UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 14, 2007
(Date of earliest event reported)
CONSOLIDATED WATER CO. LTD.
(Exact Name of Registrant as Specified in Charter)
         
Cayman Islands, B.W.I.   0-25248   Not Applicable
(State or Other Jurisdiction of
Incorporation) 		  (Commission File No.)   (IRS Employer Identification No.)
The Regatta Office Park
Windward Three, 4 th Floor
West Bay Road, P.O. Box 1114
Grand Cayman KY 1-1102, Cayman Islands
(Address of Principal Executive Offices)
(345) 945-4277
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Item 5.02.   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 14, 2007, Consolidated Water Co. Ltd. (the “Company”) amended its employment agreements with Jeffrey M. Parker, Chairman of the Board, and Frederick W. McTaggart, the Chief Executive Officer and President of the Company.
Amendment to Jeffrey M. Parker Employment Agreement
Commencing January 1, 2008, Mr. Parker’s base salary increases from approximately $190,000 to $275,000. In addition, Mr. Parker’s bonus after his 2007 fiscal year bonus will no longer be calculated as (a) 1.5% of the Company’s annual net profits, before charging the bonus amount, dividends or crediting any amounts arising from the re-valuation of the Company’s assets to a maximum of 40% of Mr. Parker’s annual remuneration and (b) 15% of the amount by which the Company’s net profits for that fiscal year exceeded the highest annual net profits earned by the Company in any prior fiscal year.
Pursuant to the terms of the amended employment agreement, Mr. Parker’s bonus will be determined, at the sole discretion of the Company’s Board of Directors, and will be paid in cash in an amount not to exceed 50% of Mr. Parker’s then-current annual compensation. The amount of the annual bonus, if any, will be calculated by the Board of Directors based upon their assessment of the performance of Mr. Parker in the following areas: (a) new business development, (b) investor relations, (c) communication with the Board of Directors, (d) communication and collaboration with the Company’s chief executive officer and chief financial officer; and special projects assigned by the Board of Directors. Finally, Mr. Parker will be entitled to a discretionary bonus in an amount and form as determined at the sole discretion of the Board of Directors.
Amendment to Frederick W. McTaggart Employment Agreement
Commencing January 1, 2008, Mr. McTaggart’s annual base salary increases from approximately $230,000 to $375,000. In addition, Mr. McTaggart’s bonus after his 2007 fiscal year bonus will no longer be calculated as (a) 2% of the net profit of the Company’s annual net profits, before charging the bonus amount, dividends, or crediting any amounts arising from the re-valuation of the Company’s assets to a maximum of 50% of Mr. McTaggart’s annual remuneration and (b) 5% of the amount by which the Company’s net profits for that fiscal year exceeded the highest annual net profits earned by the Company in any prior fiscal year.
Pursuant to the terms of the amended employment agreement, Mr. McTaggart’s bonus will be determined, at the sole discretion of the Company’s Board of Directors, and will be paid in an amount not to exceed 100% of Mr. McTaggart’s then-current annual compensation. The amount of the annual bonus, if any, will be calculated by the Board of Directors based upon their assessment of the performance of Mr. McTaggart in the following areas: (a) the

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Company achieving its budgeted net income and earnings per share targets, (b) Mr. McTaggart facilitating the Company’s revenue growth through project extensions and new projects, (c) the Company staying within the approved capital expenditure budgets for operations, project extensions and new projects, (d) Mr. McTaggart fostering excellent communications with the Board of Directors and being receptive to input from the Board of Directors, (e) Mr. McTaggart executing any special projects as assigned by the Board of Directors, and (f) the development and maintenance of excellent customer relations.
The annual bonus, if any, will be paid 75% in cash and 25% in the Company’s ordinary shares valued at the market price at the close of trading on December 31, of the relevant fiscal year (or if such day is not a trading day, at the close of trading on the preceding trading day). Finally, Mr. McTaggart will be entitled to a discretionary bonus in an amount and form as determined at the sole discretion of the Board of Directors. Pursuant to Nasdaq rules, the payment of a bonus in stock must be approved by the shareholders of the Company.
The foregoing description is only a summary of certain provisions of the amended employment agreements with Messrs. Parker and McTaggart and is qualified in its entirety by the amended employment agreements, copies of which are attached hereto as Exhibits 10.1 and 10.2 and are incorporated herein by reference.
Item 9.01   Financial Statements and Exhibits
(d)   Exhibits.
         
Exhibit No.   Title
       
 
  10.1    
Amendment of Engagement Agreement dated September 14, 2007 between the Company and Jeffrey M. Parker.
       
 
  10.2    
Amendment of Engagement Agreement dated September 14, 2007 between the Company and Frederick W. McTaggart.
       
 

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SIGNATURE
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  CONSOLIDATED WATER CO. LTD.
  		 
  By:   /s/ Frederick W. McTaggart    
    Name:   Frederick W. McTaggart   
    Title:   President and Chief Executive Officer   
 
Date: September 19, 2007

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EXHIBIT INDEX
         
Exhibit   Description
       
 
  10.1    
Amendment of Engagement Agreement dated September 14, 2007 between the Company and Jeffrey M. Parker.
       
 
  10.2    
Amendment of Engagement Agreement dated September 14, 2007 between the Company and Frederick W. McTaggart.

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EXHIBIT 10.1
AMENDMENT OF ENGAGEMENT AGREEMENT
THIS AGREEMENT is made this 14th day of September, 2007
     
BETWEEN:  
CONSOLIDATED WATER CO. LTD.,
A Cayman Islands company having its registered office at
Regatta Office Park, West Bay Road
P.O. Box 1114GT, Grand Cayman KY1-1102
(“the Company”)
   
 
AND:  
JEFFREY M. PARKER
of 308 Britannia Drive, #630
P.O. Box 30749, Grand Cayman KY1-1203, B.W.I.
(“the Chairman”)
WHEREAS:
  A.   The Company and the Chairman (together “the Parties”) entered into an engagement agreement dated the 5 th of December, 2003 (“the Engagement Agreement”)
 
  B.   On the 25 th of June, 2007 the Parties agreed that for the purpose of Clause 19 of the Engagement Agreement, for the calendar year 2007 only, the words “August 31” should replace the words “June 30”.
 
  C.   On the 29 th of August, 2007 the Parties agreed that for the purpose of Clause 19 of the Engagement Agreement, for the calendar year 2007 only, the words “September 15” should replace the words “June 30”.
 
  D.   The Parties are desirous of amending the Engagement Agreement in accordance with the terms of the Agreement.
NOW IN CONSIDERATION of the mutual covenants contained herein the Parties agree that the Engagement Agreement shall be amended as follows:
  1.   Clause 2 shall be amended by adding “and, with effect from 1 st January, 2008, will be US$275,000 per annum” immediately after the words “per annum” on the first line thereof.
 
  2.   Clause 6 shall be amended by adding “and ending with the financial year 2007” immediately after “2004” on the second line thereof.
 
  3.   Clause 6 shall be further amended by adding the following at the end thereof:
“Further, for each completed fiscal year beginning with the fiscal year 2008, at the sole discretion of the Board of Directors, the Chairman may be paid bonuses calculated as follows:
(a) Annual Bonus
     An amount in cash not to exceed 50% of the remuneration pursuant to Clause 2 hereof.

 

 

The amount of the Annual Bonus, if any, will be calculated by the Board of Directors based upon its assessment of the performance of the Chairman in the following areas:
  i.   New business development
 
  ii.   Investor Relations
 
  iii.   Communication with the Board
 
  iv.   Communication and collaboration with Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)
 
  v.   Special Projects as assigned by the Board of Directors
  (b)   Discretionary Bonus
 
      An amount in the form of cash and/or share grants and/or options on the Company’s shares.
  4.   Clause 8 shall be amended by:
  i.   Replacing the comma, after the word “foregoing” on the fourth line thereof, with a colon.
 
  ii.   Deleting the words “management of corporate governance issues, financial public relations and identification and initial investigation of new projects. The Chairman shall discharge his duties in accordance with the directions of the Board” beginning on the third line thereof.
 
  iii.   Adding the following words to replace those deleted pursuant to Clause 4. ii. hereof:
  “i.     Reporting to and coordinating with the CEO in relation to the identification and initial investigation of business in new territories. For the avoidance of doubt, the implementation and management of any resulting business shall be the responsibility of the CEO
 
  ii.   Investor Relations activities and communications, whenever possible advising the CEO and CFO in advance thereof or, when advice is not possible in advance, ensuring that the CEO and CFO are promptly advised after the event, except that:-
      All calls or meetings with the analysts covering the Company’s shares, where detailed analysis of the Company’s financial information on its past performance or where financial guidance is to be given on the Company’s future financial performance either or both of which will or might reasonably be expected to pertain to analyst reports or updates to analyst reports, must be approved by the CEO in advance and the Chairman must be joined by either the CEO or CFO;
 
      The Power Point slides, and if there be one, the written script, to be presented at an Industry Conference where there will be no one on one meetings with analysts covering the Company’s shares must be approved by the CEO in advance.

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      The script which is to be presented by the CEO and CFO at the Quarterly Telecom Conference Calls shall be the responsibility of the CEO and CFO subject to comments and input by Chairman.;
 
      All Press Releases shall be the responsibility of the CEO subject to comments and input by Chairman and CFO;
 
  iv.   At a place and time to be determined by the CEO, the Chairman will meet with the CEO or have a conference call at least weekly to provide updates on the business and project activities.
  5.   Clause 13(a) shall be amended by deleting the words “the Capacity” from the fifth line thereof and replacing them with the words “his duties hereunder”
EXECUTED for and on behalf of
CONSOLIDATED WATER CO. LTD.
By: Frederick W. McTaggart
In the presence of:
     
/s/ Gerard Pereira
  /s/ Frederick W. McTaggart
 
   
Witness
  CONSOLIDATED WATER CO. LTD
 
   
EXECUTED by
   
JEFFREY M. PARKER
   
In the presence of:
   
 
   
/s/ Gerard Pereira
  /s/ Jeffrey M. Parker
 
   
Witness
  JEFFREY M. PARKER

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EXHIBIT 10.2
FIRST AMENDMENT OF ENGAGEMENT AGREEMENT
THIS AGREEMENT is made this 14th day of September, 2007
     
BETWEEN:  
CONSOLIDATED WATER CO. LTD.,
A Cayman Islands company having its registered office at
Regatta Office Park, West Bay Road
P.O. Box 1114
Grand Cayman KY1-1102
Cayman Islands
(“the Company”)
   
 
AND:  
FREDERICK W. MCTAGGART
of 11 Doubloon Drive
P.O. Box 321
Grand Cayman KY1-1502
Cayman Islands
(“the President”)
WHEREAS:
  A.   The Company and the President (together “the Parties”) entered into an engagement agreement dated the 5th of December, 2003 (“the Engagement Agreement”)
 
  B.   On the 25th of June, 2007 the Parties agreed that for the purpose of Clause 19 of the Engagement Agreement, for the calendar year 2007 only, the words “August 31” should replace the words “June 30”.
 
  C.   On the 29th of August, 2007 the Parties agreed that for the purpose of Clause 19 of the Engagement Agreement, for the calendar year 2007 only, the words “September 15” should replace the words “June 30”.
 
  D.   The Parties are desirous of amending the Engagement Agreement in accordance with the terms of the Agreement.
NOW IN CONSIDERATION of the mutual covenants contained herein the Parties agree that the Engagement Agreement shall be amended as follows:
  1.   Clause 2 shall be replaced with the following clause:

‘The President’s remuneration will be US$200,000.00 per annum and with effect from 1st January, 2008, will be US$375,000 per annum, payable semi-monthly in arrears and subject to adjustment as per Clause 5.’
 
  2.   Clause 6 shall be amended by adding “and ending with the financial year 2007” immediately after “2004” on the second line thereof.

 

 

  3.   Clause 6 shall be further amended by adding the following words at the end thereof:
 
      “Further, for each completed fiscal year beginning with the fiscal year 2008, at the sole discretion of the Board of Directors, the President may be paid bonuses calculated as follows:
  (a)   Annual Bonus: An amount not to exceed 100% of the remuneration pursuant to Clause 2 hereof.
 
      The amount of the Annual Bonus, if any, will be calculated by the Board of Directors based upon its assessment of the performance of the President in the following areas:
  i.   Achieving the Company’s budgeted net income and earnings per share targets,
 
  ii.   Facilitating revenue growth through project extensions and new projects,
 
  iii.   Staying within the approved capital expenditure budgets for operations, project extensions and new projects,
 
  iv.   Fostering excellent communications with the Board of Directors of the Company and being receptive to input from Board of Directors,
 
  v.   Executing any special projects as assigned by the Board of Directors,
 
  vi.   Developing and maintaining excellent customer relations.
      The Annual Bonus, if any, calculated aforesaid shall be paid as to 75% in cash and as to 25% in ordinary shares of the Company valued at the market price at the close of trading of the same on December 31st of the relevant financial year (or if such day is not a trading day, at the close of trading on the preceding trading day).
 
  (b)   Discretionary Bonus : An amount in the form of cash and/or grants of the Company’s ordinary shares and/or options on the Company’s ordinary shares.
  4.   Clause 8 shall be amended by adding a colon after the word ‘shall’ on the fifth line thereof and replacing the remaining words in that sentence with the following words:
  (a)   Serve on the board of directors of such subsidiaries or affiliates of the Company as the Board may direct,
 
  (b)   Work in cooperation with the Chairman of the Board of the Company (‘the Chairman’) on analyst calls and meetings, industry conference presentations, and press releases,

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  (c)   Meet or have a conference call at least weekly with the Chairman at a place and time determined by the President to the end and for the purpose of facilitating communication, in particular in relation to developments on business and project activities,
 
  (d)   Provide assistance to the Chairman on Board assigned Special Projects,
 
  (e)   Develop and maintain excellent customer relations and utilize the Chairman at the President’s discretion to assist in these efforts.
  5.   Clause 12(b) shall be replaced with the following clause:
      ‘b) six (6) weeks vacation to be taken at a time approved by the Board, but at no time shall the President be on vacation for more than 18 consecutive calendar days unless otherwise approved by the Board.’
  6.   Clause 13(a) shall be amended by deleting the words “the Capacity” from the fifth line thereof and replacing them with the words “his duties hereunder”
EXECUTED for and on behalf of
CONSOLIDATED WATER CO. LTD.
By: Jeffrey M. Parker
In the presence of:
     
/s/ Gerard Pereira
  /s/ Jeffrey M. Parker
 
   
Witness
  CONSOLIDATED WATER CO. LTD
 
   
EXECUTED by
   
FREDERICK W. MCTAGGART
   
In the presence of:
   
 
   
/s/ Gerard Pereira
  /s/ Frederick W. McTaggart
 
   
Witness
  FREDERICK W. MCTAGGART

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