman Islands B.W.I., who will have carriage of sale.
(3) On the execution of this Agreement, the parties must execute the Lease and all necessary documents to enable its registration and deliver it in triplicate to the Buyer's Attorney-at-Law for stamping and registration.
(4) At completion, in exchange for payment of the balance of the Price and all other money (if any) payable to the Seller under this Agreement
(a) the Seller must deliver to the Buyer:-
(i) any documents necessary to vest title to the Plant in the Buyer under the terms of this Agreement; and
(ii) water supply agreements in the forms of the Fifth, Sixth and Seventh Schedules executed by the Strata Corporations (the Fifth Schedule), Britannia Estates Home Owners Association Ltd. (the Sixth Schedule) and the other Proprietors (the Seventh Schedule) on the date of this Agreement of the residential lots in Britannia Estates more particularly described in the Section A of Part II of the Schedule for the supply of water by the Buyer to any part of the Britannia Residences; and
(b) the parties must complete by filling in the blank spaces and execute an agreement for the Buyer's supply of potable water in the form of the agreement in the Third Schedule.
3. POSSESSION AND USE OF WATER PIPE
(1) The Seller must give vacant possession of the Property (including for the avoidance of doubt those items of the Plant as are affixed to it, if any) and free possession (by delivery) of those items of the Plant as are not affixed to the Property to the Buyer at completion.
(2) The Seller acknowledges that after completion and for the duration of the Lease the Buyer intends to use the Water Pipe for distribution of potable water to the owners, tenants, licensees and occupiers of the whole of the Britannia Development (other than the Property). For this purpose, the Seller:-
(a) grants to the Buyer, without prejudice to the Buyer's rights as a concessionaire (as defined in the Water (Production and Supply) Law (1996 Revision)) of an area which includes the Britannia Development or any part of it, for so long as it is such a concessionaire under that Law or until the termination of the Lease (whichever is earlier), but subject to temporary interruption for repair and maintenance, the right to use the Water Pipe for the supply of potable water to all parts of the Britannia Development; and
(b) agrees that:-
(i) it will be responsible for the repair and maintenance of the Water Pipe and will keep it in all respects sanitary and free from pollution and any toxic, noxious or other substances prejudicial to health so that the Buyer's potable water passing through it will not be contaminated so as to reduce the quality of the potable water below that required by the Buyer's concession referred to in Clause 3(2)(a);
(ii) if it fails within twenty-four (24) hours of receiving notice from the Buyer to carry out at the Seller's cost any necessary repairs or maintenance of the Water Pipe, then the Buyer may carry out any repairs or maintenance to the Water Pipe in respect of which it has given notice to the Seller and may enter such parts of the Hotel or the
Undeveloped Lot as are necessary in order to carry out those repairs or that maintenance, causing as little inconvenience as possible and making good any unnecessary damage caused without delay;
(iii) it will not connect anything to the Water Pipe which might either on connection or use cause the water pressure in the Water Pipe to increase above 62 pounds per square inch gauge or to reduce below 35 pounds per square inch gauge and to indemnify the Buyer against all loss, damage or expense (including consequential loss and the full amount of legal expenses and damages paid to third parties to whom the Buyer becomes liable) caused from the Seller's breach of this clause or from the use of the fire pump presently connected to the Water Pipe with the Buyer's knowledge and consent.
(iv) for so long as it remains the owner, legal or beneficial, of any interest in any part of the land under which the Water Pipe runs until the termination of the Lease it will not remove or in any manner interfere with, damage or destroy any part of the Water Pipe or additions to or replacements of it or any part of it made by either the Buyer or the Seller; and
(v) it will not dispose of any legal or beneficial interest in any part of the Hotel (other than the Rum Point restaurant and the Property) or the Undeveloped Lot without obtaining from the transferee of that interest an enforceable covenant by that transferee on behalf of itself and its successors in favour of the Buyer to the same effect as those contained in this subclause (2), including a covenant to obtain the same covenant from any subsequent transferee of that or any lesser interest.
(3) The provisions of sub-clause (2) will survive completion of this Agreement.
4. TITLE TO PLANT
(1) The Seller warrants to the Buyer that the Plant belongs to him absolutely and that it will not at the time of delivery to the Buyer be subject to any hire purchase or credit sale agreement or any charge, mortgage, bill of sale or encumbrance of any kind. To the extent that the Seller is legally able to pass title to the Plant by delivery (it being agreed that the only impediment to the passing of unencumbered title to the Buyer is the possible fixation to the Property of certain items of the Plant), title will so pass on Completion. To the extent that the Seller is not legally able to pass title to the Plant by delivery for the reason above-mentioned, the Seller agrees that the Buyer may at any time prior to the end of the Lease detach those items of Plant affixed to the Property and on such detachment title will pass to the Buyer without any further act or deed.
(2) The provisions of sub-clause (1) will survive completion of this Agreement.
5. RISK
Despite any rule of law, equity or practice to the contrary, risk in the Plant will pass to the Buyer on completion.
6. STATE OF PROPERTY AND PLANT
(1) The Plant being open for inspection by or on behalf of the Buyer before the Date of this Agreement the Buyer is deemed to buy it with full notice of its present state and condition in all respects and must accept it in that state and condition at the time of taking possession of it fair wear and tear excepted.
(2) The Seller warrants that neither as at completion nor at any previous time during which it or any Affiliate has had any beneficial interest in the Property, has any business activity been carried on on the Property which involves the use or handling of hazardous materials or waste or which has had to the Seller's knowledge any adverse effect on its property, equipment or business activities.
(3) The Buyer may at any time and from time to time make such investigations and tests of the soil of the Property as it deems necessary to satisfy itself that no part of the Property is polluted by hazardous materials or wastes. The costs of such tests and investigations must be borne by the Buyer. If any such pollution is found at any time (whether before or after completion) which is attributable to the Seller, Ellesmere or Hyatt Britannia, the Seller must at its expense immediately with all possible expedition conduct all environmental remedial activities which a commercially reasonable person would perform in similar circumstances on his own land to remedy the pollution. The Seller agrees not at any time during the subsistence of the Lease to pollute any of its land registered at Block 12D Parcel 79REM1 in the West Bay Beach South Registration Section of Grand Cayman in any way which might adversely affect the Property or the Plant or the Buyer's business carried on on the Property.
7. SELLER'S RIGHT TO TERMINATE
If the Buyer does not complete in accordance with Clause 2 of this Schedule, the Seller may, at any time after the Completion Date without prejudice to any other remedy which he may have, serve notice on the Buyer to pay the balance of the Price within fourteen (14) days after the date of service of that notice. If the Buyer does not pay the balance of the Price within those fourteen (14) days (in respect of which time will be of the essence) the Seller may, unless he chooses some other remedy, terminate this Agreement and keep the Deposit and all part payments (if any) up to an aggregate of ten percent (10%) of the Price as liquidated damages together with any interest that may have accrued or been earned on it. If he does so this Agreement will immediately end and neither party will have any further rights of action or claim of any nature against the other in respect of it.
8. INTEREST ON LATE PAYMENTS
In addition to any other remedies available to the Seller if the Buyer does not pay any sum payable under this Agreement on the due date the Seller may charge interest on the unpaid amount calculated from the due date until the date of payment at the rate of ten percent (10%) per annum calculated on a daily basis, and with monthly rests.
9. STAMP DUTY AND OTHER FEES
Each party must bear its own legal fees on this Agreement.
10. PAYMENT BY CHEQUE
If the Buyer or anyone on his behalf pays any money under this Agreement by cheque, payment is deemed to be received when that cheque has been cleared in the Cayman Islands and the funds are under the unconditional control of the Seller and the Buyer may not enforce any of his rights or remedies until that cheque has been so cleared.
11. ENTIRE AGREEMENT
(1) This Agreement constitutes the entire agreement between the parties and may be varied only by agreement in writing.
(2) The Seller, the Buyer, Ellesmere and Hyatt Britannia agree that on the Completion Date the settlement agreements dated 20th April, 1999 shall be terminated and be of no further force or effect.
12. NOTICES
Any notice or communication under or in connection with this Agreement must be in writing and must be delivered personally, or sent by registered post to the address of the party to be served stated in clause 1 or at such other address as either party notifies the other. Proof of posting or delivery will be deemed to be proof of receipt:-
(1) in the case of a notice or communication sent by registered post, on the fourth day after posting; and
(2) in the case of a notice or communication delivered, on the date of delivery.
13. NO WAIVER OF TERMS
Unless there is a written agreement to the contrary, no neglect, omission or forbearance on the Seller's part to take advantage of or enforce any right or remedy arising out of any breach or non-observance of any of the terms and conditions contained or implied in this Agreement will be deemed to be or operate as a general waiver of that term or condition or the right to enforce or take advantage of it in respect of any breach or non-observance of it either original or recurring.
14. CONDITIONS PRECEDENT TO COMPLETION
Completion of this Agreement is subject to:-
(1) the consent of the Seller's mortgagee Barclays Bank Plc to the transaction contemplated by this agreement including without limitation the sale of the Plant and the grant of the Lease;
(2) the Buyer's being satisfied that the Property is not polluted or that the environmental remedial activities performed by the Seller under Clause 6(3) have been or will be successful, it being understood that failure by the Buyer to make the investigations and tests referred to in Clause 6(3) by the Completion Date will be conclusive evidence for the purposes of this Clause that
the Buyer is satisfied that the Property is not polluted but without prejudice to the provisions of Clause 6(3);
(3) the Seller's producing to the Buyer water supply agreements in the form of the Fifth, Sixth and Seventh Schedules executed by the Strata Corporations (the Fifth Schedule), Britannia Estates Home Owners Association Ltd. (the Sixth Schedule) and the other Proprietors (the Seventh Schedule) on the date of this Agreement of the residential lots in Britannia Estates more particularly described in the Section A of Part II of the Schedule, for the supply of water by the Buyer to any part of the Britannia Residences; and
(4) the registration of the Lease by the Registrar of Lands.
If the above conditions have not been satisfied by28th February, 2002, the
Seller (in respect of condition (1) only) and the Buyer (in respect of all
the conditions) may at any time thereafter by thirty (30) days' notice to
the other party terminate this Agreement unless the necessary permissions
are in fact obtained or the Buyer becomes so satisfied during those thirty
(30) days. If any condition has not been satisfied by the expiry of those
thirty (30) days, the Seller must immediately return the Deposit to the
Buyer and the Buyer must immediately surrender the Lease whereupon this
Agreement will immediately terminate and neither party will have any
further rights against the other arising out of it.
15. NO SALE OF BUSINESS
It is declared for the avoidance of doubt that this Agreement does not constitute a sale of any business of water desalination and distribution now carried on by the Seller on the Property. Accordingly, the Seller must before the Completion Date procure the termination of the employment of all staff presently employed in that business and the payment of all severance and other money to which those employees may be entitled on that termination. The Buyer may on the Completion Date offer employment to any of those former employees whom it wishes to hire.
16. RELEASE
For the avoidance of doubt, each of the Buyer, the Seller, Ellesmere and Hyatt Britannia releases the others from all claims, demands, liabilities, sums of money, actions, proceedings or accounts which each of them now has or at any time has had against any of the others in relation to any matter raised in and/or any fact or circumstance alleged in the action in Grand Court Cause No. 703 of 1996 and/or any other existing fact whether or not presently known to any of them.
17. ACKNOWLEDGMENTS
The Seller, Ellesmere and Hyatt Britannia each acknowledges the validity of the Concession (a copy of which each of them also acknowledges it has received) and will not challenge the Buyer's rights under it or act in any manner which would cause loss, damage or injury to the Buyer or its business carried on through the existence of the Concession. None of the Seller, Ellesmere or Hyatt Britannia will at any time while the Buyer is the holder of the Concession challenge or impugn the supply of water by the Buyer to the Britannia Residences and in particular will not bring any proceedings in relation to the Britannia Residences in the Grand Court against the Buyer which arises from or is based on any allegation of fact and/or law which is the same as and/or
similar to those raised or relied upon in defending the action in Grand Court Cause No. 703 of 1996. The Buyer will not bring any further proceedings in relation to the Hotel and the matters raised in the Grand Court Action No. 703 of 1996 which arises from or is based on any allegation of fact which is the same as and/or similar to those raised or relied upon in that action.
THE SECOND SCHEDULE
PART I - THE PLANT
1 SEAWATER REVERSE OSMOSIS PLANT SKID #4 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: No Name Plate
Model #: NA
Serial #: NA
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165M
Serial #: 12834
MOTOR
Brand Name: TOSHIBA (HOUSTON)
Model #: B-1254FLA4UD
Serial #: AB54699-1
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: PT8650 E1 (or) NP4840/A
Serial #: NA
MEMBRANE ELEMENT HOUSINGS
Description: 23 Housings and element-single
element per housing
Membranes Dupont
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
2 SEAWATER REVERSE OSMOSIS PLANT SKID #5 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: EXCEL Model #: 30EFCS3-3C150 Serial #: NA |
HIGH PRESSURE PUMP
Brand Name: WHEATLEY Model #: HP165M Serial #: NA MOTOR Brand Name: SIEMENS Order #: 2-312-LR91633-2 Serial #: NA ENERGY RECOVERY TURBINE Brand Name: CALDER Model #: PT8650 E1 (or) NP4840/A Serial #: NA MEMBRANE ELEMENT HOUSINGS Description: 12 twin housings-PERMASEP Membranes Dupont DRAW BACK TANK WATER METER CONTROL PANEL |
3 SEAWATER REVERSE OSMOSIS PLANT SKID #6 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: OSMONICS
Model #: HX1620-3 OT-PVC-D
Serial #: 96-A49103-1
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165AM /29613-B
Serial #: 22747
MOTOR
Brand Name: SIEMENS
Order #: 2-5106-LR90303-1
Serial #: NA
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: RO-4034 1390 15
Serial #: NA
MEMBRANE ELEMENT HOUSINGS
Description: 20 B-10 PERMASEP Housings-one
membrane per housing
Membranes DUPONT
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
4 SEAWATER REVERSE OSMOSIS PLANT SKID #7 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: EXCEL
Model #: 30EFCS3-3C150
Serial #: NA
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165AM /29613-B
Serial #: 23852
MOTOR
Brand Name: TICO AMERICA
Model #: NA
Serial #: NA
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: RO-290-40
Serial #: 021-97-A2316
MEMBRANE ELEMENT HOUSINGS
Description: 1) 4 Triples (3 membranes per
housing), no name brand on
housings
2) 2 Doubles(2 membranes per
housing), PERMASEP
Membranes DUPONT
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
5 POTABLE WATER OZONATION SYSTEM COMPRISED OF:
AIR COMPRESSOR PACKAGE
Brand Name: INGERSOLL RAND Model #: SS-EP15 Serial #: LX0230U98043 |
AIR COMPRESSOR MOTOR
Brand Name: US ELECTRIC MOTOR DIVISION OF
EMERSON ELECT CO.
Model #: T589A
ID #: B01A339RO65F
MOISTURE SEPARATOR
Brand Name: THERMAL TRANSFER PRODUCTS
Model #: S-100-AD
ID #: S-6019
REFRIGERATED DRYER
Brand Name: INGERSOLL RAND
Model #: DXR50
Serial #: 97LDXR5563
OXYGEN CONCENTRATOR
Brand Name: AIRSEP-NATL BD 72602K-CERTIFIED
BY BRUNNER ENG & MFG INC.
Model #: AS-160/250/450
Serial #: NA
OXYGEN RECEIVER
Brand Name: NATL.BD NO.182314-CERTIFIED
BY STEEL FAB
ABINGDON VA.
PART #: CRN C7228.1C
Serial #: NA
OZONE GENERATOR
Brand Name: OSMONICS
Model #: HC-5
Serial #: NA
OZONE INJECTOR MOTOR
Brand Name: BALDOR
Cat#: JWMDM3616T
Serial #: NA
CENTRIFUGAL PUMP(OZONE INJECTOR)
Brand Name: WAUKESHA CHERRY BURRELL
Model #: U2065
Serial #: 2200989
DISSOLVED OZONE MONITOR
Brand Name: OREC/OSMONICS
Model #: NA
Serial #: NA
|
AC DRIVE
Brand Name: MEGNETEK Model #: GPD 506 N12-506V-B014 Serial #: 34469 |
6 HIGH SERVICE WATER DISTRIBUTION PUMP SYSTEM COMPRISED OF:
DWPO4
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587B THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Cat #: JMM2514T Spec #: 39K35W525 DWPO5 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587A THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Cat #: JMM2514T Spec #: 39K35W528 DWPO7 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587C THREE PHASE INDUCTION MOTOR Brand Name: US ELECTRICAL MOTORS Model #: E685A Serial #: BO1A287RR087F |
7 DOMESTIC WATER TRANSFER PUMP SYSTEM COMPRISED OF:
CWP01
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: 820A Serial #: TI57490 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 CWP02 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C825AM Serial #: 171953 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 |
8 TRANSFER PUMP TO OZONATION SYSTEM COMPRISED OF:
CENTRIFUGAL PUMP
Brand Name: AMPCO Model #: 3 x 2 1/2 ZC2 Serial #: CC16867-1-1 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: NA Spec #: 07H167W06 |
9 IRRIGATION TRANSFER PUMP SYSTEM COMPRISED OF:
IRP01
CENTRIFUGAL PUMP
Brand Name: PAC_SEAL Model #: 4P940 Motor Reference #: G40444/F96Z120R169F THREE PHASE INDUCTION MOTOR Brand Name: DAYTON Model #: 9N114 Motor Reference #: G40444/F96Z120R169F CWP02 TRANSFER PUMP TO TANK Brand Name: PEERLESS PUMP COMPANY Model #: C825AM Serial #: 171953 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 |
10 POTABLE WATER DEGASSIFIER COMPRISED OF:
Brand Name: DELEOCH Model #: NA Serial #: NA BLOWER MOTOR #1 SINGLE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: VL313 Serial #: NA BLOWER MOTOR #2 THREE PHASE INDUCTION MOTOR Brand Name: GE MOTORS & INDUSTRIAL SYSTEMS Model #: 5K49ZN2189 Serial #: NMLI42677 |
11 SEAWATER WELLS AND SUBMERSIBLE PUMPS COMPRISED OF:
WP #2
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: JACUZZI Model #: S6175-2 Serial #: 92611702 |
THREE PHASE MOTOR
Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: 99g19-14-0014 WP #4 FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES SUBMERSIBLE PUMP Brand Name: GRUNFOS Model #: 300S75-2 Serial #: 14B70002 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA WP #5 FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES SUBMERSIBLE PUMP Brand Name: GRUNFOS Model #: 300S75-2 Serial #: NA THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA WP #6 FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES SUBMERSIBLE PUMP Brand Name: GRUNFOS Model #: 300S75-2 Serial #: 14B70002 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
12 DIESEL POWERED GENERATOR COMPRISED OF:
EMERGENCY GENERATOR ENGINE
Brand Name: KOMATSU LTD Model #: 6491 Serial #: 14448 EMERGENCY GENERATOR Brand Name: ONAN 60 Model #: 60 ODVB-15R/30083B Serial #: B850750776 FUEL INJECTION PUMP Brand Name: DIESEL KIKI ASSY #: 6207-71-1410 Serial #: 450K327320 MAGNETIC DRIVER Brand Name: NIKKO ELECT IND CO LTD Model #: 600-815-5560 Serial #: 0-47100-3720 |
13 BOLTED STEEL 816,000 US GALLON POTABLE WATER TANK
Brand Name: Florida Aquastore, Inc. Model #: NA Serial #: NA |
14 ALL INTERCONNECTING PIPING, CONDUITS AND APPURTENANCES, ABOVE THE GROUND WHICH CONNECT ITEMS 1 THROUGH 13 TO EACH OTHER, AND TO THE WATER PIPE, AND WHICH DIRECTLY FACILITATE THE OPERATION AND MAINTENANCE OF ITEMS 1 THROUGH 13.
15 ALL ELECTRICAL EQUIPMENT AND COMPONENTS WHICH CONNECT ITEMS 1 THROUGH 13 TO EACH OTHER AND TO THE MAIN ELECTRICAL SERVICE IN THE RO BUILDING.
16 ALL CONTROLS AND INSTRUMENTATION ATTACHED TO ITEMS 1 THROUGH 13.
17 ALL TOOLS THAT ARE SPECIFIC TO THE MAINTENANCE OR OPERATION OF THE PLANT.
18 ALL LABORATORY AND TESTING EQUIPMENT USED TO MONITOR WATER PRODUCED BY THE PLANT.
19 ALL DRAWINGS, SCHEDULES, OPERATION AND MAINTENANCE MANUALS FOR ITEMS 1 THROUGH 18.
20 ALL OFFICE EQUIPMENT CURRENTLY LOCATED WITHIN THE RO BUILDING AND USED BY THE STAFF OF THE PLANT.
21 ALL SPARE PARTS FOR ITEMS 1 THROUGH 18, STORED MATERIALS SUCH AS CHEMICALS AND LUBRICANTS HELD IN STOCK AT THE TIME OF CLOSING.
PART II - THE BRITANNIA DEVELOPMENT
SECTION A - THE BRITANNIA RESIDENCES
--------------------------- -------------------------------------------- ---------------------- ----------------------
PHASE REGISTRATION SECTION BLOCK PARCEL
--------------------------- -------------------------------------------- ---------------------- ----------------------
I West Bay Beach South 12D 25
--------------------------- -------------------------------------------- ---------------------- ----------------------
II West Bay Beach South 12D 40
--------------------------- -------------------------------------------- ---------------------- ----------------------
II West Bay Beach South 12D 38
--------------------------- -------------------------------------------- ---------------------- ----------------------
II West Bay Beach South 12D 39
--------------------------- -------------------------------------------- ---------------------- ----------------------
Britannia Estates West Bay Beach South 12D 65
--------------------------- -------------------------------------------- ---------------------- ----------------------
Britannia Estates West Bay Beach South 12D 77
--------------------------- -------------------------------------------- ---------------------- ----------------------
Britannia Estates West Bay Beach South 12D 74
--------------------------- -------------------------------------------- ---------------------- ----------------------
42, 43, 44, 45, 46,
47, 48, 49, 50, 70,
Britannia Estates West Bay Beach South 12D 53, 78, 55, 56, 57,
58, 59, 60, 61,
62, 63, 64
--------------------------- -------------------------------------------- ---------------------- ----------------------
Kings Court West Bay Beach South 12D 80
--------------------------- -------------------------------------------- ---------------------- ----------------------
|
SECTION B - THE HOTEL
---------------------------------------- -------------------------------------- --------------------------------------
REGISTRATION SECTION BLOCK PARCEL
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12C 27
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 24
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 79REM1
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 89
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 88
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 94
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12C 154
---------------------------------------- -------------------------------------- --------------------------------------
Rum Point 33B 169 & 173
---------------------------------------- -------------------------------------- --------------------------------------
|
SECTION C - THE UNDEVELOPED LOT
---------------------------------------- -------------------------------------- --------------------------------------
REGISTRATION SECTION BLOCK PARCEL
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 26
---------------------------------------- -------------------------------------- --------------------------------------
|
THE THIRD SCHEDULE
THIS AGREEMENT is made this ______ day of __________________, 2001,
BETWEEN: CONSOLIDATED WATER CO. LTD. a Cayman Islands company having its
registered office at Trafalgar Place, West Bay Road, P.O. Box 1114,
George Town, Grand Cayman B.W.I. ("CWC")
AND: CAYMAN HOTEL & GOLF INC. a Canada corporation having its address for
service in the Cayman Islands in care of Ritch & Conolly, Queensgate
House, South Church Street, P.O. Box 1994, George Town, Grand Cayman
B.W.I.("the Customer")
|
RECITAL:
The Customer wishes to obtain a supply of potable water in specified volume (i) by pipe for the Hotel known as the Hyatt Regency, on both sides of the West Bay Road, Grand Cayman and the irrigation of its golf course and (ii) by the Customer's truck for the Rum Point restaurant at Rum Point, and CWC has agreed to supply the water on the terms set out in this Agreement;
AGREEMENT:
1. SUPPLY OF WATER
(1) Subject to sub-clause (4), CWC will supply the Customer from the Commencement Date until the expiry of the Term, on the terms and conditions set out in this Agreement potable water to the quality standard required by its Concession at the meter or meters referred to in Clause 2(3) at a maximum rate of 260 gallons per minute at 62 pounds per square inch gauge.
(2) The Volume of water supplied will be a minimum of 170,000 U.S. gallons per day. The maximum volumes to be supplied will be the amount from time to time agreed by CWC who must use its best endeavours to supply the Customer's demands in full.
(3) Notwithstanding that CWC has connected any water supply to a hydrant or sprinkler system in the Hotel, it is expressly agreed that CWC will be under no obligation to provide water for fire fighting purposes or to ensure that the Water Tank contains water at any time whatever or under any circumstances, and will only supply water for those purposes if it is able to do so, and will not be liable for any damage whatever to the Hotel or any part of it caused by fire or any related cause.
(4) For the purposes of this Agreement, the water supplied to the Customer is deemed to be the amount of water shown by:-
(a) the meter measuring the amount of water passing through the Fire Pump; plus
(b) the meter measuring the amount of water flowing into the Irrigation Tank; plus
(c) the Property Meter
less the amount of water shown by the Main Meter.
(5) CWC must give not less than twenty-four (24) hours' notice to the Customer of any occasion on which to its knowledge the Water Tank will for any reason contain less than 250,000 U.S. gallons of water and if in circumstances unforeseen by CWC, the water in the Water Tank is, or within twenty-four (24) hours will be, reduced below
250,000 U.S. gallons, CWC must notify the Customer immediately it becomes aware of that fact.
2. PAYMENT
(1) From the Commencement Date until the end of the Term, the Customer will, subject to sub-clause (6) and clause 4, pay a price per 1,000 U.S. gallons equal to the total of the following:-
(a) for the Required Monthly Gallonage in any calendar month, US$8.50 subject to adjustment on 1st January, 2002 and on each January 1st thereafter in accordance with sub-clause (2);
(b) for any volume supplied in excess of the Required Monthly Gallonage in any calendar month, the price charged to commercial consumers from time to time within that part of the Licence Area in which the Hotel is situated; and
(c) the Energy Adjustment Factor from time to time.
(2) On each 1st January commencing 1st January, 2002 the Consumption Charge per 1,000 U.S. gallons of the Required Monthly Gallonage in that year will be adjusted to the figure obtained by reference to
the following formula:-
5.41 X USPPIL + 3.09 X CICPIL
------------- -------------
USPPI00 CICPI00
|
For the purposes of this clause:-
USPPIL is the United States Producer Price Index for Industrial Commodities at the preceding September 30th and USPPI00 is that index at September 30, 2000, and
CICPIL is the Cayman Islands Consumer Price Index at the preceding September 30th and CICPI00 is that index at September 30, 2000.
BUT if the Cayman Islands Government does not produce a Consumer Price Index at any relevant date, the United States Government Consumer Price Index for that date and September 30, 2000 must be used.
(3)(a) CWC must furnish, fix and maintain in good repair the Main Meter, the Property Meter and the meters measuring the volumes of water flowing into the Irrigation Tank and passing through the Fire Pump for determining the quantity of water used by the Customer. The Customer must pay the rental specified in paragraph (b) for the use of the Property Meter and the meter measuring the volume of water passing through the Fire Pump only, which will remain the property of CWC. If any meter is damaged by the Customer, its servants, agents or invitees, CWC will repair or replace the meter but at the Customer's expense. The Customer is liable for the cost of all water passing through the Property Meter less water passing through the Main Meter unless
any meter is found to be defective after a complaint by the Customer to CWC. CWC will charge the Customer for water used based on the average water consumption of the previous twelve (12) months when the defective meter was working, pro rata for the period when the meter was not recording correctly or not recording at all.
(b) Meter rates are as follows:-
SIZE MONTHLY RENTAL CONNECTION FEE RECONNECTION FEE ---- -------------- -------------- ---------------- 20 mm (3/4") CI$ 3.50 CI$ 80.00 CI$ 50.00 25 mm (1") CI$ 5.00 CI$120.00 CI$ 75.00 38 mm (1 1/2") CI$ 7.50 CI$175.00 CI$110.00 50 mm (2") CI$10.00 CI$240.00 CI$150.00 75 mm (3") CI$15.00 CI$360.00 CI$225.00 100 mm (4") CI$25.00 CI$560.00 CI$300.00 150 mm (6") CI$40.00 CI$800.00 CI$350.00 |
(4) CWC must invoice the Customer for the Monthly Charge for the
previous calendar month and any unpaid balance on the account
(including interest on any late payments at the rate set out below)
and the Customer must pay each invoice within twenty-one (21) days
failing which the Customer must pay CWC interest at the rate of 1
1/2% per month calculated on a daily basis from the due date to the
date of payment, which CWC may charge whether or not it continues to
supply water. If any invoice remains unpaid for 30 days from its
date then CWC may cease supplying water until the Customer pays all
invoices up to date.
(5) The water supply service must be used only by the Customer or his tenants or guests and must not be re-sold or otherwise supplied to third parties, either within or outside the boundaries of the Property.
(6) For the period beginning on the date of this agreement and ending on 31st May, 2002 only, for any gallonage supplied in excess of the Required Monthly Gallonage in any calendar month, the Customer will pay a price per 1000 U.S. gallons equal to the price payable pursuant to subclause 2(1)(a) and (c) in the relevant calendar month for the Required Monthly Gallonage.
3. SECURITY DEPOSIT
The Customer must pay CWC on the date of this Agreement, a deposit of US$50,000.00 which CWC must hold on account of the payment of the Monthly Charge during the last month of this Agreement. So long as the Customer has paid all charges (including any interest on late payments) due under this Agreement during the previous year, CWC must, on every anniversary of the payment of the deposit, compute and credit the Customer against the following month's bill for water under this Agreement, interest on that deposit at the average rate paid by Cayman National Bank during the previous year on fixed deposits of US$50,000.00 for periods of one year. If at the end of this Agreement any portion of the deposit remains unused, CWC must immediately refund it to the Customer without interest.
4. MINIMUM WATER QUANTITY
(1) The Customer must pay the Consumption Charge for at least 170,000 U.S. gallons of water per day whether or not it is used if CWC was able to supply that quantity on the particular day. If CWC could not have supplied that quantity of water on any day, the Customer need only pay for the quantity which could have been supplied.
(2) Notwithstanding sub-clause (1), if in any month after May 2002 the Customer does not use the minimum water quantity for which he has paid the Consumption Charge, CWC must give credit in succeeding months for the Consumption Charge paid in respect of the unused water against the Monthly Charge for water used in those months in excess of the minimum quantity BUT except in respect of credits earned after 31st May, 2026, which will expire on the expiration of this Agreement, unused credits earned in each 24 month period which commences 1st June during the Term (the first of which will commence 1st June, 2002) will expire at the end of each such 24 month period.
5. FORCE MAJEURE
Notwithstanding anything to the contrary in this Agreement, the Customer's rights against CWC and any corresponding obligations of the Customer will be suspended during any period in which CWC cannot carry out its obligations under this Agreement because of FORCE MAJEURE which includes, without limitation, hurricane, fire, flood or other acts of God, accident, explosion, war, strike, lockout, labour trouble, expropriation by Governmental authority, regulation, orders or requests of Governmental agencies or inability by the exercise of reasonable diligence to obtain supplies, materials or power.
6. ASSIGNMENT
(1) The Customer may not assign the benefit of this Agreement without first obtaining CWC's consent (such consent not to be unreasonably withheld or delayed) BUT:-
(a) may without that consent and subject to it remaining fully liable to CWC in all respects assign this Agreement to
o any wholly owned subsidiary company or any company which owns all of the Customer's shares; or
o any successor to the Customer by consolidation, merger or other corporate action; or
o the operator of the Hotel (currently the Hyatt Regency, Grand Cayman) from time to time; or
o any purchaser of the Customer or purchaser of the Hotel.
(b) in every case, each assignee of the Customer must assume and will be taken to have assumed the obligations under this Agreement and will be liable in addition to
the Customer, from the date of the assignment, to comply with all the Customer's obligations in it.
The Customer must give notice to CWC within one month after any transaction under this clause, supplying a copy of the instrument.
On CWC's giving consent to any assignment and the assignee agreeing to accept all of the Customer's obligations under this Agreement, the Customer will be released from all those obligations as of the date of CWC's consent, but without prejudice to CWC's right of action in respect of any antecedent breaches by the Customer.
(2) CWC agrees that if at any time CWC assigns or transfers the Concession or the Concession is granted to another company in which CWC has an interest, it will assign this Agreement to the assignee, transferee or grantee (as the case may be) of the Concession.
7. TERMINATION
(1) This Agreement may, without prejudice to any other rights which the terminating party may have against the other, be terminated by either party before the end of the Term if the other party:-
(a) does not comply with any of its representations, warranties or agreements set out in this Agreement and does not remedy the breach (if capable of remedy) within 30 days of service on it of notice so to do; or
(b) is prohibited from performing its obligations under this Agreement as a result of any applicable law or regulation.
(2) The Customer may terminate this Agreement at any time after the Lease has been terminated by the Customer pursuant to the termination provisions contained in the Lease.
8. NOTICES
(1) A notice or other communication under or in connection with this Agreement shall be in writing and shall be delivered personally or sent by telefax, as follows:-
(a) if to CWC, to:-
Trafalgar Place
West Bay Road, West Bay
P.O. Box 1114
George Town, Grand Cayman B.W.I.
Telefax: (345) 945-4191
with a copy to:-
Myers & Alberga
One Regis Place, 90 Fort Street
P.O. Box 472
George Town, Grand Cayman B.W.I.
Attn: Mr. Bryan L. Ashenheim
Telefax: (345) 949-8171
(b) if to the Customer, to:-
P.O. Box 1698
George Town, Grand Cayman B.W.I.
Telefax: (345) 949-8032
with a copy to:-
Ritch & Conolly
P.O. Box 1994
George Town, Grand Cayman B.W.I.
Attn: Mr. Angus Charlton
Telefax: (345) 949-8652 or 949-0673
or to another person, address or telefax number specified by a party by written notice to the others.
(2) In the absence of evidence of earlier receipt, a notice or other communication is deemed given:-
(a) if delivered personally, when left at the address referred to in Clause 8(1).
(b) if sent by telefax, on completion of its transmission or, if sent on a day which is not a working day at the recipient's address, at 9:00 a.m. (recipient's time) on the next succeeding working day at the recipient's address.
9. ENTIRE AGREEMENT, BINDING EFFECT AND MODIFICATION
This Agreement is binding on the parties and their respective successors and assigns and may be amended or modified only by a further written agreement signed by both parties. This Agreement sets out the entire agreement of the parties with respect to its subject matter and supersedes all previous agreements and understandings whether oral or written relating to it.
10. NO WAIVER OF TERMS
Unless there is a written agreement to the contrary, no neglect, omission or forbearance on CWC's part to take advantage of or enforce any right or remedy arising out of any breach or non-observance of any of the terms and conditions contained or implied in this Agreement will be deemed to be or operate as a general waiver of that term or condition or the right to enforce or take advantage of it in respect of any breach or non-observance of it either original or recurring.
11. DEFINITIONS
For the purposes of this Agreement:-
(1) "the Commencement Date" means the 1st day of [FILL IN NEXT MONTH
AFTER COMPLETION OF AGREEMENT].
(2) "the Concession" means the concession granted to CWC under the Law, as amended from time to time.
(3) "the Consumption Charge" means the charge in sub-clause 2(1)(a) subject to adjustment in accordance with sub-clause 2(2).
(4) "the Energy Adjustment Factor" means the Energy Adjustment Factor as defined in the Concession.
(5) "the Fire Pump" means the Customer's fire pump connected to the Water Tank.
(6) "the Hotel" means the hotel presently known as the Hyatt Regency, the Britannia golf course, the Hyatt beach club and Hemingway's restaurant and the Rum Point restaurant comprised in the Land Registers referred to in the Schedule.
(7) "the Irrigation Tank" means the Customer's irrigation tank marked as such on the Plan.
(8) "the Law" means the Water (Production and Supply) Law (1996 Revision) which expression includes any amendment, consolidation or re-enactment of it.
(9) "the Lease" means the lease under the Registered Land Law between the Customer as landlord and CWC as tenant of part of the land comprised in Registration Section West Bay Beach South Block 12D Parcel 79REM1.
(10) "the Licence Area" means the area for which CWC has been granted the Concession under the Law.
(11) "the Main Meter" means the water meter edged purple on the Plan metering the supply of water to that part of the Britannia Development known as "Britannia Villas".
(12) "the Monthly Charge" means the total of the Consumption Charge and the Energy Adjustment Factor in respect of each month.
(13) "the Plan" means the plan attached to this Agreement marked `Property Plan' and initialled by the parties for the purposes of identification.
(14) "the Property" means the land situated in Grand Cayman being that part of the land registered at Block 12D Parcel 79 REM 1 in the West Bay Beach South Registration Section of Grand Cayman, Cayman Islands as appears outlined in red on the Plan.
(15) "the Property Meter" means the water meter at the boundary of the Property to which the Water Pipe is connected, the location of which is marked in pink on the Plan.
(16) "the Required Monthly Gallonage" means 170,000 multiplied by the number of days in the relevant calendar month.
(17) "the Term" means the period of twenty-five (25) years or until the earlier expiry of the Concession or any renewal of it, commencing on the Commencement Date.
(18) "the Water Pipe" means the water pipe coloured brown on the Plan running from the Property Meter to the Main Meter.
(19) "the Water Tank" means the water tank owned by CWC located on the Property and marked as such on the Plan.
12. APPLICABLE LAW AND FORUM
This Agreement is governed by and must be construed in accordance with the laws of the Cayman Islands and both parties submit to the non-exclusive jurisdiction of the Cayman Islands Courts.
THE SCHEDULE
THE HOTEL
---------------------------------------- -------------------------------------- --------------------------------------
REGISTRATION SECTION BLOCK PARCEL
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12C 27
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 24 & 26
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 79REM1
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 89
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 88
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 94
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12C 154
---------------------------------------- -------------------------------------- --------------------------------------
Rum Point 33B 169 & 173
---------------------------------------- -------------------------------------- --------------------------------------
|
SIGNED for and on behalf of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER CO. LTD. by )
)
a Director, in the presence of:- )
) Per:_________________________
____________________________________ ) Director
Witness
SIGNED on behalf of CAYMAN ) CAYMAN HOTEL & GOLF INC.
HOTEL & GOLF INC. by )
, a Director, )
and by ) Per:____________________________
the presence of:- ) Director
)
____________________________________ ) Per:____________________________
Witness
|
THE FOURTH SCHEDULE
THE LEASE
THIS LEASE is made the ________ day of _______________________, 2001,
BETWEEN: CAYMAN HOTEL & GOLF INC., a Canada corporation, of P.O. Box 1698,
George Town, Grand Cayman B.W.I. ("the Landlord")
AND: CONSOLIDATED WATER CO. LTD., a Cayman Islands company, of P.O. Box
1114, George Town, Grand Cayman B.W.I. ("the Tenant")
|
AND WITNESSES as follows:-
1. In this Lease:-
(1) unless inconsistent with the context or subject matter or circumstances the following expressions have the following meanings:-
(a) "the Adjoining Property" means the lands comprised in West Bay Beach South Registration Section Block 12C Parcels 27 and 154, Block 12D Parcels 24, 26 and 79REM1 (other than the Land) and Block 12E Parcels 88, 89 and 94 and any other land which adjoins the Land in which the Landlord during the Term acquires an interest as proprietor or tenant.
(b) "the Building" means the building on the Land in which the Tenant's water plant and the laundry for the Hotel are situated shown edged blue on the Plan.
(c) "the Common Areas" means all those parts of the Landlord's adjoining land shown hatched in red on the Plan.
(d) "Conduits" includes wires, cisterns, chutes or pipes for the supply of water, telephone, electricity and gas and the disposal of domestic waste in, under or over the Land.
(e) "the Land" means the land and buildings comprised in this Lease and shown for the purposes of identification only edged red on the Plan but excluding the Landlord's Building.
(f) "the Landlord's Building" means the building marked "Golf Cart Maintenance" hatched green on the Plan, and any of its contents from time to time.
(g) "the Landlord" and "the Tenant" include their respective successors in title.
(h) "Notice" includes demand and vice versa.
(i) "the Plan" means the plan of the Land attached marked "Lease Plan".
(j) "the Plant" means the machinery, equipment and personal
property described and listed in the Schedule.
(k) "the Right of Way" means all that part of the Land shown
delineated in red on the Plan.
(l) "the RO Area" means the area of the Building edged in red and
shown on the Plan.
(m) "share(d)" means share(d) with the Landlord.
(n) "the Term" means twenty-five (25) years starting on 1st]. -
(o) "the Water Supply Agreement" means an agreement for the supply
of water to the Hotel dated the same day as this Lease and
made between the Landlord and the Tenant.
(2) (a) An obligation not to do something includes an obligation not
to permit or suffer others to do it.
(b) An obligation imposed is to be performed and a power or right
conferred is exercisable, in each case from time to time.
(c) Consent, approval and notice must be in writing.
(d) The headings are for convenience only and have no legal
effect.
(e) References to the Laundry include parts of it.
(f) References to the Land include parts of it.
(g) Words of one gender include words of any other gender.
(h) Singular words include the plural and vice versa and where
there are two or more persons included in the expression "the
Tenant", agreements made by the Tenant are joint and separate.
2. RENT
|
The Landlord LEASES the Land to the Tenant for the Term together with the rights set out in sub-clause 5(ii) but excepting and reserving to the Landlord the rights set out in sub-clause 5(i), subject to the right of re-entry in Clause 5(iv), at the rent of One United States Dollars (US$1.00) per year. The Tenant must pay the rent in United States Dollars to the Landlord in advance on or before the 1st day of.
3. TENANT'S AGREEMENTS
The Tenant agrees with the Landlord:-
(i) PAYMENTS
to pay:-
(a) the rent without any set off or counterclaim in accordance with Clause 2;
(b) all rates, taxes, assessments, duties, charges, impositions and outgoings that are or now or may at any time during the Term be charged, assessed or imposed upon the Land or upon the owner or occupier of it. The Tenant must also pay and indemnify the Landlord against the proportion reasonably attributable to the Land of all rates, taxes, assessments, duties, charges, impositions and outgoings that are now or may at any time during the term be charged, assessed or imposed on the Land and any other property including Adjoining Property or on their owners or occupiers;
(c) the stamp duty on this Lease and on one copy and its own legal fees; and
(d) to the Landlord on an indemnity basis all costs, fees, charges, disbursements and expenses including without prejudice to the generality of the above those payable to counsel, solicitors, surveyors and bailiffs incurred by the Landlord in relation to or incidental:-
(1) Every application made by the Tenant for a consent or licence required by the provisions of this Lease whether it is granted, refused or offered subject to any qualification or condition or the application is withdrawn
(2) The contemplation, preparation and service of any notices under this Lease or in contemplation of proceedings against the Tenant even if forfeiture is avoided otherwise than by relief granted by the court
(3) The recovery or attempted recovery of arrears of rent or other sums due under this Lease and any steps taken in contemplation of or in connection with the preparation and service of a schedule of dilapidation during or after the end of the Term.
REPAIR
(ii)(a) to keep every part of the Land (other than the Building) and the interior of the RO Area and all fixtures, fittings and equipment in it owned by the Landlord in good condition, clean, tidy and well-decorated, fair wear and tear and damage of which the Tenant, its licensees, invitees or visitors are not the cause excepted; and
(b) to permit the Landlord and its agents to paint or treat the outside of the Building and all doors leading into the RO Area and the outside of all windows and walls in the RO Area in such colour and manner as the Landlord decides.
NO ALTERATION
(iii) not to alter, cut or damage the RO Area or any other part of the Building without the Landlord's consent (which is deemed to be given to the extent that it is within the RO Area and is required for the operation of the Tenant's business situated therein) and not to make any exterior alteration in the appearance of the Building; and if it does so, to pay the Landlord on demand the entire cost which the Landlord incurs in repairing or replacing that damage.
NUISANCE
(iv) save as may be required for the normal operation of the Tenant's business, not to do on or in the Land or any part of the Building anything which in the Landlord's opinion:-
(a) is a nuisance to others;
(b) is dangerous; or
(c) might prejudice the Landlord's insurance cover or increase the premium
and in particular, but without prejudice to the generality of the foregoing or of the exception referred to, not to use on the Land any chemicals which either individually or in combination are noxious or explosive.
ENTRY
(v)(a) to permit the Landlord and its agents to enter at all reasonable times on reasonable notice except in an emergency (when no notice is required) to:-
(1) ascertain whether or not the covenants and conditions of this Lease have been observed and performed and to view the state of repair and condition of the Land;
(2) carry out repairs;
(3) do any work which the Tenant should have done under this Lease;
(4) comply with its other obligations under this Lease;
(5) give to the Tenant or leave on the Land a notice specifying the works required to remedy any breach of the Tenant's obligations in this Lease.
(b) to carry out the work specified in any such notice to repair as soon as possible.
(c) if within one month of service of a notice to repair the Tenant has not started to execute the work referred to in that notice or is not proceeding diligently with it or if the Tenant fails to finish the work within two months, to permit the Landlord to enter the premises to execute the outstanding works and pay to the Landlord the cost of so doing and all expenses incurred by the Landlord including legal costs and surveyors fees within seven days of demand.
ASSIGNMENT & SUB-LETTING
(vi)(a) not to assign, sublet or charge part only of the Land.
(b) save in respect of the floating Charge under the Tenant's existing Debenture granted to the Royal Bank of Canada or any Debenture replacing it, not to assign, sub-let or charge the whole of the Land without the consent of the Landlord whose consent may not be unreasonably withheld except that the Tenant may without that consent and subject to it remaining fully liable to the Landlord in all respects assign this Lease to
o any wholly owned subsidiary company or any company which owns all of the Tenant's shares, or
o any successor to the Tenant by consolidation, merger or other corporate action;
in every case, each assignee of the Tenant assuming and being taken to have assumed this Lease and being liable in addition to the Tenant, from the date of the assignment, to comply with all the Tenant's obligations in it but:-
(1) if any of the following circumstances apply either at the date when application for consent to assign is made to the Landlord or after that date but before the Landlord's consent is given the Landlord may withhold its consent and if, after the Landlord's consent has been given but before the assignment has taken place, any such circumstances apply the Landlord may revoke his consent. The circumstances are:-
(i) That any sum due from the Tenant under this Lease remains unpaid.
(ii) That in the Landlord's reasonable opinion the assignee is not a person who is likely to be able to comply with the Tenant's covenants of this Lease and to continue to be able to comply with them following the assignment.
(iii) That the assignee or any guarantor for the assignee is a corporation registered or otherwise resident in a jurisdiction in which the order of a court obtained in the Cayman Islands will not necessarily be enforced against the assignee or guarantor without any consideration of the merits of the case.
(2) The Landlord may impose any or all of the following conditions on giving any consent for an assignment by the Tenant and any such consent is to be treated as being subject to each of the following:-
(i) A condition if reasonably so required by the Landlord on an assignment to a limited company that the assignee must ensure that at least two directors of the company or some other guarantor or guarantors acceptable to the Landlord enter into direct covenants with the Landlord in such form as the Landlord shall specify.
(ii) A condition that if at any time before the
assignment the circumstances specified in clause
(c) above or any one of them apply the Landlord
may revoke the consent by written notice to the
Tenant.
(c) not to grant a permitted sublease with a fine or premium and to grant it on similar terms to this Lease containing provisions:-
(1) Prohibiting the sub-tenant from doing or allowing anything in relation to the Land inconsistent with or in breach of the provisions of this Lease.
(2) For re-entry by the sub-landlord on breach of any covenant by the sub-tenant imposing an absolute prohibition against all dealings with the premises other than an assignment.
(3) Requiring the assignee on any assignment of the sublease to enter into direct covenants with the Landlord in such form as the Landlord shall require.
(4) Prohibiting the sub-tenant from holding on trust for another or permitting another to share or occupy the whole or any part of the Land.
(5) Imposing in relation to any permitted assignment the same obligations for registration with the Landlord as are contained in this Lease in relation to dispositions by the Tenant.
(d) before any permitted subletting, to ensure that the sub-tenant enters into a direct covenant with the Landlord that during the period of the sublease the sub-tenant will observe and perform the Tenant's covenants contained in this Lease.
NOTICE OF ASSIGNMENT & SUB-LETTING
(vii) save in respect of the floating Charge under the Tenant's existing Debenture granted to the Royal Bank of Canada or any Debenture replacing it, to give notice to the Landlord within one month after any transaction under Clause 3(vi) or any charge over this Lease, supplying a copy of the instrument.
TELEPHONE AND ELECTRICITY AND OTHER SERVICES
(viii) to pay to the suppliers or reimburse the Landlord for its due proportion of (as the case may be) all charges for the installation of telephones (if required) and all bills for their use and pay to the suppliers or reimburse the Landlord for its due proportion of (as the case may be) all charges for the use of electricity and all other services on the Land.
COMPLY WITH LAWS
(ix) to comply as if it were the freeholder with the legitimate requirements of any authority relating to the Land; and to give the Landlord promptly a copy of any permission, notice or order relating to the Land which any authority serves on or issues to the Tenant; and, if the Landlord requires, to make either alone or jointly with the Landlord objections or representations against the notice or order as the Landlord directs.
LICENCES
(x) to obtain and whenever necessary renew all licences and make all returns which are necessary to enable it to operate its business and to pay all licence and other annual fees when they fall due.
INSURANCE
(xi) to pay for all insurance effected by the Tenant, and not to insure the RO Area against any risk which the Landlord insures against; and to insure against public liability in respect of injury or damage to persons when on the Land in an amount of not less than One Million United States Dollars (US$1,000,000.00) per accident.
GIVE UP POSSESSION
(xii) subject to Clause 5(ii)(b), to leave the Land when this Lease ends clean and secure in every respect and in repair in accordance with the Tenant's obligations in this Lease.
INDEMNITY
(xiii) to keep the Landlord, Hyatt Corporation and Hyatt Britannia Corporation, Ltd., as agent of Cayman Hotel & Golf Club Partnership, an Ontario Limited Partnership, d/b/a Hyatt Regency Grand Cayman, fully indemnified against all losses arising directly or indirectly out of any act, omission or negligence of the Tenant or any persons at the Land or the Common Areas expressly or impliedly with his authority or out of any breach or non-observance by the Tenant of the covenants, conditions or other provisions of this Lease or any other matters to which this Lease is subject.
INTEREST ON ARREARS
(xiv) to pay interest at the rate of 3% above the prime lending rate of Barclays Bank Plc from time to time on any sums due under this Lease that are not paid when due whether formally demanded or not. Nothing in this clause entitles the Tenant to withhold or delay any payment of sum due under this Lease or affects the rights of the Landlord in relation to any non-payment.
ENVIRONMENTAL PROTECTION
(xv)(a) not to cause or permit any noxious or offensive emissions from any apparatus on the Land.
(b) not to permit any oil or grease or any deleterious objectionable, noxious, dangerous, poisonous or explosive matter or substance to be discharged into any of the Conduits and take all measures to ensure that any effluent discharged into the Conduits does not harm the environment or corrode or otherwise harm the Conduits or cause any obstruction or deposit in them.
(c) to take all practical precautions to ensure that no noxious substances are spilled or deposited on the Land and that contamination does not occur.
(d) within 14 days of the spilling or deposit on the Land of any noxious substance in a quantity that may cause serious damage to or pollution of the environment or serious damage to property or serious harm to human health, to inform the Landlord of this and permit him to enter and inspect the Land.
(e) to indemnify the Landlord and keep him indemnified against any losses in respect of damage to or pollution of the environment or damage to property or harm to human health caused by the Tenant's operations on the Land whether in liquid or solid form or in the form of gas or vapour.
For the purposes of this sub-clause, the expression "Conduits" does not include conduits which are part of the Plant.
ROOF AND FLOOR LOADING
(xvi) not to bring into the RO Area any machinery or other articles that will or may strain or damage the Building or any part of it.
4. LANDLORD'S AGREEMENTS
The Landlord agrees with the Tenant:-
QUIET ENJOYMENT
(i) that if the Tenant complies with all its agreements and obligations it will, subject to the terms of this Lease and subject to the rights reserved to the Landlord under this Lease, occupy the Land during this Lease free from disturbance and without any interruption by the Landlord or any person rightfully claiming under or in trust for it.
INSURANCE
(ii) to insure the Building with a reputable insurance company.
REPAIR
(iii) to put and keep the Building in good repair (except in respect of repairs for which the Tenant is responsible).
INDEMNITY
(iv) to keep the Tenant, its servants, agents and visitors fully indemnified against all losses arising directly or indirectly out of any act, omission or negligence of the Landlord or any persons at the Land or the Common Areas expressly or impliedly with his authority or out of any breach or non-observance by the Landlord of the covenants, conditions or other provisions of this Lease or any other matters to which this Lease is subject.
ENVIRONMENTAL PROTECTION
(v)(a) not to cause or permit any noxious or offensive emissions from any apparatus in the Landlord's Building.
(b) not to permit any oil or grease or any deleterious objectionable, noxious, dangerous, poisonous or explosive matter or substance to be discharged into any of the Conduits
and take all measures to ensure that any effluent discharged into the Conduits does not harm the environment or corrode or otherwise harm the Plant or cause any obstruction or deposit in any of the Conduits forming part of it.
(c) to take all practical precautions to ensure that no noxious substances are spilled or deposited on the Land and that contamination does not occur.
(d) within 14 days of the spilling or deposit on the Land of any noxious substance in a quantity that may cause serious damage to or pollution of the environment or serious damage to property or serious harm to human health, to inform the Tenant of this.
(e) to indemnify the Tenant and keep it indemnified against any losses in respect of damage to or pollution of the environment or damage to property or harm to human health caused by the Landlord's operations in the Landlord's Building or the Adjoining Land whether in liquid or solid form or in the form of gas or vapour.
5. IT IS AGREED:-
LANDLORD'S RIGHTS
(i) The rights set out below are excepted and reserved from the Lease in favour of the Landlord and all others now entitled or who may become entitled:-
(a) The free and uninterrupted passage and running of all appropriate services and supplies from and to other parts of the Adjoining Property and the Landlord's Building in and through any Conduits other than those forming part of the Plant.
(b)(i) The right to construct and maintain at any time during the Term any pipes, sewers, drains, mains, ducts, conduits, gutters, watercourses, wires, cables, channels, flues and all other conducting media including any fixings and ancillary apparatus for the benefit of any part of the Adjoining Property and the Landlord's Building making good any damage caused by the exercise of the right.
(ii) The right to relocate any existing pipes, sewers, drains, mains, ducts, gutters, watercourses, channels, flues and other conducting media other than those forming part of the Plant in any manner whatsoever.
(c) The right for the Landlord and all persons expressly or by implication authorised by it to pass and repass to and from the Adjoining Property at all times for all purposes connected with the use and enjoyment of the Landlord's Building.
(d) The right to enter or in emergency to break into and enter the Land at any time during the Term at reasonable times and on reasonable notice except in emergency:-
(i) To inspect, clean, connect with, repair, remove, replace with others, alter or execute any works whatever to or in connection with the conduits, easements or services referred to in this Clause 5.
(ii) To carry out work or do anything whatsoever that the Landlord is obliged to do under this Lease.
(iii) To exercise any of the rights granted to the Landlord by this Lease.
(e) The right to erect scaffolding for the purposes of inspecting, repairing or cleaning the Building.
(f) The rights of light, air, support, shelter, protection and all other easements and rights at the date of this Lease belonging to or enjoyed by other parts of the Building or any other buildings and any Adjoining Property.
(g) For the right and liberty at any time after the date of this Lease, to alter, raise the height of or rebuild any building on any Adjoining Property.
(h) The right for the Landlord and the lessees and occupiers for the time being of the Landlord's Building at all times with or without motor vehicles to pass and repass along and over the Right of Way to and from the Adjoining Property during the Term but the Landlord will keep the Tenant indemnified from and against any act, loss, damage or liability suffered by the Tenant in the exercise of the rights in this sub-clause (h).
TENANT'S RIGHTS
(ii)(a) the Tenant and its servants, agents and visitors have the right to share the use of:-
o a right of access 12 feet wide with or without vehicles and equipment to well pump #1 shown on the Plan and including an area 10 feet in radius from the centre of the well head;
o the Common Areas to get to and from the Land with or without motor vehicles;
o the conduits in the Building which serve the RO Area;
(b) on or at any time before termination of this Lease for any reason (including under Clause 5(iv)), the Tenant may detach all items affixed to the Land and used for the purposes of its business and remove them without interference by the Landlord. In the case of termination by expiry of the Term, the Tenant must complete the detachment and removal by the end of the Term, but in case of termination for any other reason (including under Clause 5(iv)), the Tenant will have an additional thirty (30) days after termination during which it will be entitled to enter on the Land with or without vehicles and workmen to detach and remove those items. In either case, the Tenant must do as little damage to the Property as possible during such detachment and removal but otherwise has no obligation to repair or restore the Land or any building on it after completion of the detachment and removal.
TERMINATION ON DAMAGE
(iii)(a) If and whenever the Building or any part of it is damaged or destroyed and payment of the insurance money is not wholly or partly refused because of any act or default of the Tenant or anyone at the Building or on the Land expressly or by implication with his authority the Landlord must use his reasonable endeavours to obtain all
planning permissions or other permits and consents ("permissions") that are required under the planning laws or otherwise to enable him to rebuild and reinstate the Building.
(b) Subject to the provisions of clause (c) and, if any permissions are required, after they have been obtained the Landlord must as soon as reasonably practicable apply all money received in respect of the insurance in rebuilding or reinstating the Building.
(c) The Landlord need not rebuild or reinstate the Building if and for so long as rebuilding or reinstatement is prevented because:-
(i) the Landlord despite using his reasonable endeavours cannot obtain any necessary permission.
(ii) any permission is granted subject to a condition with which it is unreasonable to expect the Landlord to comply.
(iii) there is some defect or deficiency on the site on which the rebuilding or reinstatement is to take place that means it can only be undertaken at a cost that is unreasonable in all the circumstances.
(iv) it is unable to obtain access to the Land to rebuild or reinstate.
(v) of any other circumstances beyond the Landlord's control.
(d) If at the end of the period of one year commencing on the date of damage or destruction the Building is still not fit for the Tenant's occupation and use either the Landlord or the Tenant may by notice served at any time within three months of the end of that period terminate this Lease and upon service of such notice the Term is to cease absolutely but without prejudice to any rights or arrears that may have accrued to either party for breach of the terms of this Lease including this Clause 5(iii) and all money received in respect of the insurance effected by the Landlord is to belong to the Landlord absolutely.
TERMINATION
(iv) If and whenever during the Term:-
(a) the Tenant breaches any of the covenants or conditions of this Lease and any such breach is not remedied within thirty (30) days of receipt of notice of any such breach from the Landlord;
(b) the Tenant being an individual becomes bankrupt or being a company enters into liquidation either compulsorily or voluntarily (except for the purpose of reconstruction or amalgamation);
(c) the Tenant enters into any arrangement or composition for the benefit of its creditors;
(d) any distress or execution is levied on the Tenant's goods and is not remedied within thirty (30) days of the date of the levying of any such distress or execution;
(e) the Tenant is unable to pay its debts within the meaning of The Companies Law (2001 Second Revision) or any amendment, alteration or re-enactment of it; or
(f) the Water Supply Agreement is lawfully terminated by the Landlord
then the Landlord may at any time, and despite the waiver of any previous right of entry, enter the Land or any part of it in the name of the whole so ending this Lease, but without prejudice to any rights or remedies which may have accrued to the Landlord under it.
INSPECTION OF POLICIES
(v) the Landlord and the Tenant each has the right to inspect the insurance policies issued to the other pursuant to this Lease.
MAKE GOOD DAMAGES
(vi) the Landlord must make good any damage done when exercising its rights, except to the extent that the damage results from the Tenant's negligence or breach of obligation; but the Landlord will not be liable for any inconvenience or consequential loss resulting from the exercise of its rights.
ACCIDENT & INJURY
(vii) the Landlord will not be responsible to the Tenant for any accident or injury to any individual or for damage to or loss of any goods or other property sustained on the Land unless the accident or injury results from the negligence of the Landlord or its agents.
NEGLECT & FORBEARANCE
(viii) no neglect, forbearance or omission by the Landlord to take advantage of or enforce any right or privilege arising out of any breach by the Tenant (whether original or recurring) of any obligation (express or implied) will operate as or be deemed to be a general waiver of the its entitlement to take advantage of or enforce that right or privilege.
TENANT'S FAILURE TO INSURE
(ix) if the Tenant at any time does not insure in accordance with its obligations under this Lease, the Landlord may do so and the Tenant must pay on demand any money which the Landlord spends for that purpose.
REGISTERED LAND LAW
(x) the terms of this Lease, where inconsistent with the provisions of The Registered Land Law, will where permitted by law prevail; and the covenants implied by sections 52 and 53 of the Registered Land Law are excluded.
RIGHT TO SELL
(xi) if after the Tenant has vacated the Land at the end of this Lease
any of the Tenant's property remains in the RO Area and the Tenant
does not remove it within the thirty (30) days referred to in Clause
5(ii)(c), the Landlord may as the Tenant's agent sell that property
and after deducting from the proceeds of sale the costs and expenses
of removal storage and sale, the Landlord will hold the balance to
the Tenant's order; and the Tenant must indemnify the Landlord
against any liability which it incurs to any third party whose
property the Landlord sells in good faith and in the mistaken belief
(which will be assumed unless the contrary is proved) that the
property belonged to the Tenant.
NO REPRESENTATIONS
(xii) this Lease contains the entire agreement between the parties; each party acknowledges that it has not entered into this Lease in reliance wholly or partly on any statement or representation made by or on behalf of the other unless it is expressly set out in this Lease.
EXCEPTIONS
(xiii) despite anything to the contrary in this Lease, the Tenant has no responsibility to repair or maintain or in any way to take care of the Landlord's Building or the Common Areas.
NOTICES
(xiv) a notice or other document will be deemed to be duly served by a party either delivering or sending it by prepaid registered mail addressed to the other party at the address stated at the beginning of this Lease or to its registered office or last-known address. The notice or other document will be deemed to be received by the other party on delivery or seventy-two (72) hours after posting, as the case may be.
GOVERNING LAW
(xv) this Lease is governed by and must be construed in accordance with the laws of the Cayman Islands and the parties agree to submit to the jurisdiction of the courts of the Cayman Islands.
THE SCHEDULE
THE PLANT
1 SEAWATER REVERSE OSMOSIS PLANT SKID #4 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: No Name Plate
Model #: NA
Serial #: NA
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165M
Serial #: 12834
MOTOR
Brand Name: TOSHIBA (HOUSTON)
Model #: B-1254FLA4UD
Serial #: AB54699-1
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: PT8650 E1 (or) NP4840/A
Serial #: NA
MEMBRANE ELEMENT HOUSINGS
Description: 23 Housings and element-single
element per housing
Membranes Dupont
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
2 SEAWATER REVERSE OSMOSIS PLANT SKID #5 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: EXCEL Model #: 30EFCS3-3C150 Serial #: NA HIGH PRESSURE PUMP Brand Name: WHEATLEY Model #: HP165M Serial #: NA MOTOR Brand Name: SIEMENS Order #: 2-312-LR91633-2 Serial #: NA ENERGY RECOVERY TURBINE Brand Name: CALDER Model #: PT8650 E1 (or) NP4840/A Serial #: NA MEMBRANE ELEMENT HOUSINGS Description: 12 twin housings-PERMASEP Membranes Dupont DRAW BACK TANK WATER METER CONTROL PANEL |
3 SEAWATER REVERSE OSMOSIS PLANT SKID #6 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: OSMONICS
Model #: HX1620-3 OT-PVC-D
Serial #: 96-A49103-1
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165AM /29613-B
Serial #: 22747
MOTOR
Brand Name: SIEMENS
Order #: 2-5106-LR90303-1
Serial #: NA
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: RO-4034 1390 15
Serial #: NA
MEMBRANE ELEMENT HOUSINGS
Description: 20 B-10 PERMASEP Housings-one
membrane per housing
Membranes DUPONT
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
4 SEAWATER REVERSE OSMOSIS PLANT SKID #7 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: EXCEL Model #: 30EFCS3-3C150 Serial #: NA HIGH PRESSURE PUMP Brand Name: WHEATLEY Model #: HP165AM /29613-B Serial #: 23852 MOTOR Brand Name: TICO AMERICA Model #: NA Serial #: NA |
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: RO-290-40
Serial #: 021-97-A2316
MEMBRANE ELEMENT HOUSINGS
Description: 1) 4 Triples (3 membranes per
housing), no name brand on
housings
2) 2 Doubles(2 membranes per
housing), PERMASEP
Membranes DUPONT
DRAW BACK TANK
WATER METER
CONTROL PANEL
5 POTABLE WATER OZONATION SYSTEM COMPRISED OF:
AIR COMPRESSOR PACKAGE
Brand Name: INGERSOLL RAND
Model #: SS-EP15
Serial #: LX0230U98043
AIR COMPRESSOR MOTOR
Brand Name: US ELECTRIC MOTOR DIVISION OF
EMERSON ELECT CO.
Model #: T589A
ID #: B01A339RO65F
|
MOISTURE SEPARATOR
Brand Name: THERMAL TRANSFER PRODUCTS
Model #: S-100-AD
ID #: S-6019
REFRIGERATED DRYER
Brand Name: INGERSOLL RAND
Model #: DXR50
Serial #: 97LDXR5563
OXYGEN CONCENTRATOR
Brand Name: AIRSEP-NATL BD 72602K-
CERTIFIED BY BRUNNER ENG
& MFG INC.
Model #: AS-160/250/450
Serial #: NA
|
OXYGEN RECEIVER
Brand Name: NATL.BD NO.182314-CERTIFIED
BY STEEL FAB ABINGDON VA.
PART #: CRN C7228.1C
Serial #: NA
OZONE GENERATOR
Brand Name: OSMONICS
Model #: HC-5
Serial #: NA
OZONE INJECTOR MOTOR
Brand Name: BALDOR
Cat#: JWMDM3616T
Serial #: NA
CENTRIFUGAL PUMP(OZONE INJECTOR)
Brand Name: WAUKESHA CHERRY BURRELL
Model #: U2065
Serial #: 2200989
DISSOLVED OZONE MONITOR
Brand Name: OREC/OSMONICS
Model #: NA
Serial #: NA
AC DRIVE
Brand Name: MEGNETEK
Model #: GPD 506 N12-506V-B014
Serial #: 34469
|
6 HIGH SERVICE WATER DISTRIBUTION PUMP SYSTEM COMPRISED OF:
DWPO4
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587B THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Cat #: JMM2514T Spec #: 39K35W525 |
DWPO5
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587A THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Cat #: JMM2514T Spec #: 39K35W528 DWPO7 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587C THREE PHASE INDUCTION MOTOR Brand Name: US ELECTRICAL MOTORS Model #: E685A Serial #: BO1A287RR087F |
7 DOMESTIC WATER TRANSFER PUMP SYSTEM COMPRISED OF:
CWP01
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: 820A Serial #: TI57490 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 CWP02 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C825AM Serial #: 171953 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 |
8 TRANSFER PUMP TO OZONATION SYSTEM COMPRISED OF:
CENTRIFUGAL PUMP
Brand Name: AMPCO Model #: 3 x 2 1/2 ZC2 Serial #: CC16867-1-1 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: NA Spec #: 07H167W06 |
9 IRRIGATION TRANSFER PUMP SYSTEM COMPRISED OF:
IRP01
CENTRIFUGAL PUMP
Brand Name: PAC_SEAL
Model #: 4P940
Motor Reference #: G40444/F96Z120R169F
THREE PHASE INDUCTION MOTOR
Brand Name: DAYTON
Model #: 9N114
Motor Reference #: G40444/F96Z120R169F
CWP02
TRANSFER PUMP TO TANK
Brand Name: PEERLESS PUMP COMPANY
Model #: C825AM
Serial #: 171953
THREE PHASE INDUCTION MOTOR
Brand Name: BALDOR
Model #: JMM3314T
Spec #: 37F196X48
10 POTABLE WATER DEGASSIFIER COMPRISED OF:
Brand Name: DELEOCH
Model #: NA
Serial #: NA
BLOWER MOTOR #1
SINGLE PHASE INDUCTION MOTOR
Brand Name: BALDOR
Model #: VL313
Serial #: NA
|
BLOWER MOTOR #2
THREE PHASE INDUCTION MOTOR
Brand Name: GE MOTORS & INDUSTRIAL SYSTEMS Model #: 5K49ZN2189 Serial #: NMLI42677 |
11 SEAWATER WELLS AND SUBMERSIBLE PUMPS COMPRISED OF:
WP #2
FEEDWATER WELL, CASING AND WELL
HEAD APPURTENANCES SUBMERSIBLE PUMP
Brand Name: JACUZZI Model #: S6175-2 Serial #: 92611702 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: 99g19-14-0014 WP #4 FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES SUBMERSIBLE PUMP Brand Name: GRUNFOS Model #: 300S75-2 Serial #: 14B70002 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
WP #5
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: GRUNFOS Model #: 300S75-2 Serial #: NA THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
WP #6
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: GRUNFOS Model #: 300S75-2 Serial #: 14B70002 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
12 EMERGENCY DIESEL POWERED GENERATOR COMPRISED OF:
EMERGENCY GENERATOR ENGINE
Brand Name: KOMATSU LTD Model #: 6491 Serial #: 14448 EMERGENCY GENERATOR Brand Name: ONAN 60 Model #: 60 ODVB-15R/30083B Serial #: B850750776 FUEL INJECTION PUMP Brand Name: DIESEL KIKI ASSY #: 6207-71-1410 Serial #: 450K327320 MAGNETIC DRIVER Brand Name: NIKKO ELECT IND CO LTD Model #: 600-815-5560 Serial #: 0-47100-3720 |
13 BOLTED STEEL 816,000 US GALLON POTABLE WATER TANK
Brand Name: Florida Aquastore, Inc. Model #: NA Serial #: NA |
14 ALL INTERCONNECTING PIPING, CONDUITS AND APPURTENANCES, ABOVE THE GROUND WHICH CONNECT ITEMS 1 THROUGH 13 TO EACH OTHER, AND TO THE WATER PIPE, AND WHICH DIRECTLY FACILITATE THE OPERATION AND MAINTENANCE OF ITEMS 1 THROUGH 13.
15 ALL ELECTRICAL EQUIPMENT AND COMPONENTS WHICH CONNECT ITEMS 1 THROUGH 13 TO EACH OTHER AND TO THE MAIN ELECTRICAL SERVICE IN THE RO BUILDING.
16 ALL CONTROLS AND INSTRUMENTATION ATTACHED TO ITEMS 1 THROUGH 13.
17 ALL TOOLS SPECIFIC TO THE MAINTENANCE OR OPERATION OF THE PLANT.
18 ALL LABORATORY AND TESTING EQUIPMENT USED TO MONITOR WATER PRODUCED BY THE PLANT.
19 ALL DRAWINGS, SCHEDULES, OPERATION AND MAINTENANCE MANUALS FOR ITEMS 1 THROUGH 18.
20 ALL OFFICE EQUIPMENT CURRENTLY LOCATED WITHIN THE RO BUILDING AND USED BY THE STAFF OF THE PLANT.
21 ALL SPARE PARTS FOR ITEMS 1 THROUGH 18, STORED MATERIALS SUCH AS CHEMICALS AND LUBRICANTS HELD IN STOCK AT THE TIME OF CLOSING.
THE COMMON SEAL of CAYMAN ) CAYMAN HOTEL & GOLF INC.
HOTEL & GOLF INC. was hereunto )
affixed by )
Director and by )
Director/Secretary )
by authority of the Board )
of Directors in ) Per:___________________________
the presence of:- ) Director
)
)
____________________________ ) Per:___________________________
Notary Public Director/Secretary
THE COMMON SEAL of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER CO. LTD. )
was hereunto affixed by )
Director, and by ) Per:___________________________
Director/Secretary ) Director
by authority of the Board of )
Directors in )
the presence of:- )
)
_____________________________ ) Per:___________________________
Notary Public Director/Secretary
|
THE FIFTH SCHEDULE
BRITANNIA RESORT STRATA CORPORATIONS
AN AGREEMENT made the _____ day of _______________, 200__,
BETWEEN: CONSOLIDATED WATER CO. LTD., a Cayman company ("CWC")
AND: ________________________________________,
("the Consumer")
|
THE PARTIES AGREE that:-
1. CWC will during the subsistence of its licence so to do from the Government of the Cayman Islands or an extension or renewal of it ("the Licence") supply potable water by pipe to the Consumer's property described in the First Schedule ("the Property") on the terms and conditions specified in this Agreement and in the Second Schedule.
2. For the purpose of this Agreement, the Consumer is deemed to be the owner or his agent of the Property. The Consumer must settle bills of account for the supply of water within the prescribed periods.
CWC must bill the Consumer monthly for water supplied. The Consumer must pay invoices in full on the later of:-
a. ten (10) days after the invoice date, or
b. the 21st day of the month following the month in respect of which the invoice relates.
The Consumer must pay interest on overdue amounts at the rate of 1 1/2% per month calculated from the due date to the date of payment, with monthly rests.
If the Consumer fails to pay any invoice in full within the greater of ten
(10) days and such other period as may be required by the Licence, CWC may
disconnect the Property from its water supply. On payment in full of the
invoice and any interest due together with the reconnection fee set out in
the Second Schedule, CWC will at the Consumer's request reconnect the
water supply to the Property.
3. CWC must supply at least one main meter to the Property in accordance with Clause 7. The Consumer may supply and install individual meters within the Property. CWC will bill the Consumer based on the readings of the main meter or meters and it will be the Consumer's responsibility to deal with any tenants. The Consumer's attention is drawn to the provisions of the Water (Production and Supply) Law set out in the Second Schedule.
4. CWC need not supply water if there is any deficiency in CWC's source of supply of water due to any contingency affecting its machinery and works or due to any accidental or other interruption of its water supply.
5. CWC will have such rights of access to the Property as are necessary for constructing, maintaining and operating its water supply BUT it must repair any damage done by its servants or agents in the exercise of those rights of access.
6. The Consumer must pay CWC, at its offices at Trafalgar Place, West Bay Road, P.O. Box 1114 GT, Grand Cayman, or any other place provided by CWC for the purpose from time to time, for water supplied at the rates specified in the Second Schedule and in this Agreement adjusted annually as provided in this Agreement. The Consumer is also subject to the minimum monthly charges specified in the Second Schedule and must pay minimum charges even if it makes no use at all of CWC's water supply or if it uses less than the specified minimum quantity per month. For the purposes of this Agreement and until individual meters for each property are installed, the water supplied to the Consumer is deemed to be the amount of water shown by the meter to the Property less the amount of water shown by the meter to the adjoining property to the East (if any) within the Britannia Resort.
7. CWC must furnish, fix and maintain in good repair a meter or meters for
determining the quantity of water used by the Consumer. The Consumer must
pay the rental specified in the Second Schedule for the use of the meter
or meters, which will remain the property of CWC. If any meter is damaged
by the Consumer, its servants, agents or invitees, CWC will repair or
replace the meter but at the Consumer's expense. The Consumer is liable
for the cost of all water computed in accordance with Clause 6 unless the
meter to the Property or those to the adjoining property immediately to
the East (if any) within the Britannia Resort are found to be defective
after a complaint by the Consumer to CWC. CWC will charge the Consumer for
water used based on the average water consumption of the previous twelve
(12) months when the defective meter was working, pro rata for the period
when the meter was not recording correctly or not recording at all.
8. (1) CWC must lay the necessary water lines to the boundary of the Property at a location to be determined by CWC. The Consumer must pay the cost of connecting the Property to CWC's line. The connections must be made by or under the supervision of an employee of CWC.
(2) To the extent necessary to enable CWC to provide water to properties to the East of the Property, the Consumer grants the right in perpetuity to CWC to use such of the pipes, valves, meters and other attached equipment and ancillary pipework on or under the Property as are necessary for this purpose ("the Pipework") and to enter on the Property at any time with or without vehicles and equipment for the purpose of maintaining, repairing and, if necessary, replacing any part of the Pipework.
(3) The Consumer must not interfere with the Pipework, CWC water mains, control valves or meters and must not connect any water pump or other apparatus direct to the Pipework or any water line provided by CWC at any time.
9. All pipes for water supply on the Property must be fitted at the meter with screw-down shut-off valves or equivalent at the Consumer's expense.
10. CWC will deliver water to the Property at the pressure, from time to time, in its water system. The Consumer must bear the cost of constructing and operating storage and pressure boosting facilities on the Property, if required.
11. The quality of water that CWC supplies must be within its present standards required by the Licence which are a maximum of 500 mg/L total dissolved solids. If at any time Government requires CWC to supply water of a higher quality, then CWC will make an appropriate price adjustment to the cost of water supplied, which it will agree with Government before supplying higher quality water.
12. On January 1st in each year, CWC will adjust the water charges by the formula based on the change in the previous year of the Cayman Islands Government Consumer Price Index and the United States Producer Price Index for Industrial Commodities as at each September 30th, as set out in the Licence. CWC may from time to time without notice to the Consumer increase its charges to the extent permitted by the Licence.
13. The water supply service must be used only by the Consumer or his tenants or guests and must not be re-sold or otherwise supplied to third parties, either within or outside the boundaries of the Property.
14. Notwithstanding that CWC has connected any water supply to a hydrant or sprinkler system on the Property, it is expressly agreed that CWC will be under no obligation to provide water for fire fighting purposes, at any time whatever or under any circumstances, and will only supply water for those purposes if it is able to do so, and will not be liable for any damage to the Property whatever caused by fire or any related cause.
15. The Consumer may terminate this Agreement at any time by written notice to CWC which will be effective only when all money owed to CWC in respect of CWC's supply of water to the Property has been paid in full. In particular, the Consumer remains responsible under this Agreement unless and until he terminates it even after disposal of the Property.
16. CWC may amend the terms of this Agreement at any time on written notice to the Consumer posted to him at his address on CWC's records, but only if and to the extent that the new terms do not conflict with the requirements of the Licence.
FIRST SCHEDULE
THE PROPERTY
SECOND SCHEDULE
SEVEN MILE BEACH SERVICE
Minimum water pressure 30 lbs. per square inch.
WATER TARIFF BASE RATES
Rates apply to amounts for the billing period and are exclusive of the Energy Adjustment Factor provided for by the Licence.
(1) Residential consumers using less than 3,000
U.S. gallons per month CI$17.45 per 1,000 U.S. gallons
(2) Residential consumers using more than 3,000
U.S. gallons per month CI$18.76 per 1,000 U.S. gallons
(3) Commercial/Industrial consumers CI$18.76 per 1,000 U.S. gallons
(4) Public Authority CI$17.45 per 1,000 U.S. gallons
Minimum Monthly Charge is for 1,000 U.S. gallons.
|
METER CHARGES
SIZE MONTHLY RENTAL CONNECTION FEE RECONNECTION FEE** ---- -------------- -------------- ---------------- 20 mm (3/4") CI$ 3.50 CI$ 80.00 CI$ 50.00 25 mm (1") CI$ 5.00 CI$120.00 CI$ 75.00 38 mm (1 1/2") CI$ 7.50 CI$175.00 CI$110.00 50 mm (2") CI$10.00 CI$240.00 CI$150.00 75 mm (3") CI$15.00 CI$360.00 CI$225.00 100 mm (4") CI$25.00 CI$560.00 CI$300.00 150 mm (6") CI$40.00 CI$800.00 CI$350.00 |
** This charge relates to work completed by CWC employees outside the boundaries of the Property. Any work carried out by CWC employees within the boundaries at the Consumer's request will be charged to the Consumer at cost plus thirty percent (30%). Such work will be undertaken entirely at CWC's discretion and must be previously requested in writing.
Under The Water (Production and Supply) Law, 1979 (Law 15 of 1979), it is illegal except in certain specified limited circumstances for anyone other than CWC to supply water for reward within the area licensed to CWC. Further, whoever unlawfully interferes with CWC's water system or obstructs the execution of any works by an employee of CWC in his duties as such is guilty of an offence, and may be liable to be fined or imprisoned in accordance with provisions of the Law.
SIGNED by THE CONSUMER in )
the presence of:- )
)
) --------------------------------
)
------------------------------ )
Witness
SIGNED on behalf of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER )
CO. LTD. in the presence of:- )
)
) Per:
------------------------------ ) -------------------------
Witness
|
THE SIXTH SCHEDULE
BRITANNIA RESORT COMMON AREAS
AN AGREEMENT made the _____ day of _______________, 200__,
BETWEEN: CONSOLIDATED WATER CO. LTD., a Cayman company ("CWC")
AND: BRITANNIA ESTATES HOME OWNERS ASSOCIATION LTD.,
a Cayman Company ("the Consumer")
|
THE PARTIES AGREE that:-
1. CWC will during the subsistence of its licence so to do from the Government of the Cayman Islands or an extension or renewal of it ("the Licence") supply potable water by pipe to the Consumer's property described in the First Schedule ("the Property") on the terms and conditions specified in this Agreement and in the Second Schedule.
2. For the purpose of this Agreement, the Consumer is deemed to be the owner or his agent of the Property. The Consumer must settle bills of account for the supply of water within the prescribed periods.
CWC must bill the Consumer monthly for water supplied. The Consumer must pay invoices in full on the later of:-
a. ten (10) days after the invoice date, or
b. the 21st day of the month following the month in respect of which the invoice relates.
The Consumer must pay interest on overdue amounts at the rate of 1 1/2% per month calculated from the due date to the date of payment, with monthly rests.
If the Consumer fails to pay any invoice in full within the greater of ten (10) days and such other period as may be required by the Licence, CWC may disconnect the Property from its water supply. On payment in full of the invoice and any interest due together with the reconnection fee set out in the Second Schedule, CWC will at the Consumer's request reconnect the water supply to the Property.
3. CWC must supply at least one main meter to the Property in accordance with Clause 7. The Consumer may supply and install individual meters within the Property. CWC will bill the Consumer based on the readings of the main meter or meters and it will be the Consumer's responsibility to deal with any tenants. The Consumer's attention is drawn to the provisions of the Water (Production and Supply) Law set out in the Second Schedule.
4. CWC need not supply water if there is any deficiency in CWC's source of supply of water due to any contingency affecting its machinery and works or due to any accidental or other interruption of its water supply.
5. CWC will have such rights of access to the Property as are necessary for constructing, maintaining and operating its water supply BUT it must repair any damage done by its servants or agents in the exercise of those rights of access.
6. The Consumer must pay CWC, at its offices at Trafalgar Place, West Bay Road, P.O. Box 1114 GT, Grand Cayman, or any other place provided by CWC for the purpose from time to time, for water supplied at the rates specified in the Second Schedule and in this Agreement adjusted annually as provided in this Agreement. The Consumer is also subject to the minimum monthly charges specified in the Second Schedule and must pay minimum charges even if it makes no use at all of CWC's water supply or if it uses less than the specified minimum quantity per month.
7. CWC must furnish, fix and maintain in good repair a meter or meters for determining the quantity of water used by the Consumer. The Consumer must pay the rental specified in the Second Schedule for the use of the meter or meters, which will remain the property of CWC. If any meter is damaged by the Consumer, its servants, agents or invitees, CWC will repair or replace the meter but at the Consumer's expense. The Consumer is liable for the cost of all water passing through the meter unless the meter is found to be defective after a complaint by the Consumer to CWC. CWC will charge the Consumer for water used based on the average water consumption of the previous twelve (12) months when the defective meter was working, pro rata for the period when the meter was not recording correctly or not recording at all.
8. (1) CWC must lay the necessary water lines to the boundary of the Property at a location to be determined by CWC. The Consumer must pay the cost of connecting the Property to CWC's line. The connections must be made by or under the supervision of an employee of CWC.
(2) To the extent necessary to enable CWC to provide water to properties to the East of the Property, the Consumer grants the right in perpetuity to CWC to use such of the pipes,
valves, meters and other attached equipment and ancillary pipework on or under the Property as are necessary for this purpose ("the Pipework") and to enter on the Property at any time with or without vehicles and equipment for the purpose of maintaining, repairing and, if necessary, replacing any part of the Pipework.
(3) The Consumer must not interfere with the Pipework, CWC water mains, control valves or meters and must not connect any water pump or other apparatus direct to the Pipework or any water line provided by CWC at any time.
9. All pipes for water supply on the Property must be fitted at the meter with screw-down shut-off valves or equivalent at the Consumer's expense.
10. CWC will deliver water to the Property at the pressure, from time to time, in its water system. The Consumer must bear the cost of constructing and operating storage and pressure boosting facilities on the Property, if required.
11. The quality of water that CWC supplies must be within its present standards required by the Licence which are a maximum of 500 mg/L total dissolved solids. If at any time Government requires CWC to supply water of a higher quality, then CWC will make an appropriate price adjustment to the cost of water supplied, which it will agree with Government before supplying higher quality water.
12. On January 1st in each year, CWC will adjust the water charges by the formula based on the change in the previous year of the Cayman Islands Government Consumer Price Index and the United States Producer Price Index for Industrial Commodities as at each September 30th, as set out in the Licence. CWC may from time to time without notice to the Consumer increase its charges to the extent permitted by the Licence.
13. The water supply service must be used only by the Consumer or his tenants or guests and must not be re-sold or otherwise supplied to third parties, either within or outside the boundaries of the Property.
14. Notwithstanding that CWC has connected any water supply to a hydrant or sprinkler system on the Property, it is expressly agreed that CWC will be under no obligation to provide water for fire fighting purposes, at any time whatever or under any circumstances, and will only supply water for those purposes if it is able to do so, and will not be liable for any damage to the Property whatever caused by fire or any related cause.
15. The Consumer may terminate this Agreement at any time by written notice to CWC which will be effective only when all money owed to CWC in respect of CWC's supply of water to the Property has been paid in full. In particular, the Consumer remains responsible under this Agreement unless and until he terminates it even after disposal of the Property.
16. CWC may amend the terms of this Agreement at any time on written notice to the Consumer posted to him at his address on CWC's records, but only if and to the extent that the new terms do not conflict with the requirements of the Licence.
FIRST SCHEDULE
THE PROPERTY
Those Common Areas of the Britannia Resort registered at Registration Section West Bay Beach South Block 12D Parcels 65, 74 and 77.
SECOND SCHEDULE
SEVEN MILE BEACH SERVICE
Minimum water pressure 30 lbs. per square inch.
WATER TARIFF BASE RATES
Rates apply to amounts for the billing period and are exclusive of the Energy Adjustment Factor provided for by the Licence.
(1) Residential consumers using less than 3,000
U.S. gallons per month CI$17.45 per 1,000 U.S. gallons
(2) Residential consumers using more than 3,000
U.S. gallons per month CI$18.76 per 1,000 U.S. gallons
(3) Commercial/Industrial consumers CI$18.76 per 1,000 U.S. gallons
(4) Public Authority CI$17.45 per 1,000 U.S. gallons
Minimum Monthly Charge is for 1,000 U.S. gallons.
|
METER CHARGES
SIZE MONTHLY RENTAL CONNECTION FEE RECONNECTION FEE** ---- -------------- -------------- ------------------ 20 mm (3/4") CI$ 3.50 CI$ 80.00 CI$ 50.00 25 mm (1") CI$ 5.00 CI$120.00 CI$ 75.00 38 mm (1 1/2") CI$ 7.50 CI$175.00 CI$110.00 50 mm (2") CI$10.00 CI$240.00 CI$150.00 75 mm (3") CI$15.00 CI$360.00 CI$225.00 100 mm (4") CI$25.00 CI$560.00 CI$300.00 150 mm (6") CI$40.00 CI$800.00 CI$350.00 |
** This charge relates to work completed by CWC employees outside the boundaries of the Property. Any work carried out by CWC employees within the boundaries at the Consumer's request will be charged to the Consumer at cost plus thirty percent (30%). Such work will be undertaken entirely at CWC's discretion and must be previously requested in writing.
Under The Water (Production and Supply) Law, 1979 (Law 15 of 1979), it is illegal except in certain specified limited circumstances for anyone other than CWC to supply water for reward within the area licensed to CWC. Further, whoever unlawfully interferes with CWC's water system or obstructs the execution of any works by an employee of CWC in his duties as such is guilty of an offence, and may be liable to be fined or imprisoned in accordance with provisions of the Law.
SIGNED by THE CONSUMER in ) BRITANNIA ESTATES HOME
the presence of:- ) OWNERS ASSOCIATION LTD.
)
)
) Per: _________________________
------------------------------ )
Witness
SIGNED on behalf of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER )
CO. LTD. in the presence of:- )
)
) Per: _________________________
------------------------------ )
Witness
|
THE SEVENTH SCHEDULE
AN AGREEMENT made the _____ day of _______________, 200__,
BETWEEN: CONSOLIDATED WATER CO. LTD., a Cayman company ("CWC")
AND: ______________________________________,
("the Consumer")
|
THE PARTIES AGREE that:-
1. CWC will during the subsistence of its licence so to do from the Government of the Cayman Islands or an extension or renewal of it ("the Licence") supply potable water by pipe to the Consumer's property described in the First Schedule ("the Property") on the terms and conditions specified in this Agreement and in the Second Schedule.
2. For the purpose of this Agreement, the Consumer is deemed to be the owner or his agent of the Property. The Consumer must settle bills of account for the supply of water within the prescribed periods.
CWC must bill the Consumer monthly for water supplied. The Consumer must pay invoices in full on the later of:-
a. ten (10) days after the invoice date, or
b. the 21st day of the month following the month in respect of which the invoice relates.
The Consumer must pay interest on overdue amounts at the rate of 1 1/2% per month calculated from the due date to the date of payment, with monthly rests.
If the Consumer fails to pay any invoice in full within the greater of ten
(10) days and such other period as may be required by the Licence, CWC may
disconnect the Property from its water supply. On payment in full of the
invoice and any interest due together with the reconnection fee set out in
the Second Schedule, CWC will at the Consumer's request reconnect the
water supply to the Property.
3. CWC must supply at least one main meter to the Property in accordance with Clause 7. The Consumer may supply and install individual meters within the Property. CWC will bill the Consumer based on the readings of the main meter or meters and it will be the Consumer's responsibility to deal with any tenants. The Consumer's attention is drawn to the provisions of the Water (Production and Supply) Law set out in the Second Schedule.
4. CWC need not supply water if there is any deficiency in CWC's source of supply of water due to any contingency affecting its machinery and works or due to any accidental or other interruption of its water supply.
5. CWC will have such rights of access to the Property as are necessary for constructing, maintaining and operating its water supply BUT it must repair any damage done by its servants or agents in the exercise of those rights of access.
6. The Consumer must pay CWC, at its offices at Trafalgar Place, West Bay Road, P.O. Box 1114 GT, Grand Cayman, or any other place provided by CWC for the purpose from time to time, for water supplied at the rates specified in the Second Schedule and in this Agreement adjusted annually as provided in this Agreement. The Consumer is also subject to the minimum monthly charges specified in the Second Schedule and must pay minimum charges even if it makes no use at all of CWC's water supply or if it uses less than the specified minimum quantity per month.
7. CWC must furnish, fix and maintain in good repair a meter or meters for determining the quantity of water used by the Consumer. The Consumer must pay the rental specified in the Second Schedule for the use of the meter or meters, which will remain the property of CWC. If any meter is damaged by the Consumer, its servants, agents or invitees, CWC will repair or replace the meter but at the Consumer's expense. The Consumer is liable for the cost of all water passing through the meter unless the meter is found to be defective after a complaint by the Consumer to CWC. CWC will charge the Consumer for water used based on the average water consumption of the previous twelve (12) months when the defective meter was working, pro rata for the period when the meter was not recording correctly or not recording at all.
8. CWC must lay the necessary water lines to the boundary of the Property at a location to be determined by CWC. The Consumer must pay the cost of connecting the Property to CWC's line. The connections must be made by or under the supervision of an employee of CWC. The Consumer must not interfere with the CWC water mains, control valves or meters and must
not connect any water pump or other apparatus direct to any water line provided by CWC at any time.
9. All pipes for water supply on the Property must be fitted at the meter with screw-down shut-off valves or equivalent at the Consumer's expense.
10. CWC will deliver water to the Property at the pressure, from time to time, in its water system. The Consumer must bear the cost of constructing and operating storage and pressure boosting facilities on the Property, if required.
11. The quality of water that CWC supplies must be within its present standards required by the Licence which are a maximum of 500 mg/L total dissolved solids. If at any time Government requires CWC to supply water of a higher quality, then CWC will make an appropriate price adjustment to the cost of water supplied, which it will agree with Government before supplying higher quality water.
12. On January 1st in each year, CWC will adjust the water charges by the formula based on the change in the previous year of the Cayman Islands Government Consumer Price Index and the United States Producer Price Index for Industrial Commodities as at each September 30th, as set out in the Licence. CWC may from time to time without notice to the Consumer increase its charges to the extent permitted by the Licence.
13. The water supply service must be used only by the Consumer or his tenants or guests and must not be re-sold or otherwise supplied to third parties, either within or outside the boundaries of the Property.
14. Notwithstanding that CWC has connected any water supply to a hydrant or sprinkler system on the Property, it is expressly agreed that CWC will be under no obligation to provide water for fire fighting purposes, at any time whatever or under any circumstances, and will only supply water for those purposes if it is able to do so, and will not be liable for any damage to the Property whatever caused by fire or any related cause.
15. The Consumer may terminate this Agreement at any time by written notice to CWC which will be effective only when all money owed to CWC in respect of CWC's supply of water to the Property has been paid in full. In particular, the Consumer remains responsible under this Agreement unless and until he terminates it even after disposal of the Property.
16. CWC may amend the terms of this Agreement at any time on written notice to the Consumer posted to him at his address on CWC's records, but only if and to the extent that the new terms do not conflict with the requirements of the Licence.
FIRST SCHEDULE
THE PROPERTY
[INSERT DESCRIPTION OF PROPERTY INCLUDING REGISTRATION SECTION,
BLOCK AND PARCEL NUMBER]
SECOND SCHEDULE
SEVEN MILE BEACH SERVICE
Minimum water pressure 30 lbs. per square inch.
WATER TARIFF BASE RATES
Rates apply to amounts for the billing period and are exclusive of the Energy Adjustment Factor provided for by the Licence.
(1) Residential consumers using less than 3,000
U.S. gallons per month CI$17.45 per 1,000 U.S. gallons
(2) Residential consumers using more than 3,000
U.S. gallons per month CI$18.76 per 1,000 U.S. gallons
(3) Commercial/Industrial consumers CI$18.76 per 1,000 U.S. gallons
(4) Public Authority CI$17.45 per 1,000 U.S. gallons
Minimum Monthly Charge is for 1,000 U.S. gallons.
|
METER CHARGES
SIZE MONTHLY RENTAL CONNECTION FEE RECONNECTION FEE** ---- -------------- -------------- ---------------- 20 mm (3/4") CI$ 3.50 CI$ 80.00 CI$ 50.00 25 mm (1") CI$ 5.00 CI$120.00 CI$ 75.00 38 mm (1 1/2") CI$ 7.50 CI$175.00 CI$110.00 50 mm (2") CI$10.00 CI$240.00 CI$150.00 75 mm (3") CI$15.00 CI$360.00 CI$225.00 100 mm (4") CI$25.00 CI$560.00 CI$300.00 150 mm (6") CI$40.00 CI$800.00 CI$350.00 |
** This charge relates to work completed by CWC employees outside the boundaries of the Property. Any work carried out by CWC employees within the boundaries at the Consumer's request will be charged to the Consumer at cost plus thirty percent (30%). Such work will be undertaken entirely at CWC's discretion and must be previously requested in writing.
Under The Water (Production and Supply) Law, 1979 (Law 15 of 1979), it is illegal except in certain specified limited circumstances for anyone other than CWC to supply water for reward within the area licensed to CWC. Further, whoever unlawfully interferes with CWC's water system or obstructs the execution of any works by an employee of CWC in his duties as such is guilty of an offence, and may be liable to be fined or imprisoned in accordance with provisions of the Law.
SIGNED by THE CONSUMER in )
the presence of:- )
)
)
) Per: _________________________
------------------------------ )
Witness
SIGNED on behalf of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER )
CO. LTD. in the presence of:- )
)
) Per: _________________________
------------------------------ )
Witness
----------------------------------------
|
EXECUTED by the parties on the Date of this Agreement.
SIGNED for and on behalf of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER CO. LTD. by )
)
Director, in the presence of:- )
) Per: /s/ JEFFREY M. PARKER
) -----------------------
/s/ PETER D. RIBBINS ) Director
-------------------------------------
Witness
SIGNED for and on behalf of ) ELLESMERE BRITANNIA LTD.
ELLESMERE BRITANNIA LTD. by )
S. Prasad Director, in )
the presence of:- )
) Per: /s/ SURESH PRASAD
) -----------------------
/s/ ILLEGIBLE ) Director
-------------------------------------
Witness
SIGNED for and on behalf of ) HYATT BRITANNIA CORPORATION
HYATT BRITANNIA CORPORATION ) LTD.
LTD. by T.D. Riegelman, Director, )
in the presence of:- )
)
) Per: /s/ T.D. RIEGELMAN
) ---------------------
/s/ TERESA C. GAMBON ) Director
-------------------------------------
Witness
|
SIGNED for and on behalf of CAYMAN ) CAYMAN HOTEL & GOLF INC.
HOTEL & GOLF INC. by )
S. Prasad Director, )
and by ) Per: /s/ SURESH PRASAD
) ----------------------
in the presence of:- ) Director
)
)
/s/ ILLEGIBLE ) Per:
------------------------------------- ----------------------
Witness
|
Exhibit 10.31
AGREEMENT
THIS AGREEMENT is made this 1st day of February, 2002,
BETWEEN: CONSOLIDATED WATER CO. LTD.
a Cayman Islands company having its registered office at
Trafalgar Place, West Bay Road, P.O. Box 1114, George Town,
Grand Cayman B.W.I. ("CWC")
AND: CAYMAN HOTEL & GOLF INC.
a Canada corporation having its address for service in the
Cayman Islands in care of Ritch & Conolly, Queensgate House,
South Church Street, P.O. Box 1994, George Town, Grand Cayman
B.W.I.("the Customer")
|
RECITAL:
The Customer wishes to obtain a supply of potable water in specified volume (i) by pipe for the Hotel known as the Hyatt Regency, on both sides of the West Bay Road, Grand Cayman and the irrigation of its golf course and (ii) by the Customer's truck for the Rum Point restaurant at Rum Point, and CWC has agreed to supply the water on the terms set out in this Agreement;
AGREEMENT:
1. SUPPLY OF WATER
(1) Subject to sub-clause (4), CWC will supply the Customer from the Commencement Date until the expiry of the Term, on the terms and conditions set out in this Agreement potable water to the quality standard required by its Concession at the meter or meters referred to in Clause 2(3) at a maximum rate of 260 gallons per minute at 62 pounds per square inch gauge.
(2) The Volume of water supplied will be a minimum of 170,000 U.S. gallons per day. The maximum volumes to be supplied will be the amount from time to time agreed by CWC who must use its best endeavours to supply the Customer's demands in full.
(3) Notwithstanding that CWC has connected any water supply to a hydrant or sprinkler system in the Hotel, it is expressly agreed that CWC will be under no obligation to provide water for fire fighting purposes or to ensure that the Water Tank contains water at any time whatever or under any circumstances, and will only supply water for those purposes if it is able to do so, and will not be liable for any damage whatever to the Hotel or any part of it caused by fire or any related cause.
(4) For the purposes of this Agreement, the water supplied to the Customer is deemed to be the amount of water shown by:-
(a) the meter measuring the amount of water passing through the Fire Pump; plus
(b) the meter measuring the amount of water flowing into the Irrigation Tank; plus
(c) the Property Meter
less the amount of water shown by the Main Meter.
(5) CWC must give not less than twenty-four (24) hours' notice to the Customer of any occasion on which to its knowledge the Water Tank will for any reason contain less than 250,000 U.S. gallons of water and if in circumstances unforeseen by CWC, the water in the Water Tank is, or within twenty-four (24) hours will be, reduced below 250,000 U.S. gallons, CWC must notify the Customer immediately it becomes aware of that fact.
2. PAYMENT
(1) From the Commencement Date until the end of the Term, the Customer will, subject to sub-clause (6) and clause 4, pay a price per 1,000 U.S. gallons equal to the total of the following:-
(a) for the Required Monthly Gallonage in any calendar month, US$8.50 subject to adjustment on 1st January, 2003 and on each January 1st thereafter in accordance with sub-clause (2);
(b) for any volume supplied in excess of the Required Monthly Gallonage in any calendar month, the price charged to commercial consumers from time to time within that part of the Licence Area in which the Hotel is situated; and
(c) the Energy Adjustment Factor from time to time.
(2) On each 1st January commencing 1st January, 2003 the Consumption Charge per 1,000 U.S. gallons of the Required Monthly Gallonage in that year will be adjusted to the figure obtained by reference to the following formula:-
For the purposes of this clause:-
USPPIL is the United States Producer Price Index for Industrial Commodities at the preceding September 30th and USPPI00 is that index at September 30, 2000, and
CICPIL is the Cayman Islands Consumer Price Index at the preceding September 30th and CICPI00 is that index at September 30, 2000.
BUT if the Cayman Islands Government does not produce a Consumer Price Index at any relevant date, the United States Government Consumer Price Index for that date and September 30, 2000 must be used.
(3) (a) CWC must furnish, fix and maintain in good repair the
Main Meter, the Property Meter and the meters
measuring the volumes of water flowing into the
Irrigation Tank and passing through the Fire Pump for
determining the quantity of water used by the
Customer. The Customer must pay the rental specified
in paragraph (b) for the use of the Property Meter
and the meter measuring the volume of water passing
through the Fire Pump only, which will remain the
property of CWC. If any meter is damaged by the
Customer, its servants, agents or invitees, CWC will
repair or replace the meter but at the Customer's
expense. The Customer is liable for the cost of all
water passing through (i) the Property Meter and (ii)
the meters measuring the volumes of water flowing
into the Irrigation Tank and passing through the Fire
Pump, less water passing through the Main Meter
unless any meter is found to be defective after a
complaint by the Customer to CWC. CWC will charge the
Customer for water used based on the average water
consumption of the previous twelve (12) months when
the defective meter was working, pro rata for the
period when the meter was not recording correctly or
not recording at all.
(b) Meter rates are as follows:-
|
SIZE MONTHLY RENTAL CONNECTION FEE RECONNECTION FEE ---- -------------- -------------- ---------------- 20 mm (3/4") CI$ 3.50 CI$ 80.00 CI$ 50.00 25 mm (1") CI$ 5.00 CI$120.00 CI$ 75.00 38 mm (1 1/2") CI$ 7.50 CI$175.00 CI$110.00 50 mm (2") CI$10.00 CI$240.00 CI$150.00 75 mm (3") CI$15.00 CI$360.00 CI$225.00 100 mm (4") CI$25.00 CI$560.00 CI$300.00 150 mm (6") CI$40.00 CI$800.00 CI$350.00 |
(4) CWC must invoice the Customer for the Monthly Charge for the previous calendar month and any unpaid balance on the account (including interest on any late payments at the rate set out below) and the Customer must pay each invoice within twenty-one (21) days failing which the Customer must pay CWC interest at the rate of 1 1/2% per month calculated on a daily basis from the due date to the date of payment, which CWC may charge whether or not it continues to supply water. If any invoice remains unpaid for 30 days from its date then CWC may cease supplying water until the Customer pays all invoices up to date.
(5) The water supply service must be used only by the Customer or his tenants or guests and must not be re-sold or otherwise supplied to third parties, either within or outside the boundaries of the Hotel.
(6) For the period beginning on the date of this agreement and
ending on 31st May, 2002 only, for any gallonage supplied in
excess of the Required Monthly Gallonage in any calendar
month, the Customer will pay a price per 1000 U.S. gallons
equal to the price payable pursuant to subclause 2(1)(a) and
(c) in the relevant calendar month for the Required Monthly
Gallonage.
3. SECURITY DEPOSIT
The Customer must pay CWC on the date of this Agreement, a deposit of US$50,000.00 which CWC must hold on account of the payment of the Monthly Charge during the last month of this Agreement. So long as the Customer has paid all charges (including any interest on late payments) due under this Agreement during the previous year, CWC must, on every anniversary of the payment of the deposit, compute and credit the Customer against the following month's bill for water under this Agreement, interest on that deposit at the average rate paid by Cayman National Bank during the previous year on fixed deposits of US$50,000.00 for periods of one year. If at the end of this Agreement any portion of the deposit remains unused, CWC must immediately refund it to the Customer without interest.
4. MINIMUM WATER QUANTITY
(1) The Customer must pay the Consumption Charge for at least 170,000 U.S. gallons of water per day whether or not it is used if CWC was able to supply that quantity on the particular day. If CWC could not have supplied that quantity of water on any day, the Customer need only pay for the quantity which could have been supplied.
(2) Notwithstanding sub-clause (1), if in any month after May 2002 the Customer does not use the minimum water quantity for which he has paid the Consumption Charge, CWC must give credit in succeeding months for the Consumption Charge paid in respect of the unused water against the Monthly Charge for water used in those months in excess of the minimum quantity BUT except in respect of credits earned after 31st May, 2026, which will expire on the expiration of this Agreement, unused credits earned in each 24 month period which commences 1st June during the Term (the first of which will commence 1st June, 2002) will expire at the end of each such 24 month period.
5. FORCE MAJEURE
Notwithstanding anything to the contrary in this Agreement, the Customer's rights against CWC and any corresponding obligations of the Customer will be suspended during any period in which CWC cannot carry out its obligations under this Agreement because of FORCE MAJEURE which includes, without limitation, hurricane, fire, flood or other acts of God, accident, explosion, war, strike, lockout, labour trouble, expropriation by Governmental authority, regulation, orders or requests of Governmental agencies or inability by the exercise of reasonable diligence to obtain supplies, materials or power.
6. ASSIGNMENT
(1) The Customer may not assign the benefit of this Agreement without first obtaining CWC's consent (such consent not to be unreasonably withheld or delayed) BUT:-
(a) may without that consent and subject to it remaining fully liable to CWC in all respects assign this Agreement to
o any wholly owned subsidiary company or any company which owns all of the Customer's shares; or
o any successor to the Customer by consolidation, merger or other corporate action; or
o the operator of the Hotel (currently the Hyatt Regency, Grand Cayman) from time to time; or
o any purchaser of the Customer or purchaser of the Hotel.
(b) in every case, each assignee of the Customer must assume and will be taken to have assumed the obligations under this Agreement and will be liable in addition to the Customer, from the date of the assignment, to comply with all the Customer's obligations in it.
The Customer must give notice to CWC within one month after any transaction under this clause, supplying a copy of the instrument.
On CWC's giving consent to any assignment and the assignee agreeing to accept all of the Customer's obligations under this Agreement, the Customer will be released from all those obligations as of the date of CWC's consent, but without prejudice to CWC's right of action in respect of any antecedent breaches by the Customer.
(2) CWC agrees that if at any time CWC assigns or transfers the Concession or the Concession is granted to another company in which CWC has an interest, it will assign this Agreement to the assignee, transferee or grantee (as the case may be) of the Concession.
7. TERMINATION
(1) This Agreement may, without prejudice to any other rights which the terminating party may have against the other, be terminated by either party before the end of the Term if the other party:-
(a) does not comply with any of its representations, warranties or agreements set out in this Agreement and does not remedy the breach (if capable of remedy) within 30 days of service on it of notice so to do; or
(b) is prohibited from performing its obligations under this Agreement as a result of any applicable law or regulation.
(2) The Customer may terminate this Agreement at any time after the Lease has been terminated by the Customer pursuant to the termination provisions contained in the Lease.
8. NOTICES
(1) A notice or other communication under or in connection with this Agreement shall be in writing and shall be delivered personally or sent by telefax, as follows:-
(a) if to CWC, to:-
Trafalgar Place West Bay Road, West Bay P.O. Box 1114 George Town, Grand Cayman B.W.I.
Telefax: (345) 945-4191
with a copy to:-
Myers & Alberga
One Regis Place, 90 Fort Street
P.O. Box 472
George Town, Grand Cayman B.W.I.
Attn: Mr. Bryan L. Ashenheim
Telefax: (345) 949-8171
(b) if to the Customer, to:-
P.O. Box 1698 George Town, Grand Cayman B.W.I.
Telefax: (345) 949-8032
with a copy to:-
Ritch & Conolly
P.O. Box 1994
George Town, Grand Cayman B.W.I.
Attn: Mr. Angus Charlton
Telefax: (345) 949-8652 or 949-0673
or to another person, address or telefax number specified by a party by written notice to the others.
(2) In the absence of evidence of earlier receipt, a notice or other communication is deemed given:-
(a) if delivered personally, when left at the address referred to in Clause 8(1).
(b) if sent by telefax, on completion of its transmission or, if sent on a day which is not a working day at the recipient's address, at 9:00 a.m. (recipient's time) on the next succeeding working day at the recipient's address.
9. ENTIRE AGREEMENT, BINDING EFFECT AND MODIFICATION
This Agreement is binding on the parties and their respective successors and assigns and may be amended or modified only by a further written agreement signed by both parties. This Agreement sets out the entire agreement of the parties with respect to its subject matter and supersedes all previous agreements and understandings whether oral or written relating to it.
10. NO WAIVER OF TERMS
Unless there is a written agreement to the contrary, no neglect, omission or forbearance on CWC's part to take advantage of or enforce any right or remedy arising out of any breach or non-observance of any of the terms and conditions contained or implied in this Agreement will be deemed to be or operate as a general waiver of that term or condition or the right to enforce or take advantage of it in respect of any breach or non-observance of it either original or recurring.
11. DEFINITIONS
For the purposes of this Agreement:-
(1) "the Commencement Date" means the 1st day of February, 2002.
(2) "the Concession" means the concession granted to CWC under the Law, as amended from time to time.
(3) "the Consumption Charge" means the charge in sub-clause 2(1)(a) subject to adjustment in accordance with sub-clause 2(2).
(4) "the Energy Adjustment Factor" means the Energy Adjustment Factor as defined in the Concession.
(5) "the Fire Pump" means the Customer's fire pump connected to the Water Tank.
(6) "the Hotel" means the hotel presently known as the Hyatt Regency, the Britannia golf course, the Hyatt beach club and Hemingway's restaurant and the Rum Point restaurant comprised in the Land Registers referred to in the Schedule.
(7) "the Irrigation Tank" means the Customer's irrigation tank marked as such on the Plan.
(8) "the Law" means the Water (Production and Supply) Law (1996 Revision) which expression includes any amendment, consolidation or re-enactment of it.
(9) "the Lease" means the lease under the Registered Land Law between the Customer as landlord and CWC as tenant of part of the land comprised in Registration Section West Bay Beach South Block 12D Parcel 79REM1.
(10) "the Licence Area" means the area for which CWC has been granted the Concession under the Law.
(11) "the Main Meter" means the water meter edged purple on the Plan metering the supply of water to that part of the Britannia Development known as "Britannia Villas".
(12) "the Monthly Charge" means the total of the Consumption Charge and the Energy Adjustment Factor in respect of each month.
(13) "the Plan" means the plan attached to this Agreement marked `Property Plan' and initialled by the parties for the purposes of identification.
(14) "the Property Meter" means the water meter at the boundary of the Property to which the Water Pipe is connected, the location of which is marked in pink on the Plan.
(15) "the Required Monthly Gallonage" means 170,000 multiplied by the number of days in the relevant calendar month.
(16) "the Term" means the period of twenty-five (25) years or until the earlier expiry of the Concession or any renewal of it, commencing on the Commencement Date.
(17) "the Water Pipe" means the water pipe coloured brown on the Plan running from the Property Meter to the Main Meter.
(18) "the Water Tank" means the water tank owned by CWC located on the Property and marked as such on the Plan.
12. APPLICABLE LAW AND FORUM
This Agreement is governed by and must be construed in accordance with the laws of the Cayman Islands and both parties submit to the non-exclusive jurisdiction of the Cayman Islands Courts.
THE SCHEDULE
THE HOTEL
REGISTRATION SECTION BLOCK PARCEL
--------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12C 27
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 24 & 26
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12D 79REM1
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 89
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 88
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12E 94
---------------------------------------- -------------------------------------- --------------------------------------
West Bay Beach South 12C 154
---------------------------------------- -------------------------------------- --------------------------------------
Rum Point 33B 169 & 173
---------------------------------------- -------------------------------------- --------------------------------------
|
SIGNED for and on behalf of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER CO. LTD. by )
)
a Director, in the presence of:- )
Per: /s/ Jeffrey M. Parker
) --------------------------
/s/ Frederick Mctaggart ) Director
-----------------------------------
Witness
SIGNED on behalf of CAYMAN ) CAYMAN HOTEL & GOLF INC.
HOTEL & GOLF INC. by )
Scott McCaw , a Director, )
and by Peter Janson , a Director ) Per: /s/ Scott Mccaw
---------------------------
the presence of:- Marilyn Rolfe ) Director
)
/s/ Marilyn Rolfe ) Per: /s/ Peter Janson
----------------------------------- ---------------------------
Witness Director
|
Exhibit 10.48
April 25, 2001
ATTENTION: RICK MCTAGGART
Dear Sir:
RE: CONFIRMATION OF CREDIT FACILITIES
Further to our recent discussions, and subject to the undernoted terms and conditions, we are pleased to offer you financing as follows:
LENDER: ROYAL BANK OF CANADA (The "Bank")
BORROWER: CONSOLIDATED WATER CO. LTD.(The "Borrower")
AMOUNT: Segment 1) $1,000,000 - Overdraft, revolving
Segment 2) $3,500,000 - Standby Line
CURRENCY: All dollar amounts in this letter refer to
United States funds, unless otherwise
specified.
PURPOSE: Segment 1) General Operating purposes
Segment 2) General Corporate purposes
INTEREST RATES: Segment 1) USD/KYD Prime + 1%/LIBOR + 1.50%
Segment 2) LIBOR + 1.50%
The Borrower shall pay interest monthly in
arrears on Prime-based facilities at the
annual rate set out above calculated on a
daily basis and based on the actual number of
days elapsed in the period for which interest
is being calculated divided by 365. The annual
rates of interest to which the rates
calculated in accordance with the foregoing
provisions are equivalent, are the rates so
determined multiplied by the actual number of
days in a one year period calculated from the
first day on which interest is to be
calculated and divided by 365. These rates
apply after as well as before maturity,
default, and judgement, with interest on
overdue interest at the same rate as on the
principal.
|
LIBOR LOANS:
Interest on LIBOR loans shall be payable on
each LIBOR interest date. The yearly rates of
interest to which the rates determined in
accordance with the LIBOR provisions of this
agreement are equivalent, are rates so
determined multiplied by the actual number of
days in a year and divided by 360.
SERVICE PRICING: a) An annual review fee of 1/16% ($2,800
this year) will be charged to cover the
administration involved in reviewing the
company's financial information and
re-establishing facilities.
b) Any temporary excesses/amendments and
additional credit requirements are
subject to approval and may be assessed
a fee of up to 1/2%, minimum $1,000.
c) A fee of 1/2% will be associated with
each draw down under Segment 2.
REPAYMENT: Segment 1) Revolving; repayment in full upon
demand.
Segment 2) Undrawn portion - 1 year,
extendable term. Drawn amounts -
Monthly payments over a maximum 5
year term, 10 year amortization.
PROHIBITED INTEREST - Nothing in this
agreement shall be construed as obliging the
Borrower to pay any interest, charges or other
expenses as provided by this agreement or in
any other security agreement related thereto
in excess of what is permitted by law.
PREPAYMENTS: Segment 1) may be prepaid in whole or in part
without penalty.
Segment 2) may only be repaid at maturity
(maturity of each term, i.e., 30 days, 60
days, 90 days etc.).
SECURITY: GENERAL SECURITY FOR ALL LOANS
Certified copy of directors' resolutions,
bylaws, legal opinions and attendant documents
as may be requested by the Bank.
Page 2 of 9
|
Fixed & floating charge debenture for
USD$2,500,000, with fixed charge covering West
Bay Beach North, Block 11D, Parcel 8 and
collateral charge covering Governor's Harbour
property and floating charge covering all
other assets of the Borrower (To be up stamped
to USD$4,500,000 as Segment 2) drawn down).
Guarantee & Postponement of Claim in favour of
Consolidated Water Co. Ltd. signed by Cayman
Water Company Limited.
INSURANCE: The Borrower will lodge with the Bank
comprehensive insurance policies satisfactory
to the Bank, covering buildings, equipment and
inventory with loss made payable firstly to
the Bank.
|
REPRESENTATIONS,
WARRANTIES &
ACKNOWLEDGMENTS: The Borrower represents and warrants to the
Bank that:
1) it is a corporation validly incorporated
and subsisting under the laws of Cayman
Islands, and that it is duly registered
or qualified to carry on business in all
jurisdictions where the character of the
properties owned by it or the nature of
its business transacted makes such
registration or qualification necessary;
2) the execution and delivery of this
Agreement has been duly authorized by
all necessary actions and does not (i)
violate any law or, any provision of the
charter or any unanimous shareholders
agreement to which it is subject or,
(ii) result in a breach of, a default
under, or the creation of any
encumbrance on the properties and assets
of it under any agreement or instrument
to which it or any of its properties and
assets may be bound or affected.
3) There is no provision in the Borrower's
articles, bylaws or any unanimous
shareholder agreement respecting the
ability of the Borrower to:
a) borrow money upon the credit of
the Borrower;
|
b) issue, reissue, sell or pledge debt obligations of the Borrower;
c) give a guarantee on behalf of the Borrower to secure performance of an obligation to any person; and
d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Borrower, owned or subsequently acquired, to secure any debt obligation of the Borrower.
4) The Borrower is in compliance with all applicable statutes, regulations, orders and bylaws enacted or adopted for the protection and conservation of the natural environment.
5) The Borrower has obtained all certificates, approvals, permits, consents, orders and directions required concerning the installation or operation of any machinery, equipment or facility constituting assets of the Borrower, or required concerning any land of the Borrower, or required concerning any structure, activity or facility on or in any land of the Borrower, and the Borrower is not aware of any circumstance which might give rise to the revocation of any such certificates, approvals, permits, consents, orders and directions or the implementation of further orders or directions relating to the above which might affect the land or the business of the Borrower which the Borrower has not disclosed fully in writing to the Bank.
COVENANTS: The Borrower, by accepting this Offer, agrees:
1) to deliver to the Bank such financial and other information as the Bank may reasonably request from time to time, including but not limited to the following:
a) audited financial statements within 90 days after each fiscal year end.
b) quarterly company prepared financial statements within 30 days following each quarter end.
2) not to grant or create any security interest, lien, charge or encumbrance affecting any of its properties or assets, except for any security interest granted to secure an obligation created solely for the purchase of additional fixed assets required for the efficient operation of its business with any such security to cover only the assets purchased.
3) Debt to Equity shall not exceed 0.85. "Equity" is defined as the total of share capital, contributed surplus, retained earnings and postponed shareholder loans MINUS intangible assets and amounts owed to the Borrower by shareholders/associated companies.
4) to maintain a Debt Servicing ratio of
not less than 1.25 (earnings before
interest, depreciation and amortization
divided by principal and interest on all
debt).
All covenants in this agreement or any other
agreement between the Borrower and the Bank or
other documentation or security will remain in
force for the benefit of the Bank at all times
before and after the making of advances
hereunder and/or the taking of security
pursuant hereto.
OTHER CONDITIONS: If the Bank chooses to grant forbearance or a
waiver of any of the terms and conditions of
this letter, this action will not affect the
Bank's ability to act on any subsequent breach
or default or the rights of the Bank resulting
therefrom.
EVIDENCE OF
INDEBTEDNESS: The Bank shall open and maintain at the Branch
of Account, accounts and records evidencing
the Borrowings made available to the Borrower
by the Bank under this agreement. The Bank
shall record the principal amount of such
Borrowings, the payment of principal and
interest on account of the loans, and all
other amounts becoming due to the Bank under
this agreement.
The Bank's accounts and records constitute, in
the absence of manifest error, PRIMA FACIE
evidence of the indebtedness of the Borrower
to the Bank pursuant to this agreement.
The Borrower authorizes and directs the Bank
to automatically debit, by mechanical,
electronic or manual means, any bank account
of the Borrower for all amounts payable under
this agreement, including but not limited to,
the repayment of principal and the payment of
interest, fees and all charges for the keeping
of such account.
EVENTS OF DEFAULT: Without limiting the Bank's right to make
demand for payment at any time on demand
loans, the Bank may immediately withdraw the
Borrower's right to further borrow under this
agreement, demand immediate repayment of all
amounts outstanding, together with outstanding
accrued interest and realize on all or any
portion of the security granted to the Bank if
|
any of the following events of default occur:
1) Failure of the Borrower to pay any
principal, interest or other amounts
when due pursuant to this agreement;
2) Failure of the Borrower to observe or
perform any covenant, condition or
provision in this agreement or other
documentation or security;
3) If the Borrower becomes insolvent,
commits an act of bankruptcy, makes an
assignment of property for the benefit
of its creditors, or enters into a bulk
sale of its assets without the prior
written approval of the Bank;
4) If any proceeding is taken with respect
to a compromise or arrangement with the
creditors of the Borrower, including
under the Companies' Creditors
Arrangement Act or to have the Borrower
declared bankrupt or wound up, or to
have a Receiver or Receiver Manager
appointed of any part of the mortgaged
property or if any encumbrancer takes
possession of any part thereof;
5) There occurs, in the sole opinion of
the Bank:
(a) a material adverse change in the
financial condition of the
Borrower; or
(b) an unacceptable change in
ownership of the Borrower; or
(c) legal implications detrimental to
the affairs of the Borrower;
CONDITIONS PRECEDENT: The obligation of the Bank to make these
credit facilities available to the Borrower is
subject to and conditional upon all security
and/or documentation being completed and
registered in form and substance satisfactory
to the Bank.
REVISION DATE: Without limiting any rights the Bank may have
to demand payment, these credit facilities
will be subject to review at the Bank's
discretion and at least annually.
|
LEGAL COSTS: All legal costs, fees, expenses, etc.
incurred in establishing these credit
facilities, preparation and maintenance of
security and documentation are for account of
the Borrower.
ACCEPTANCE: This offer expires if not accepted in writing
by May 15th, 2001, unless extended in writing
by the Bank.
|
Please acknowledge your acceptance of the above terms and conditions by signing the attached copy of this Offer to Finance in the space provided below and returning to the undersigned. This Offer to Finance cancels and supersedes any previous Offers.
Yours truly,
ROYAL BANK OF CANADA
/s/ G.C. Plamondon ----------------------------------------- G.C. PLAMONDON, Sr. Assistant Manager |
CONSOLIDATED WATER CO. LTD.
PER: /s/ Frederick W. Mctaggart
----------------------------------
President and COO
PER: /s/ Peter D. Ribbins
-----------------------------------
Director/Secretary
|
Exhibit 10.49
THIS VARIATION OF DEBENTURE is made the 22ND day of February 2002 (A Variation of the Collateral Charge is registered over West Bay Beach North, Block 11D, Parcel 40 and West Bay Beach North, Block 11D, Parcel 8)
BETWEEN:
(1) CONSOLIDATED WATER CO. LTD., a company incorporated under the laws of the Cayman Islands and having its registered office at the offices of Consolidated Water Co. Ltd., Trafalgar Place, West Bay Road, P.O. Box 1114 GT, Grand Cayman (hereinafter called "the Borrower") of the ONE PART; and
(2) ROYAL BANK OF CANADA., a banking corporation licensed to carry on business in the Cayman Islands with offices at P.O. Box 245, George Town, Grand Cayman (hereinafter called "the Bank") of the OTHER PART.
WHEREAS:
(1) The Bank and the Borrower entered into a form of Debenture dated the 1st day of June 1979 (the "Debenture") to secure the loan of CI$200,000.00 borrowed from the Bank. A Supplemental Deed was entered into on the 30th day of April 1981 for an additional borrowing of CI$ 275,000.00. A second supplemental Deed to the Debenture was entered into on the 10th day of March 1983 for an additional borrowing. A third supplemental Deed to the Debenture was entered into on the 6th day of December 1984 for additional borrowing. A fourth Supplemental Deed to the Debenture was entered into on the 31st day of August 1989. A further Variation to the Debenture was entered into on the 11th day of October 1999;
(2) The Bank and the Borrower have now agreed to enter into this Variation of Debenture to secure a further borrowing from the Bank of US$500,000.00 so that the total amount of the loan to the borrower shall be us$3,000,000.00;
(3) The Bank and the Borrower have now agreed that the interest rate shall be at the Bank's US$ LIBOR rate plus 1.5%;
(4) The Bank and the Borrower have now agreed to that the repayment of the loan shall be revolving.
NOW THIS DEED WITNESSES as follows:
1. Words and terms defined in this Variation of Debenture shall bear the same meaning herein as in the Debenture unless expressly provided to the contrary.
2. In consideration of the said agreement the Borrower and the Bank hereby agree the Debenture and the Variation of Debenture shall hereafter stand as security for all sums owing to the Bank from time to time up to maximum of US$3,000,000.00 (Three Million United States Dollars) altogether with interest thereon;
3. The rate of interest payable shall be the Bank's US$ LIBOR plus 1.5%;
4. The repayment of the loan by the Borrower shall be revolving;
5. The Bank hereby consents to the registration of a Variation of Collateral Charge over property being held as collateral security to the loan and being mentioned in the Schedule to this Variation of Debenture;
6. All other terms and conditions of the Debentures shall remain in full force and effect;
7. This Variation of Debenture shall be governed by and interpreted in accordance with Cayman Islands Law.
IN WITNESS WHEREOF the parties have executed this Variation of Debenture as a deed the day and year first before written.
SCHEDULE
All those parcels of land on Grand Cayman comprised within Registration Section West Bay Beach North Block 11D Parcel 8 and West Bay Beach North, Block 11D,
Parcel 40
THE COMMON SEAL of )
CONSOLIDATED WATER CO. LTD. )
Was hereunto affixed by )
)
In the presence of ) /s/ Frederick Mctaggart
--------------------------------
) Director
)
) /s/ Peter Ribbins
--------------------------------
/s/ Jeffrey M. Parker ) Secretary
-------------------------
Witness
THE COMMON SEAL of )
ROYAL BANK OF CANADA)
Was hereunto affixed by ) /s/ G. Plamondon
-------------------------------
And by ) Director
In the presence of )
) /s/ Denise Ebanks
-------------------------------
) Asst. Secretary
/s/ John Broadbent )
-------------------------
Witness
|
Exhibit 10.50
CAYMAN ISLANDS
The Registered Land Law (1995 Revision)
The Registered Land Rules (2000 Revision)
Third Schedule
SECOND COLLATERAL CHARGE TO A VARIATION OF DEBENTURE
DATED 22ND OF FEBRUARY 2002
REGISTRATION SECTION BLOCK PARCEL
WEST BAY BEACH NORTH 11D 8
---------------------------------- ----- ------
WE, CONSOLIDATED WATER CO. LTD.
(hereinafter called " the Chargor")
|
of P.O. Box 1114 GT, Grand Cayman
HEREBY CHARGE our interest in the above mentioned title to secure the payment
To ROYAL BANK OF CANADA
Of P.O. Box 245 GT, Grand Cayman
Of the principal sum of US$3,000,000.00
With interest at the rate as set our in the attached Schedule,
Payable as set within the attached schedule, subject to Section 67 of the above Law, save as negatived, modified or added to , in the manner as set out in the attached Schedule. The Chargee reserves the right to tack and/or consolidate Charges as set out in the attached Schedule.
The principle sum shall be repaid on demand together with any interest or any other monies then due in accordance with attached Schedule.
And We the above named Chargor hereby acknowledge that We understand the effect of Section 72 of the Registered Land Law, (1995 Revision).
Dated this 22nd day of February 2002
CONSOLIDATED WATER CO. LTD.
Signed by the Chargor /s/ Frederick Mctaggart /s/ Peter Ribbins
---------------------------- ----------------------------
Director Secretary
In the presence of:-
-----------------------------------------------------------
Signed by the Chargee /s/ G. Plamondon
-----------------------------------------------------------
ROYAL BANK OF CANADA
In the presence of:- /s/ Denise Ebanks
-----------------------------------------------------------
|
FOR OFFICIAL USE ONLY
I, the Registrar of Lands in the Cayman Islands hereby certify that this document was Received by me for registration on the 6TH day of MARCH 2002 And that stamp duty assessed/adjudicated by me/Treasury at CI$ 30.00 and Land Registry fees at CI$ 50.00 relating thereto have been paid.
REGISTERED this 8TH day of MARCH 2002
/s/ illegible
---------------------------------
ASST REGISTRAR OF LANDS
CAYMAN ISLANDS
|
CERTIFICATE OF IDENTIFICATION
CONSOLIDATED WATER CO. LTD.
Name: Frederick W. McTaggart Director
I HEREBY CERTIFY that the above-named person appeared before me on the...15... Of ...February, 2002, and being known to me acknowledged the above signature or mark to be his and that he had freely and voluntarily executed this instrument and understood its contents.
/s/ Jeffrey Parker
--------------------------------------------------
Signature and designation of the person certifying
|
CERTIFICATE OF IDENTIFICATION
CONSOLIDATED WATER CO. LTD.
Name: Peter D. Ribbins Secretary
I HEREBY CERTIFY that the above-named person appeared before me on the...15... Of ......February, 2002, and being known to me acknowledged the above signature or mark to be his and that he had freely and voluntarily executed this instrument and understood its contents.
/s/ Jeffrey Parker
--------------------------------------------------
Signature and designation of the person certifying
|
CAYMAN ISLANDS
The Registered Land Law (1995 Revision)
The Registered Land Rules (2000 Revision)
Third Schedule
SECOND COLLATERAL CHARGE TO A VARIATION OF DEBENTURE
Dated 22nd of February 2002
REGISTRATION SECTION BLOCK PARCEL
WEST BAY BEACH NORTH 11D 40
--------------------------- ------ ------
WE, CONSOLIDATED WATER CO. LTD.
(hereinafter called " the Chargor")
|
of P.O. Box 1114 GT, Grand Cayman
HEREBY CHARGE our interest in the above mentioned title to secure the payment
To ROYAL BANK OF CANADA
Of P.O. Box 245 GT, Grand Cayman
Of the principal sum of US$3,000,000.00
With interest at the rate as set our in the attached Schedule,
Payable as set within the attached schedule, subject to Section 67 of the above Law, save as negatived, modified or added to , in the manner as set out in the attached Schedule. The Chargee reserves the right to tack and/or consolidate Charges as set out in the attached Schedule.
The principle sum shall be repaid on demand together with any interest or any other monies then due in accordance with attached Schedule.
And We the above named Chargor hereby acknowledge that We understand the effect of Section 72 of the Registered Land Law, (1995 Revision).
Dated this 22nd day of February 2002
CONSOLIDATED WATER CO. LTD.
Signed by the Chargor /s/ Frederick Mctaggart /s/ Peter Ribbins
---------------------------- --------------------------
Director Secretary
In the presence of:-
-----------------------------------------------------------
Signed by the Chargee /s/ G. Plamondon
----------------------------------------------------------
ROYAL BANK OF CANADA
In the presence of:- /s/ Denise Ebanks
-----------------------------------------------------------
|
FOR OFFICIAL USE ONLY
I, the Registrar of Lands in the Cayman Islands hereby certify that this document was Received by me for registration on the 6TH day of MARCH 2002 And that stamp duty assessed/adjudicated by me/Treasury at CI$ 30.00 and Land Registry fees at CI$ 50.00 relating thereto have been paid.
Registered This 8th Day of March 2002
/s/ illegible
---------------------------------
ASST REGISTRAR OF LANDS
CAYMAN ISLANDS
|
CERTIFICATE OF IDENTIFICATION
CONSOLIDATED WATER CO. LTD.
Name: Frederick W. McTaggart Director
I HEREBY CERTIFY that the above-named person appeared before me on the...15... Of ...February, 2002, and being known to me acknowledged the above signature or mark to be his and that he had freely and voluntarily executed this instrument and understood its contents.
/s/ Jeffrey Parker
--------------------------------------------------
Signature and designation of the person certifying
|
CERTIFICATE OF IDENTIFICATION
CONSOLIDATED WATER CO. LTD.
Name: Peter D. Ribbins Secretary
I HEREBY CERTIFY that the above-named person appeared before me on the...15... Of ......February, 2002, and being known to me acknowledged the above signature or mark to be his and that he had freely and voluntarily executed this instrument and understood its contents.
/s/ Jeffrey Parker
--------------------------------------------------
Signature and designation of the person certifying
|
THE REGISTRAR OF LANDS IS HEREBY REQUESTED:-
(a) to register this Charge in favor of the Chargee,
(b) to note on the register that the attached Schedule contains an agreement by the Chargor with the Chargee that the Chargor will not without first obtaining the prior written consent of the Chargee lease or sub-lease or agree to lease or sub-lease or accept surrenders of leases or sub-leases or transfer or otherwise part with the possession of the Charged Premises or any part thereof,
(c) to note on the register that the right to tack and rank in priority to any subsequent charge is expressly reserved to the Chargee,
(d) to note on the register that the attached Schedule reserves to the Chargee the right to consolidate this Charge with any other charge,
(e) to note on the register that the attached Schedule contains an agreement by the Chargor with the Chargee that the Chargor will not without first obtaining the prior written consent of the chargee create or purport or attempt to create any charge incumbrance or mortgage which by virtue of any law or regulation will rank pari passu with or in priority to this Charge or second or subsidiary to this Charge.
THE SCHEDULE
Within referred to
It is hereby further agreed and the Chargor and the Chargee hereby respectively covenant with each other as follows:-
1.(a) That the Chargor shall repay to the Chargee all Sum and/or interest and
any other monies payable in accordance with the terms and conditions,
covenants and agreements contained herein and in the Debenture and
subsequent Supplemental Debentures and Variation of Debenture and
Commitment letter,
(b) The rate of interest payable hereunder shall be such rate as is
ascertained by the Chargee (as well after as before any judgment ) to
be 1 1/2% above US$LIBOR. The interest rate shall be ascertained by the
Chargee on the date hereof and shall be recalculated periodically I
line with variations in the general level of interest rates until the
Principal Sum and interest thereon or on the balance thereof
outstanding from time to time and all other sums payable hereunder
shall have been paid to the Chargee PROVIDED THAT if the date for
calculation of interest hereunder shall fall on a day which is not a
business day such calculating shall be made on the next succeeding
business day and for the purposes of this sub-clause the words "
business day" shall mean a day when banks are open for business in the
Cayman Islands and New York City, U.S.A.
(c) The Chargor shall be at liberty during the continuance of this security
to make Repayment of any part of the Principal Sum in accordance with
the terms and conditions as set our in the Commitment Letter dated 25th
April 2001. Repayment will be accepted by the Chargee provided that any
such repayment of part must be of at least One Thousand United States
Dollars or a multiple thereof and provided that any such repayment of
part must be made on a monthly installment date hereinbefore mentioned
and upon such additional payment being made principal and interest
shall continue to be payable at a rate not less than that provided for
in sub-clause 1 (a) hereof,
(d) The Chargor shall be at liberty at any time during the continuance of
this security make repayment in accordance with the terms and
conditions as set out in the Commitment Letter dated 25th April 2001.
Any repayment of the whole of the Remaining balance of the Principal
Sum and interest and any other monies due at The date of repayment
shall be made as notified in writing by the Chargee to the Chargor.
2.(a) If the Chargor shall repay to the Chargee the Principal Sum and
interest thereon by the installments and at the times and in manner
hereinbefore provided within seven(7) days after the dates on which the
same are hereinbefore made payable and if the Chargor shall also
perform and observe all the covenants conditions and stipulations
herein contained or implied and on the Charger's part to be performed
and observed other than the covenants for payment of the said
installments then the Chargee shall accept such repayments of principal
and interest by the said installments as aforesaid and the Chargee will
not take steps to enforce the payment of the Principal Sum and interest
or any part thereof.
|
(b) Provided always and it is hereby agreed that upon payment to the Chargee of the Principal Sum and interest and all other monies payable hereunder as notified in writing by the Chargee to the Chargor the Chargee will at any time thereafter upon reasonable notice and upon the request and at the cost of the Chargor discharge this Charge.
3. Sub section (c) of Section 67 of the Registered Land Law (1995 Revision) (hereinafter called "the above Law") (and sub-section (j) thereof only so far as it relates to the said sub-section (c)) shall not apply to this Charge nor to any instrument of variation executed pursuant to this Charge and instead thereof the Chargor shall keep or cause to be kept the Charged Premises and all such buildings or erections as may become for the time being subject hereto in good and substantial repair and condition and permit the Chargee and the agents of the Chargee at all reasonable time during the day time and without any further consent to enter into and upon the Charged Premises and inspect the same and view the state thereof and upon receipt of notice in writing from the Chargee shall immediately remedy restore repair amend and make good all such effects decays wants of reparation amendments and upkeep of the said buildings and erections and the gates walls and fences on the Charged Premises as the Chargee may require and if the Chargor shall neglect to do so that the Chargee may enter upon the Charged Premises with or without workmen or others from time to time in order to repair and keep in repair the same and without thereby becoming liable as a Chargee in possession and that the expenses of so doing shall be repaid by the Chargor to the Chargee on demand and in the meantime shall be added to the Principal Sum and bear interest accordingly.
4. Sub-section (d) of Section 67 of the above Law (and sub-section (j) thereof only so far as it relates to the said sub-section (d)) shall not apply to this Charge nor to any instrument of variation executed pursuant to this Charge and instead thereof the Chargor shall so long as any money shall remain owing on the security of this Charge or any variation thereof insure and keep insured in their full insurable value any buildings or erections from time to time erected or in the course of erection on the Charged Premises with an insurance office of repute approved from time to time by the Chargee and against riot strike public liabilities fire lightning flood earthquake volcanic eruption hurricane cyclone tornado windstorm and any such other hazards and risks as the Chargee may from time to time require AND will punctually pay every sum from time to time payable for keeping on foot every such insurance or within seven (7) days after the first day upon which it becomes payable and will cause a note of this Charge's interest hereunder to be endorsed as aforesaid or other proper evidence of the subsistence thereof and also on demand deliver to the Chargee the receipt for or other sufficient evidence of payment of every sum payable as aforesaid AND that if the Chargor shall make default in any of the above matters the Chargee may insure and keep insured all or any of the said buildings in manner aforesaid and that the expense of so doing shall be paid by the Chargor to the Chargee on demand and in the meantime shall be added to the Principal Sum hereby secured and bear interest accordingly AND it is hereby agreed and declared that all monies received under or by virtue of any insurance as aforesaid whether received by the Chargor the Chargee or any receiver appointed by the Chargee (notwithstanding the provisions of Section 73 (7 ) of the above Law ) shall at the option of the Chargee either be forthwith applied in or towards substantially rebuilding reinstating or repairing the buildings or erections destroyed or damaged or in or towards payment of the monies for the time being secured by these presents including any premiums paid under the aforesaid power.
5. The Chargor shall on the date hereof effect an insurance policy in respect of damage to the charges premises in a sum at least equal to the Principal Sum and interest and any other sums owing or outstanding upon the security of this Charge with an insurance company approved by the Chargee.
6. Sub-section (f) and (g) of Section 67 of the above Law shall not apply to this Charge nor to any instrument of variation executed pursuant to this Charge and instead thereof the Chargor shall not during the continuance of this Charge without first obtaining the prior written consent of the Chargee lease or sub-lease or agree to lease or sub-lease or accept surrenders of leases or sub-leases or transfer or otherwise part with the possession of the charges premises or any part thereof.
7. The right contained in Section 82 of the above Law to consolidate this Charge with any other charge is expressly reserved to the Chargee and the right to tack and rank in priority to any subsequent charge as contained in Section 81 of the above Law in respect of further advances made to the Chargor is also expressly reserved to the Chargee.
8. The Chargor shall not create or purport or attempt to create any charge incumbrance or mortgage which by virtue of any law or regulation will rank pari passu with or in priority to this Charge or second or subsidiary to this Charge to act in any way which shall have the effect of diminishing or decreasing the valued of the security of this Charge without first obtaining the prior written consent of the Chargee.
9. The Chargor shall not without the prior written consent of the Chargee make or permit or suffer to be made any material change to or addition whatsoever inn or to the Charged Premises or the use thereof.
10. The Chargor shall pay all reasonable lawyer's costs and other costs and expenses that may be incurred by the Chargee of and incidental to the preparation completion stamping and registration of this Charge or any variation hereto and the protection and enforcement from time to time of the Chargee's rights hereunder.
11. The Chargor covenants that the Chargor will on demand both before and after the security constituted hereby has become enforceable at the Chargor's own cost and expense during the continuance of this Charge do and execute or cause to be done and executed all such instruments acts deeds and things to perfect this security and to preserve and protect the rights and privileges of the Chargee granted by this Charge or by operation of law and to this end the Chargor hereby undertakes and agrees on demand to execute cause to be verified and delivered to the Chargee a power of attorney in form required by the Chargee in favour of the Chargee to enable the Chargee to register the same in the register of powers of attorney at the expense of the Chargor or with consent of the Registrar of Lands to file a copy thereof certified by the Registrar of Lands in the file of powers of attorney.
12. In the event that the Chargor shall fail to discharge all monies and liabilities in full in accordance with the terms hereof or in the event that the Chargor shall be in breach of any of the Chargor's covenants or obligations herein contained whether expressed or implied or in the event that the Chargor commits any act of bankruptcy or makes any assignment or composition for the benefit of the Chargor's creditors or being a company goes into liquidation (other than a voluntary liquidation for the purposes of a reconstruction only the terms of which have been previously approved in writing by the Chargee ) or suffers the appointment of a receiver over any part of the Chargor's assets then in any such event the whole of the Principal Sum and all interest thereon and any other sums owing hereunder to the Chargee shall become immediately due and payable and the provisions of Sections 72 to 75 of the above Law shall apply subject to the modifications hereinafter set forth;-
(i) the power of sale and of appointing a receiver and any other remedies available to the Chargee shall become immediately exercisable without further notice.
(ii) in addition to the remedies provided by Section 72 of the above Law the Chargee shall have the right to foreclose or enter into possession of the charges premises or both in the same circumstances as would allow the Chargee to exercise its power of sale or appoint a receiver.
(iii) in the event that the Chargee does appoint a receiver or enter into possession of the Charged Premises the Chargee shall be entitled to exercise its power of sale or Foreclosure at any time thereafter without further notice
(iv) upon the exercise of its power of sale the Chargee shall have the right to sell the Charged Premises by private treaty as well as by public auction
(v) wherever there is a reference in Section 73 (6) of the above Law to "five percent" this shall be read as "ten percent"
(vi) a receiver appointed by the Chargee shall have such powers in addition to those set out in the above Law or any other law relating thereto as the Chargee shall deem necessary (including the right to sell the Charged Premises ) for the proper enforcement and protection of the Chargee's rights hereunder.
PROVIDED ALWAYS and its is herby expressly declared and agreed that in any case where any such modification of the above Law (or any other modification provided for in this Charge) shall require the sanction of the Court the Chargee shall have the right at its option to waive any modification where it is in favor of the Chargee to do so or to seek the sanction of the Court thereto and should the Chargee fail to obtain the sanction of the Court to any particular modification or should the Chargee elect to waive its rights under any modification then the original provisions of the above Law shall apply without modification.
13. This Charge is not assignable alienable or transferable by the Chargor.
14. The Chargee may at any time transfer and assign the benefit of this Charge.
15. No neglect omission or forbearance on the part of the Chargee to take advantage of or enforce any right arising out of any breach non-observance or non-performance of any covenant or condition herein contained or by law implied shall be deemed to operate as a general waiver of such covenant or condition or the right to take advantage thereof either original or recurring.
16. The taking of judgment or judgments on any covenants contained in this Charge shall not operate as a merger of the said covenant or covenants or affect the Chargee's right to interest pursuant to the terms of this Charge.
17. The Chargee shall not be liable for any loss which may occur by reason of the exercise or execution of any or all of its remedies and powers conferred given or implied by this Charge or by the Laws of the Cayman Islands.
18. In the event that the Chargor is a Company the Chargor hereby represents and warrants to the Chargee that it is duly incorporated and existing in good standing under the Laws of the Cayman Islands (or under the Laws of some other jurisdiction and duly registered to carry on business in the Cayman Islands) and that it is qualified to do business wherever necessary to carry on its present operations and that the making and performance of this Charge is within its corporate powers having been properly authorized by all necessary governmental and corporate approvals and does not contravene any law or any contractual restriction binding on the Chargor and that the Charge is a legal valid and binding obligation of the Chargor enforceable against the Chargor in accordance with its terms and that there are no pending or threatened actions or proceedings before any court or administrative agency which may materially adversely affect the Chargor's financial conditions and operations.
19. This Schedule shall be governed and construed solely accordingly to the Laws of the Cayman Islands.
20. Any notice required to be given to or served on the Chargor or Chargee
under these presents shall be deemed to be sufficiently served on or
given to the Chargee if service thereof is in compliance with
provisions of section 153 of the Registered Land Law (1995 Revision) as
the same may be amended from time to time.
21.(a) The expression "this Charge" shall mean the Charge annexed hereto
as negatived modified or added to by this Schedule and all other
securities provided taken or available to the Chargee thereunder
including any power of attorney and the expression " the charges
premises" shall mean the land the subject of this Charge (or any part
or parts thereof) and all buildings erections fixtures and fittings now
or from time to time situate thereon or on some part or parts thereof.
(b) In this Charge where the context so admits the words importing the
masculine gender shall include the feminine gender and vice versa and
words importing the singular number only shall include the plural
number and vice versa and words importing persons and all reference to
persons shall include corporations and firms.
|
(c) In this Charge where the context so admits the expression "the Chargor" shall include persons deriving title under the Chargor or entitled to redeem this Charge and the expression " the Chargee" shall include persons deriving title under the Chargee to any reference herein to any statue or section of any statue shall be deemed to include reference to any statutory modification or re-enactment thereof for the time being in force.
(d) If there are two or more parties hereto comprising the Chargor the expression "the Chargor" shall throughout mean and include such two or more parties and each of them or (as the case may require) such tow or more parties or any of them and shall so far as the context so admits be construed as well in the plural as in the singular and all covenants charges agreements and undertakings herein expressed or implied on the part of the Chargor shall be deemed to be joint and several covenants charges agreements and undertakings by such parties.
Exhibit 10.52
LEASE
THIS LEASE is made the 10th day of December __, 2001,
BETWEEN: CAYMAN HOTEL & GOLF INC., a Canada corporation, of P.O. Box 1698,
George Town, Grand Cayman B.W.I. ("the Landlord")
AND: CONSOLIDATED WATER CO. LTD., a Cayman Islands company, of P.O.
Box 1114, George Town, Grand Cayman B.W.I. ("the Tenant")
|
AND WITNESSES as follows:-
1. In this Lease:-
(1) unless inconsistent with the context or subject matter or circumstances the following expressions have the following meanings:-
(a) "the Adjoining Property" means the lands comprised in West Bay Beach South Registration Section Block 12C Parcels 27 and 154, Block 12D Parcels 24, 26 and 79REM1 (other than the Land) and Block 12E Parcels 88, 89 and 94 and any other land which adjoins the Land in which the Landlord during the Term acquires an interest as proprietor or tenant.
(b) "the Building" means the building on the Land in which the Tenant's water plant and the laundry for the Hotel are situated shown edged blue on the Plan.
(c) "the Common Areas" means all those parts of the Landlord's adjoining land shown hatched in red on the Plan.
(d) "Conduits" includes wires, cisterns, chutes or pipes for the supply of water, telephone, electricity and gas and the disposal of domestic waste in, under or over the Land.
(e) "the Land" means the land and buildings comprised in this Lease and shown for the purposes of identification only edged red on the Plan but excluding the Landlord's Building.
(f) "the Landlord's Building" means the building marked "Golf Cart Maintenance" hatched green on the Plan, and any of its contents from time to time.
(g) "the Landlord" and "the Tenant" include their respective successors in title.
(h) "Notice" includes demand and vice versa.
(i) "the Plan" means the plan of the Land attached marked "Lease Plan".
(j) "the Plant" means the machinery, equipment and personal property described and listed in the Schedule.
(k) "the Right of Way" means all that part of the Land shown delineated in red on the Plan.
(l) "the RO Area" means the area of the Building edged in red and shown on the Plan.
(m) "share(d)" means share(d) with the Landlord.
(n) "the Term" means twenty-five (25) years starting on 1st]. -
(o) "the Water Supply Agreement" means an agreement for the supply of water to the Hotel dated the same day as this Lease and made between the Landlord and the Tenant.
(2)(a) An obligation not to do something includes an obligation not to permit or suffer others to do it.
(b) An obligation imposed is to be performed and a power or right conferred is exercisable, in each case from time to time.
(c) Consent, approval and notice must be in writing.
(d) The headings are for convenience only and have no legal effect.
(e) References to the Laundry include parts of it.
(f) References to the Land include parts of it.
(g) Words of one gender include words of any other gender.
(h) Singular words include the plural and vice versa and where there are two or more persons included in the expression "the Tenant", agreements made by the Tenant are joint and separate.
2. RENT
The Landlord LEASES the Land to the Tenant for the Term together with the rights set out in sub-clause 5(ii) but excepting and reserving to the Landlord the rights set out in sub-clause 5(i), subject to the right of re-entry in Clause 5(iv), at the rent of One United States Dollars (US$1.00) per year. The Tenant must pay the rent in United States Dollars to the Landlord in advance on or before the 1st day of.
3. TENANT'S AGREEMENTS
The Tenant agrees with the Landlord:-
(i) PAYMENTS
to pay:-
(a) the rent without any set off or counterclaim in accordance with Clause 2;
(b) all rates, taxes, assessments, duties, charges, impositions and outgoings that are or now or may at any time during the Term be charged, assessed or imposed upon the Land or upon the owner or occupier of it. The Tenant must also pay and indemnify the Landlord against the proportion reasonably attributable to the Land of all rates, taxes, assessments, duties, charges, impositions and outgoings that are now or may at any time during the term be charged, assessed or imposed on the Land and any other property including Adjoining Property or on their owners or occupiers;
(c) the stamp duty on this Lease and on one copy and its own legal fees; and
(d) to the Landlord on an indemnity basis all costs, fees, charges, disbursements and expenses including without prejudice to the generality of the above those payable to counsel, solicitors, surveyors and bailiffs incurred by the Landlord in relation to or incidental:-
(1) Every application made by the Tenant for a consent or licence required by the provisions of this Lease whether it is granted, refused or offered subject to any qualification or condition or the application is withdrawn
(2) The contemplation, preparation and service of any notices under this Lease or in contemplation of proceedings against the Tenant even if forfeiture is avoided otherwise than by relief granted by the court
(3) The recovery or attempted recovery of arrears of rent or other sums due under this Lease and any steps taken in contemplation of or in connection with the preparation and service of a schedule of dilapidation during or after the end of the Term.
REPAIR
(ii)(a) to keep every part of the Land (other than the Building) and the interior of the RO Area and all fixtures, fittings and equipment in it owned by the Landlord in good condition, clean, tidy and well-decorated, fair wear and tear and damage of which the Tenant, its licensees, invitees or visitors are not the cause excepted; and
(b) to permit the Landlord and its agents to paint or treat the outside of the Building and all doors leading into the RO Area and the outside of all windows and walls in the RO Area in such colour and manner as the Landlord decides.
NO ALTERATION
(iii) not to alter, cut or damage the RO Area or any other part of the Building without the Landlord's consent (which is deemed to be given to the extent that it is within the RO Area and is required for the operation of the Tenant's business situated therein) and not to make any exterior alteration in the appearance of the Building; and if it does so, to pay the Landlord on demand the entire cost which the Landlord incurs in repairing or replacing that damage.
NUISANCE
(iv) save as may be required for the normal operation of the Tenant's business, not to do on or in the Land or any part of the Building anything which in the Landlord's opinion:-
(a) is a nuisance to others;
(b) is dangerous; or
(c) might prejudice the Landlord's insurance cover or increase the premium
and in particular, but without prejudice to the generality of the foregoing or of the exception referred to, not to use on the Land any chemicals which either individually or in combination are noxious or explosive.
ENTRY
(v)(a) to permit the Landlord and its agents to enter at all reasonable times on reasonable notice except in an emergency (when no notice is required) to:-
(1) ascertain whether or not the covenants and conditions of this Lease have been observed and performed and to view the state of repair and condition of the Land;
(2) carry out repairs;
(3) do any work which the Tenant should have done under this Lease;
(4) comply with its other obligations under this Lease;
(5) give to the Tenant or leave on the Land a notice specifying the works required to remedy any breach of the Tenant's obligations in this Lease.
(b) to carry out the work specified in any such notice to repair as soon as possible.
(c) if within one month of service of a notice to repair the Tenant has not started to execute the work referred to in that notice or is not proceeding diligently with it or if the Tenant fails to finish the work within two months, to permit the Landlord to enter the premises to execute the outstanding works and pay to the Landlord the cost of so doing and all expenses incurred by the Landlord including legal costs and surveyors fees within seven days of demand.
ASSIGNMENT & SUB-LETTING
(vi)(a) not to assign, sublet or charge part only of the Land.
(b) save in respect of the floating Charge under the Tenant's existing Debenture granted to the Royal Bank of Canada or any Debenture replacing it, not to assign, sub-let or charge the whole of the Land without the consent of the Landlord whose consent may not be unreasonably withheld except that the Tenant may without that consent and subject to it remaining fully liable to the Landlord in all respects assign this Lease to
o any wholly owned subsidiary company or any company which owns all of the Tenant's shares, or
o any successor to the Tenant by consolidation, merger or other corporate action;
in every case, each assignee of the Tenant assuming and being taken to have assumed this Lease and being liable in addition to the Tenant, from the date of the assignment, to comply with all the Tenant's obligations in it but:-
(1) if any of the following circumstances apply either at the date when application for consent to assign is made to the Landlord or after that date but before the Landlord's consent is given the Landlord may withhold its consent and if, after the Landlord's consent has been given but before the assignment has taken place, any such circumstances apply the Landlord may revoke his consent. The circumstances are:-
(i) That any sum due from the Tenant under this Lease remains unpaid.
(ii) That in the Landlord's reasonable opinion the assignee is not a person who is likely to be able to comply with the Tenant's
covenants of this Lease and to continue to be able to comply with them following the assignment.
(iii) That the assignee or any guarantor for the assignee is a corporation registered or otherwise resident in a jurisdiction in which the order of a court obtained in the Cayman Islands will not necessarily be enforced against the assignee or guarantor without any consideration of the merits of the case.
(2) The Landlord may impose any or all of the following conditions on giving any consent for an assignment by the Tenant and any such consent is to be treated as being subject to each of the following:-
(i) A condition if reasonably so required by the Landlord on an assignment to a limited company that the assignee must ensure that at least two directors of the company or some other guarantor or guarantors acceptable to the Landlord enter into direct covenants with the Landlord in such form as the Landlord shall specify.
(ii) A condition that if at any time before the assignment the circumstances specified in clause (c) above or any one of them apply the Landlord may revoke the consent by written notice to the Tenant.
(c) not to grant a permitted sublease with a fine or premium and to grant it on similar terms to this Lease containing provisions:-
(1) Prohibiting the sub-tenant from doing or allowing anything in relation to the Land inconsistent with or in breach of the provisions of this Lease.
(2) For re-entry by the sub-landlord on breach of any covenant by the sub-tenant imposing an absolute prohibition against all dealings with the premises other than an assignment.
(3) Requiring the assignee on any assignment of the sublease to enter into direct covenants with the Landlord in such form as the Landlord shall require.
(4) Prohibiting the sub-tenant from holding on trust for another or permitting another to share or occupy the whole or any part of the Land.
(5) Imposing in relation to any permitted assignment the same obligations for registration with the Landlord as are contained in this Lease in relation to dispositions by the Tenant.
(d) before any permitted subletting, to ensure that the sub-tenant enters into a direct covenant with the Landlord that during the period of the sublease the sub-tenant will observe and perform the Tenant's covenants contained in this Lease.
NOTICE OF ASSIGNMENT & SUB-LETTING
(vii) save in respect of the floating Charge under the Tenant's existing Debenture granted to the Royal Bank of Canada or any Debenture replacing it, to give notice to the Landlord within one month after any transaction under Clause 3(vi) or any charge over this Lease, supplying a copy of the instrument.
TELEPHONE AND ELECTRICITY AND OTHER SERVICES
(viii) to pay to the suppliers or reimburse the Landlord for its due proportion of (as the case may be) all charges for the installation of telephones (if required) and all bills for their use and pay to the suppliers or reimburse the Landlord for its due proportion of (as the case may be) all charges for the use of electricity and all other services on the Land.
COMPLY WITH LAWS
(ix) to comply as if it were the freeholder with the legitimate requirements of any authority relating to the Land; and to give the Landlord promptly a copy of any permission, notice or order relating to the Land which any authority serves on or issues to the Tenant; and, if the Landlord requires, to make either alone or jointly with the Landlord objections or representations against the notice or order as the Landlord directs.
LICENCES
(x) to obtain and whenever necessary renew all licences and make all returns which are necessary to enable it to operate its business and to pay all licence and other annual fees when they fall due.
INSURANCE
(xi) to pay for all insurance effected by the Tenant, and not to insure the RO Area against any risk which the Landlord insures against; and to insure against public liability in respect of injury or damage to persons when on the Land in an amount of not less than One Million United States Dollars (US$1,000,000.00) per accident.
GIVE UP POSSESSION
(xii) subject to Clause 5(ii)(b), to leave the Land when this Lease ends clean and secure in every respect and in repair in accordance with the Tenant's obligations in this Lease.
INDEMNITY
(xiii) to keep the Landlord, Hyatt Corporation and Hyatt Britannia Corporation, Ltd., as agent of Cayman Hotel & Golf Club Partnership, an Ontario Limited Partnership, d/b/a Hyatt Regency Grand Cayman, fully indemnified against all losses arising
directly or indirectly out of any act, omission or negligence of the Tenant or any persons at the Land or the Common Areas expressly or impliedly with his authority or out of any breach or non-observance by the Tenant of the covenants, conditions or other provisions of this Lease or any other matters to which this Lease is subject.
INTEREST ON ARREARS
(xiv) to pay interest at the rate of 3% above the prime lending rate of Barclays Bank Plc from time to time on any sums due under this Lease that are not paid when due whether formally demanded or not. Nothing in this clause entitles the Tenant to withhold or delay any payment of sum due under this Lease or affects the rights of the Landlord in relation to any non-payment.
ENVIRONMENTAL PROTECTION
(xv) (a) not to cause or permit any noxious or offensive emissions from any apparatus on the Land.
(b) not to permit any oil or grease or any deleterious objectionable, noxious, dangerous, poisonous or explosive matter or substance to be discharged into any of the Conduits and take all measures to ensure that any effluent discharged into the Conduits does not harm the environment or corrode or otherwise harm the Conduits or cause any obstruction or deposit in them.
(c) to take all practical precautions to ensure that no noxious substances are spilled or deposited on the Land and that contamination does not occur.
(d) within 14 days of the spilling or deposit on the Land of any noxious substance in a quantity that may cause serious damage to or pollution of the environment or serious damage to property or serious harm to human health, to inform the Landlord of this and permit him to enter and inspect the Land.
(e) to indemnify the Landlord and keep him indemnified against any losses in respect of damage to or pollution of the environment or damage to property or harm to human health caused by the Tenant's operations on the Land whether in liquid or solid form or in the form of gas or vapour.
For the purposes of this sub-clause, the expression "Conduits" does not include conduits which are part of the Plant.
ROOF AND FLOOR LOADING
(xvi) not to bring into the RO Area any machinery or other articles that will or may strain or damage the Building or any part of it.
4. LANDLORD'S AGREEMENTS
The Landlord agrees with the Tenant:-
QUIET ENJOYMENT
(i) that if the Tenant complies with all its agreements and obligations it will, subject to the terms of this Lease and subject to the rights reserved to the Landlord under this Lease, occupy the Land during this Lease free from disturbance and without any interruption by the Landlord or any person rightfully claiming under or in trust for it.
INSURANCE
(ii) to insure the Building with a reputable insurance company.
REPAIR
(iii) to put and keep the Building in good repair (except in respect of repairs for which the Tenant is responsible).
INDEMNITY
(iv) to keep the Tenant, its servants, agents and visitors fully indemnified against all losses arising directly or indirectly out of any act, omission or negligence of the Landlord or any persons at the Land or the Common Areas expressly or impliedly with his authority or out of any breach or non-observance by the Landlord of the covenants, conditions or other provisions of this Lease or any other matters to which this Lease is subject.
ENVIRONMENTAL PROTECTION
(v) (a) not to cause or permit any noxious or offensive emissions from any apparatus in the Landlord's Building.
(b) not to permit any oil or grease or any deleterious objectionable, noxious, dangerous, poisonous or explosive matter or substance to be discharged into any of the Conduits and take all measures to ensure that any effluent discharged into the Conduits does not harm the environment or corrode or otherwise harm the Plant or cause any obstruction or deposit in any of the Conduits forming part of it.
(c) to take all practical precautions to ensure that no noxious substances are spilled or deposited on the Land and that contamination does not occur.
(d) within 14 days of the spilling or deposit on the Land of any noxious substance in a quantity that may cause serious damage to or pollution of the environment or serious damage to property or serious harm to human health, to inform the Tenant of this.
(e) to indemnify the Tenant and keep it indemnified against any losses in respect of damage to or pollution of the environment or damage to property or harm to
human health caused by the Landlord's operations in the Landlord's Building or the Adjoining Land whether in liquid or solid form or in the form of gas or vapour.
5. IT IS AGREED:-
LANDLORD'S RIGHTS
(i) The rights set out below are excepted and reserved from the Lease in favour of the Landlord and all others now entitled or who may become entitled:-
(a) The free and uninterrupted passage and running of all appropriate services and supplies from and to other parts of the Adjoining Property and the Landlord's Building in and through any Conduits other than those forming part of the Plant.
(b)(i) The right to construct and maintain at any time during the Term any pipes, sewers, drains, mains, ducts, conduits, gutters, watercourses, wires, cables, channels, flues and all other conducting media including any fixings and ancillary apparatus for the benefit of any part of the Adjoining Property and the Landlord's Building making good any damage caused by the exercise of the right.
(ii) The right to relocate any existing pipes, sewers, drains, mains, ducts, gutters, watercourses, channels, flues and other conducting media other than those forming part of the Plant in any manner whatsoever.
(c) The right for the Landlord and all persons expressly or by implication authorised by it to pass and repass to and from the Adjoining Property at all times for all purposes connected with the use and enjoyment of the Landlord's Building.
(d) The right to enter or in emergency to break into and enter the Land at any time during the Term at reasonable times and on reasonable notice except in emergency:-
(i) To inspect, clean, connect with, repair, remove, replace with others, alter or execute any works whatever to or in connection with the conduits, easements or services referred to in this Clause 5.
(ii) To carry out work or do anything whatsoever that the Landlord is obliged to do under this Lease.
(iii) To exercise any of the rights granted to the Landlord by this Lease.
(e) The right to erect scaffolding for the purposes of inspecting, repairing or cleaning the Building.
(f) The rights of light, air, support, shelter, protection and all other easements and rights at the date of this Lease belonging to or enjoyed by other parts of the Building or any other buildings and any Adjoining Property.
(g) For the right and liberty at any time after the date of this Lease, to alter, raise the height of or rebuild any building on any Adjoining Property.
(h) The right for the Landlord and the lessees and occupiers for the time being of the Landlord's Building at all times with or without motor vehicles to pass and repass along and over the Right of Way to and from the Adjoining Property during the Term but the Landlord will keep the Tenant indemnified from and against any act, loss, damage or liability suffered by the Tenant in the exercise of the rights in this sub-clause (h).
TENANT'S RIGHTS
(ii)(a) the Tenant and its servants, agents and visitors have the right to share the use of:-
o a right of access 12 feet wide with or without vehicles and equipment to well pump #1 shown on the Plan and including an area 10 feet in radius from the centre of the well head;
o the Common Areas to get to and from the Land with or without motor vehicles;
o the conduits in the Building which serve the RO Area;
(b) on or at any time before termination of this Lease for any reason (including under Clause 5(iv)), the Tenant may detach all items affixed to the Land and used for the purposes of its business and remove them without interference by the Landlord. In the case of termination by expiry of the Term, the Tenant must complete the detachment and removal by the end of the Term, but in case of termination for any other reason (including under Clause 5(iv)), the Tenant will have an additional thirty (30) days after termination during which it will be entitled to enter on the Land with or without vehicles and workmen to detach and remove those items. In either case, the Tenant must do as little damage to the Property as possible during such detachment and removal but otherwise has no obligation to repair or restore the Land or any building on it after completion of the detachment and removal.
TERMINATION ON DAMAGE
(iii)(a) If and whenever the Building or any part of it is damaged or destroyed and payment of the insurance money is not wholly or partly refused because of any act or default of the Tenant or anyone at the Building or on the Land expressly or by implication with his authority the Landlord must use his reasonable endeavours to obtain all planning permissions or other permits and consents
("permissions") that are required under the planning laws or otherwise to enable him to rebuild and reinstate the Building.
(b) Subject to the provisions of clause (c) and, if any permissions are required, after they have been obtained the Landlord must as soon as reasonably practicable apply all money received in respect of the insurance in rebuilding or reinstating the Building.
(c) The Landlord need not rebuild or reinstate the Building if and for so long as rebuilding or reinstatement is prevented because:-
(i) the Landlord despite using his reasonable endeavours cannot obtain any necessary permission.
(ii) any permission is granted subject to a condition with which it is unreasonable to expect the Landlord to comply.
(iii) there is some defect or deficiency on the site on which the rebuilding or reinstatement is to take place that means it can only be undertaken at a cost that is unreasonable in all the circumstances.
(iv) it is unable to obtain access to the Land to rebuild or reinstate.
(v) of any other circumstances beyond the Landlord's control.
(d) If at the end of the period of one year commencing on the date of damage or destruction the Building is still not fit for the Tenant's occupation and use either the Landlord or the Tenant may by notice served at any time within three months of the end of that period terminate this Lease and upon service of such notice the Term is to cease absolutely but without prejudice to any rights or arrears that may have accrued to either party for breach of the terms of this Lease including this Clause 5(iii) and all money received in respect of the insurance effected by the Landlord is to belong to the Landlord absolutely.
TERMINATION
(iv) If and whenever during the Term:-
(a) the Tenant breaches any of the covenants or conditions of this Lease and any such breach is not remedied within thirty (30) days of receipt of notice of any such breach from the Landlord;
(b) the Tenant being an individual becomes bankrupt or being a company enters into liquidation either compulsorily or voluntarily (except for the purpose of reconstruction or amalgamation);
(c) the Tenant enters into any arrangement or composition for the benefit of its creditors;
(d) any distress or execution is levied on the Tenant's goods and is not remedied within thirty (30) days of the date of the levying of any such distress or execution;
(e) the Tenant is unable to pay its debts within the meaning of The Companies Law (2001 Second Revision) or any amendment, alteration or re-enactment of it; or
(f) the Water Supply Agreement is lawfully terminated by the Landlord
then the Landlord may at any time, and despite the waiver of any previous right of entry, enter the Land or any part of it in the name of the whole so ending this Lease, but without prejudice to any rights or remedies which may have accrued to the Landlord under it.
INSPECTION OF POLICIES
(v) the Landlord and the Tenant each has the right to inspect the insurance policies issued to the other pursuant to this Lease.
MAKE GOOD DAMAGES
(vi) the Landlord must make good any damage done when exercising its rights, except to the extent that the damage results from the Tenant's negligence or breach of obligation; but the Landlord will not be liable for any inconvenience or consequential loss resulting from the exercise of its rights.
ACCIDENT & INJURY
(vii) the Landlord will not be responsible to the Tenant for any accident or injury to any individual or for damage to or loss of any goods or other property sustained on the Land unless the accident or injury results from the negligence of the Landlord or its agents.
NEGLECT & FORBEARANCE
(viii) no neglect, forbearance or omission by the Landlord to take advantage of or enforce any right or privilege arising out of any breach by the Tenant (whether original or recurring) of any obligation (express or implied) will operate as or be deemed to be a general waiver of the its entitlement to take advantage of or enforce that right or privilege.
TENANT'S FAILURE TO INSURE
(ix) if the Tenant at any time does not insure in accordance with its obligations under this Lease, the Landlord may do so and the Tenant must pay on demand any money which the Landlord spends for that purpose.
REGISTERED LAND LAW
(x) the terms of this Lease, where inconsistent with the provisions of The Registered Land Law, will where permitted by law prevail; and the covenants implied by sections 52 and 53 of the Registered Land Law are excluded.
RIGHT TO SELL
(xi) if after the Tenant has vacated the Land at the end of this Lease any
of the Tenant's property remains in the RO Area and the Tenant does
not remove it within the thirty (30) days referred to in Clause
5(ii)(c), the Landlord may as the Tenant's agent sell that property
and after deducting from the proceeds of sale the costs and expenses
of removal storage and sale, the Landlord will hold the balance to
the Tenant's order; and the Tenant must indemnify the Landlord
against any liability which it incurs to any third party whose
property the Landlord sells in good faith and in the mistaken belief
(which will be assumed unless the contrary is proved) that the
property belonged to the Tenant.
NO REPRESENTATIONS
(xii) this Lease contains the entire agreement between the parties; each party acknowledges that it has not entered into this Lease in reliance wholly or partly on any statement or representation made by or on behalf of the other unless it is expressly set out in this Lease.
EXCEPTIONS
(xiii) despite anything to the contrary in this Lease, the Tenant has no responsibility to repair or maintain or in any way to take care of the Landlord's Building or the Common Areas.
NOTICES
(xiv) a notice or other document will be deemed to be duly served by a party either delivering or sending it by prepaid registered mail addressed to the other party at the address stated at the beginning of this Lease or to its registered office or last-known address. The notice or other document will be deemed to be received by the other party on delivery or seventy-two (72) hours after posting, as the case may be.
GOVERNING LAW
(xv) this Lease is governed by and must be construed in accordance with the laws of the Cayman Islands and the parties agree to submit to the jurisdiction of the courts of the Cayman Islands.
THE SCHEDULE
THE PLANT
1 SEAWATER REVERSE OSMOSIS PLANT SKID #4 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: No Name Plate
Model #: NA
Serial #: NA
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165M
Serial #: 12834
MOTOR
Brand Name: TOSHIBA (HOUSTON)
Model #: B-1254FLA4UD
Serial #: AB54699-1
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: PT8650 E1 (or) NP4840/A
Serial #: NA
MEMBRANE ELEMENT HOUSINGS
Description: 23 Housings and element-single
element per housing
Membranes Dupont
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
2 SEAWATER REVERSE OSMOSIS PLANT SKID #5 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: EXCEL Model #: 30EFCS3-3C150 Serial #: NA HIGH PRESSURE PUMP Brand Name: WHEATLEY Model #: HP165M Serial #: NA MOTOR Brand Name: SIEMENS Order #: 2-312-LR91633-2 Serial #: NA |
ENERGY RECOVERY TURBINE
Brand Name: CALDER Model #: PT8650 E1 (or) NP4840/A Serial #: NA MEMBRANE ELEMENT HOUSINGS Description: 12 twin housings-PERMASEP Membranes Dupont DRAW BACK TANK WATER METER CONTROL PANEL |
3 SEAWATER REVERSE OSMOSIS PLANT SKID #6 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: OSMONICS
Model #: HX1620-3 OT-PVC-D
Serial #: 96-A49103-1
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165AM /29613-B
Serial #: 22747
MOTOR
Brand Name: SIEMENS
Order #: 2-5106-LR90303-1
Serial #: NA
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: RO-4034 1390 15
Serial #: NA
MEMBRANE ELEMENT HOUSINGS
Description: 20 B-10 PERMASEP Housings-one
membrane per housing
Membranes DUPONT
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
4 SEAWATER REVERSE OSMOSIS PLANT SKID #7 COMPRISED OF:
CARTRIDGE FILTER
Brand Name: EXCEL
Model #: 30EFCS3-3C150
Serial #: NA
HIGH PRESSURE PUMP
Brand Name: WHEATLEY
Model #: HP165AM /29613-B
Serial #: 23852
MOTOR
Brand Name: TICO AMERICA
Model #: NA
Serial #: NA
ENERGY RECOVERY TURBINE
Brand Name: CALDER
Model #: RO-290-40
Serial #: 021-97-A2316
MEMBRANE ELEMENT HOUSINGS
Description: 1) 4 Triples (3 membranes per
housing), no name brand on housings
2) 2 Doubles (2 membranes per
housing), PERMASEP
Membranes DUPONT
DRAW BACK TANK
WATER METER
CONTROL PANEL
|
5 POTABLE WATER OZONATION SYSTEM COMPRISED OF:
AIR COMPRESSOR PACKAGE
Brand Name: INGERSOLL RAND
Model #: SS-EP15
Serial #: LX0230U98043
AIR COMPRESSOR MOTOR
Brand Name: US ELECTRIC MOTOR DIVISION
OF EMERSON ELECT CO.
Model #: T589A
ID #: B01A339RO65F
|
MOISTURE SEPARATOR
Brand Name: THERMAL TRANSFER PRODUCTS Model #: S-100-AD ID #: S-6019 |
REFRIGERATED DRYER
Brand Name: INGERSOLL RAND
Model #: DXR50
Serial #: 97LDXR5563
OXYGEN CONCENTRATOR
Brand Name: AIRSEP-NATL BD 72602K-CERTIFIED
BY BRUNNER ENG & MFG INC.
Model #: AS-160/250/450
Serial #: NA
OXYGEN RECEIVER
Brand Name: NATL.BD NO.182314-CERTIFIED
BY STEEL FAB
ABINGDON VA.
PART #: CRN C7228.1C
Serial #: NA
OZONE GENERATOR
Brand Name: OSMONICS
Model #: HC-5
Serial #: NA
OZONE INJECTOR MOTOR
Brand Name: BALDOR
Cat#: JWMDM3616T
Serial #: NA
CENTRIFUGAL PUMP(OZONE INJECTOR)
Brand Name: WAUKESHA CHERRY BURRELL
Model #: U2065
Serial #: 2200989
DISSOLVED OZONE MONITOR
Brand Name: OREC/OSMONICS
Model #: NA
Serial #: NA
AC DRIVE
Brand Name: MEGNETEK
Model #: GPD 506 N12-506V-B014
Serial #: 34469
|
6 HIGH SERVICE WATER DISTRIBUTION PUMP SYSTEM COMPRISED OF:
DWPO4
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587B THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Cat #: JMM2514T Spec #: 39K35W525 DWPO5 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587A THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Cat #: JMM2514T Spec #: 39K35W528 DWPO7 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C820AM Serial #: 152587C THREE PHASE INDUCTION MOTOR Brand Name: US ELECTRICAL MOTORS Model #: E685A Serial #: BO1A287RR087F |
7 DOMESTIC WATER TRANSFER PUMP SYSTEM COMPRISED OF:
CWP01
CENTRIFUGAL PUMP
Brand Name: PEERLESS PUMP COMPANY Model #: 820A Serial #: TI57490 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 CWP02 CENTRIFUGAL PUMP Brand Name: PEERLESS PUMP COMPANY Model #: C825AM Serial #: 171953 |
THREE PHASE INDUCTION MOTOR
Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 |
8 TRANSFER PUMP TO OZONATION SYSTEM COMPRISED OF:
CENTRIFUGAL PUMP
Brand Name: AMPCO Model #: 3 x 2 1/2 ZC2 Serial #: CC16867-1-1 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: NA Spec #: 07H167W06 |
9 IRRIGATION TRANSFER PUMP SYSTEM COMPRISED OF:
IRP01
CENTRIFUGAL PUMP
Brand Name: PAC_SEAL Model #: 4P940 Motor Reference #: G40444/F96Z120R169F THREE PHASE INDUCTION MOTOR Brand Name: DAYTON Model #: 9N114 Motor Reference #: G40444/F96Z120R169F CWP02 TRANSFER PUMP TO TANK Brand Name: PEERLESS PUMP COMPANY Model #: C825AM Serial #: 171953 THREE PHASE INDUCTION MOTOR Brand Name: BALDOR Model #: JMM3314T Spec #: 37F196X48 |
10 POTABLE WATER DEGASSIFIER COMPRISED OF:
Brand Name: DELEOCH Model #: NA Serial #: NA |
BLOWER MOTOR #1
SINGLE PHASE INDUCTION MOTOR
Brand Name: BALDOR Model #: VL313 Serial #: NA BLOWER MOTOR #2 THREE PHASE INDUCTION MOTOR Brand Name: GE MOTORS & INDUSTRIAL SYSTEMS Model #: 5K49ZN2189 Serial #: NMLI42677 |
11 SEAWATER WELLS AND SUBMERSIBLE PUMPS COMPRISED OF:
WP #2
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: JACUZZI Model #: S6175-2 Serial #: 92611702 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: 99g19-14-0014 |
WP #4
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: GRUNFOS Model #: 300S75-2 Serial #: 14B70002 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
WP #5
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: GRUNFOS Model #: 300S75-2 Serial #: NA |
THREE PHASE MOTOR
Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
WP #6
FEEDWATER WELL, CASING AND WELL HEAD APPURTENANCES
SUBMERSIBLE PUMP
Brand Name: GRUNFOS Model #: 300S75-2 Serial #: 14B70002 THREE PHASE MOTOR Brand Name: FRANKLIN Model #: 236 6119 020 Serial #: NA |
12 EMERGENCY DIESEL POWERED GENERATOR COMPRISED OF:
EMERGENCY GENERATOR ENGINE
Brand Name: KOMATSU LTD Model #: 6491 Serial #: 14448 EMERGENCY GENERATOR Brand Name: ONAN 60 Model #: 60 ODVB-15R/30083B Serial #: B850750776 FUEL INJECTION PUMP Brand Name: DIESEL KIKI ASSY #: 6207-71-1410 Serial #: 450K327320 MAGNETIC DRIVER Brand Name: NIKKO ELECT IND CO LTD Model #: 600-815-5560 Serial #: 0-47100-3720 |
13 BOLTED STEEL 816,000 US GALLON POTABLE WATER TANK
Brand Name: Florida Aquastore, Inc. Model #: NA Serial #: NA |
14 ALL INTERCONNECTING PIPING, CONDUITS AND APPURTENANCES, ABOVE THE GROUND WHICH CONNECT ITEMS 1 THROUGH 13 TO EACH OTHER, AND TO THE WATER PIPE, AND WHICH DIRECTLY FACILITATE THE OPERATION AND MAINTENANCE OF ITEMS 1 THROUGH 13.
15 ALL ELECTRICAL EQUIPMENT AND COMPONENTS WHICH CONNECT ITEMS 1 THROUGH 13 TO EACH OTHER AND TO THE MAIN ELECTRICAL SERVICE IN THE RO BUILDING.
16 ALL CONTROLS AND INSTRUMENTATION ATTACHED TO ITEMS 1 THROUGH 13.
17 ALL TOOLS SPECIFIC TO THE MAINTENANCE OR OPERATION OF THE PLANT.
18 ALL LABORATORY AND TESTING EQUIPMENT USED TO MONITOR WATER PRODUCED BY THE PLANT.
19 ALL DRAWINGS, SCHEDULES, OPERATION AND MAINTENANCE MANUALS FOR ITEMS 1 THROUGH 18.
20 ALL OFFICE EQUIPMENT CURRENTLY LOCATED WITHIN THE RO BUILDING AND USED BY THE STAFF OF THE PLANT.
21 ALL SPARE PARTS FOR ITEMS 1 THROUGH 18, STORED MATERIALS SUCH AS CHEMICALS AND LUBRICANTS HELD IN STOCK AT THE TIME OF CLOSING.
THE COMMON SEAL of CAYMAN ) CAYMAN HOTEL & GOLF INC.
HOTEL & GOLF INC. was hereunto )
affixed by S. Prasad )
Director and by )
S. Prasad Asst/Secretary )
by authority of the Board )
of Directors in ) Per: /s/ Suresh Prasad
-----------------------------------
the presence of:- ) Director
)
)
/s/ illegible ) Per: /s/ Suresh Prasad
-------------------------------- -----------------------------------
Notary Public Asst/Secretary
THE COMMON SEAL of ) CONSOLIDATED WATER CO. LTD.
CONSOLIDATED WATER CO. LTD. )
was hereunto affixed by
Jeffrey Parker )
Director, and by ) Per: /s/ Jeffrey M. Parker
Peter Ribbins Secretary ) ----------------------------------
) Director
by authority of the Board of
Directors in the present of:- )
/s/ illegible ) Per: /s/ Peter Ribbins
-------------------------------- ---------------------------------
Notary Public Director/Secretary
|
Exhibit 10.53
BELIZE
THE REGISTERED LAND ORDINANCE, 1977
CERTIFICATE OF LEASE
Chapter 157, Laws of Belize
REGISTERED SECTION BLOCK PARCEL
SAN PEDRO 7 1870/1
------------------ ----- ------
Area: 1.186 Acres
LESSOR Government of Belize
RENT $1.00 p.a.
|
TERM 18 years 27/4/93
THIS IS TO CERTIFY THAT BELIZE WATER LTD.
of #37 Regent Street, Belize City, Belize District
Is now registered as the proprietor of the leasehold interest above referred to, subject to the agreements and other matters contained in the registered lease, to the entries in the register relating to the lease and to such of the overriding interests set forth in section 31 of the Registered Land Ord. 1977 as may for the time being subsist and affect the land comprised in the lease.
At the date thereof the following entries appear in the register relating to the lease:
PART A- PROPERTY SECTION (EASEMENTS, ETC.)
PART B- PROPRIETORSHIP SECTION (INHIBITIONS, CAUTIONS AND RESTRICTIONS)
Not to transfer the land, lease or charge without written consent of Lessor. Hereinafter subject to the lease conditions attached.
PART C- INCUMBRANCES SECTION (LEASES, CHARGES,ETC.)
GIVEN UNDER MY HAND AND THE SEAL OF THE LAND REGISTRY
THIS 18th DAY OF July, 2001
/s/ M. Petzold
---------------------------------------
REGISTRAR OF LANDS
|
Exhibit 21
CONSOLIDATED WATER CO. LTD. AND SUBSIDIARY COMPANIES
Subsidiaries of the Registrant
The following list includes all of the Registrant's wholly-owned subsidiaries as of December 31, 2001. All subsidiaries of the Registrant appearing in the following table are included in the consolidated financial statements of the Registrant.
Name of Subsidiary Jurisdiction of Incorporation ------------------ ----------------------------- Belize Water Ltd. Belize Commonwealth Water Limited(1) Bahamas Cayman Water Company Limited(1) Cayman Islands Hurricane Hideway Ltd.(1) Cayman Islands |
(1) Dormant companies, with no operations, assets and liabilities.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Registration No. 333-10206) of Consolidated Water Co. Ltd. of our report dated March 13, 2002 relating to the financial statements which appear in this Form 10-K.
/s/ PricewaterhouseCoopers PricewaterhouseCoopers Cayman Islands March 28, 2002 |