<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>3
<FILENAME>g68171ex10-12.txt
<DESCRIPTION>WATER SUPPLY AGREEMENT
<TEXT>

<PAGE>   1
                                                                   Exhibit 10.12
                             WATER SUPPLY AGREEMENT


THIS AGREEMENT is made this 18th day of December 2000


BETWEEN:                   CONSOLIDATED WATER CO. LTD. a Cayman Islands company
                           with its Registered Office at Trafalgar Place, West
                           Bay Road, P.O. Box 1114GT, Grand Cayman, B.W.I. (the
                           "Company")


AND:                       SOUTH BIMINI INTERNATIONAL LTD. A Bahamian company
                           with its Registered Office at the Chambers of Messrs.
                           Higgs & Kelly, P.O. Box N4818, 384 Bay Street,
                           Nassau, The Bahamas (the "Customer")


WHEREAS:

A.       The Customer is desirous of obtaining a supply of potable water
         ("Water") to its property development known as Bimini Sands Resort
         (which, with the exception of the parcel hereinafter defined as the
         "Land", is hereinafter referred to as the "Property).

B.       The Company is willing to provide Water to the Property.

NOW IN CONSIDERATION of the mutual covenants contained herein the parties agree
as follows:

1.       Save for the continuing supply of well water to certain docks pending
         completion of excavation of the marina, the Customer will purchase all
         Water that it needs for the Property from the Company and will use its
         best endeavors to cause purchasers of all or part of the Property from
         the Customer to enter into Water Supply Agreements similar to this
         Agreement with the Company.

2.       The Customer will give the Company not less than one hundred and eighty
         (180) days notice of any expected increase of more than 20% in the
         volume of Water that it requires in excess of the average volume of
         Water supplied in the two preceding calendar months and the Company

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         will use its best endeavors to meet the full demand from the Customer
         from time to time.

3.       The Customer will lease to the Company at a peppercorn rental for the
         duration of this Agreement the land described in the First Schedule
         hereto (the "Land") and will permit the Company's employees and agents
         to enter upon and enjoy at no cost such rights of access over the
         Property as are reasonably necessary for the conduct of the Company's
         business from time to time. The Company will use the Land for the
         installation of the necessary feed and discharge wells, buildings,
         machinery, equipment, storage, pumping and piping facilities
         (collectively the "Equipment") necessary to supply the Water and for no
         other purpose.

4.       Not later than 90 days from the date on which the last of all licenses,
         permits, permissions and approvals from Government or governmental
         authorities necessary to allow the Company to install the Equipment and
         commence the supply of Water are received (the "Commencement"), the
         Company will commence the supply of Water to the Property.

5.       The Company will install a totalizing meter or meters at the boundary
         between the Land and the Property (the "Meter") and will maintain the
         Meter in good repair. If the Meter is damaged by the Customer, its
         agents, servants or invitees the Company will repair or replace the
         Meter at the Customer's expense and will charge the Customer for Water
         pro rata for the period when the meter was defective or not recording
         based on the average volume of Water used during the preceding two
         calendar months

6.       The Company will supply Water at the Meter at a pressure of not less
         than 45 p.s.i.g and not more than 60 p.s.i.g.. At all times the Water
         supplied will be suitably disinfected with a pH of between 7.0 and 7.5,
         will conform to the standards specified from time to time by The World
         Health Organization for potable water, will contain no coliform
         bacteria and will not contain more than 250 mg/l of chlorides.

7.       The Company need not supply Water to the Customer if:-

         a)       The Customer does not pay the charges as set out in this
                  Agreement for Water supplied by the due date.

         b)       The Company cannot supply Water as a result of FORCE MAJEURE
                  which includes, without limitation, hurricane, windstorm,
                  fire, flood or other acts of God, accident, explosion, war,
                  strike, lockout, labor trouble, expropriation by Governmental
                  authority, regulation,


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                  orders or requests of Government or Governmental authorities
                  or agencies or inability by the exercise of reasonable
                  diligence to obtain supplies, materials or power.

8.       From the Commencement the Company will invoice the Customer monthly in
         arrears at the rates set out in the Second Schedule hereto for the
         volume of Water supplied as disclosed by the Meter. The Customer will
         pay the amount of the invoice to the Company at its offices in full on
         or before the later of:-

         a)       Ten (10) calendar days after the date of the invoice, or

         b)       The 25th day of the month following the month to which the
                  invoice relates.

9.       The Customer, in accordance with reasonable specifications laid down by
         the Company, shall lay all pipes for the supply of Water on the
         Property.

10.      Notwithstanding that the Company's Water supply is connected to a fire
         hydrant or sprinkler system on the Property, it is expressly agreed
         that the Company will be under no obligation to supply Water for fire
         fighting purposes at any time whatsoever and under any circumstances.
         The Company 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 whatsoever
         caused by fire or any related cause.

11.      Subject to the provisions for prior termination contained herein, this
         Agreement shall terminate on the earlier of:-

         (a)      Ten (10) years from the Commencement, renewable for like
                  periods at the option of the Customer upon not less than six
                  months notice, or

         (b)      At the option of the Customer, four calendar months after the
                  end of the second calendar month in which the volume of Water
                  supplied hereunder exceeds an average of 40,000 United States
                  gallons per day for two consecutive months.

12.      The Customer shall not be responsible to the Company or the Company's
         licensees, servants or agents or any other persons entering on the Land
         or calling upon the Company or any of the Company's licensees, servants
         or agents for:-

         (a)      any accidents happening or injury suffered (including injury
                  resulting in death) or


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         (b)      any damage to or loss of any chattel or property sustained

         on the Land and further the Customer shall not be liable to the Company
         for any loss, damage, inconvenience or injury suffered by the Company
         or any employee, workman or customer or invitee or person resorting to
         the Land through or as a result of:-

         (i)      any state of disrepair of the Land or

         (ii)     any breakdown or unavoidable suspension of or any defect in
                  any fixture or fitting or service or facility supplied in or
                  about the Land or anything in or upon any part of the Land

         AND the Company hereby irrevocably covenants, promises and agrees to
         indemnify the Customer and its officers, directors, shareholders,
         servants and agents and to hold it and them harmless from and against
         any and all losses, claims, expenses, suits, costs, demands, damages or
         liabilities, joint or several, of whatever kind or nature which it or
         they may sustain or to which it or they may become subject arising out
         of or relating in any way to any of the foregoing including without
         limitation in each case, attorney's fees, costs and expenses actually
         incurred in defending against or enforcing such losses, claims,
         expenses, suits, damages or liabilities and whether by judgement,
         settlement or upon and after appeal PROVIDED ALWAYS that nothing herein
         contained shall be deemed to render the Company liable:-

         (1)      for or in respect of or to indemnify the Customer against any
                  compensation or damages for or in respect of any injuries or
                  damage:-

                  (i)      to the Customer, its licensees servants or agents or

                  (ii)     to any other person

                  resulting from any act or neglect done or committed by the
                  Customer, its licensees, servants or agents on the Land or the
                  Property during the term of this Contract PROVIDED HOWEVER AND
                  IT IS HEREBY EXPRESSLY AGREED that should any claim be made
                  against the Company in respect of any matter arising as a
                  result of any act or neglect done or committed by the
                  Customer, its licensees, servants or agents in manner
                  contemplated by this sub- clause then the Customer will
                  indemnify the Company against any cost or expenses arising
                  therefrom including, without limitation,



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                  attorney's fees, costs and expenses and further the Customer
                  will, subject to the Company obtaining the consent in writing
                  of the Company's insurers, at the request of the Company
                  undertake the defence of the Company with respect to such
                  claim AND FOR THE AVOIDANCE OF DOUBT the Company expressly
                  agrees that for the purposes of this proviso neither the
                  Company nor any of its licensees, servants or agents shall be
                  considered a licensee, servant or agent of the Customer
                  PROVIDED ALWAYS AND IT IS HEREBY EXPRESSLY AGREED that the
                  Customer shall not be liable to indemnify the Company unless
                  the Company notifies the Customer within seven (7) days of
                  receipt of any claim or potential claim and, if the Customer
                  so requires, allows the Customer and agents and attorneys
                  chosen by the Customer immediately to take over and bring to
                  completion all negotiations for settlement (both before and
                  after suit) and defenses to any claim (whether in court or at
                  arbitration) as agent for the Company but at the Customer's
                  expense and the Company must:-

                  (a)      ensure that all required information and advice on
                           the circumstances of the case are at all times freely
                           given to the Customer, its agents and attorneys
                           subject only to reimbursement of the reasonable costs
                           of providing them; and

                  (c)      execute on request by the Customer any settlement
                           agreement subject only to any cost to the Company
                           under that agreement being borne by the Customer at
                           the times and in the manner provided for in that
                           agreement;

                  or

         (2)      to indemnify the Customer unless the Customer notifies the
                  Company within seven (7) days of receipt of any claim or
                  potential claim and further if the Company so requires then,
                  subject to the Customer obtaining the consent in writing of
                  the Customer's insurers, the Customer shall allow the Company
                  and agents and attorneys chosen by the Company immediately to
                  take over and bring to completion all negotiations for
                  settlement (both before and after suit) and defenses to any
                  claim (whether in court or at arbitration) as agent for the
                  Customer but at the Company's expense and in which case the
                  Customer must:-

                  (a)      ensure that all required information and advice on
                           the circumstances of the case are at all times freely
                           given to the


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                           Company, its agents and attorneys subject only to
                           reimbursement of the reasonable costs of providing
                           them; and

                  (b)      execute on request by the Company any settlement
                           agreement subject only to any cost to the Customer
                           under that agreement being borne by the Company at
                           the times and in the manner provided for in that
                           agreement.


13.      In the event that the Company fails to comply with any of its
         obligations hereunder and, if capable of remedy, fails to remedy any
         breach within a reasonable period after the Customer has given written
         notice to the Company, the Customer may, by a second notice (the
         "Second Notice") either:

         a)       require the Company to remove the equipment from the Land
                  within 30 days of the date of the Second Notice, or

         b)       require the Company to immediately vacate the Land and the
                  Equipment and may operate the Equipment itself or appoint some
                  other person to operate it.

         In the event that the Customer exercises its rights under this Clause
         12 b), the Equipment shall be valued by two independent qualified
         valuers to be appointed within sixty days of the date of the Second
         Notice, one by the Customer and one by the Company.

         Each party shall give written notice to the other of the name and
         address of their appointee and, in the event that one of the parties
         shall fail to give such notice then the appointee of the other of them
         shall alone proceed to conduct the valuation.

         In assessing the value of the Equipment the valuer(s) shall exclude any
         amount attributable to or in respect of goodwill whether arising from
         the existence of this Agreement or otherwise but shall assess the value
         as if the Equipment forms part of a production unit in the condition in
         which it was in on the date on which the Second Notice was served.

         In the event that the two valuers cannot agree upon the same valuation
         then the value shall be determined by an umpire chosen by the two
         valuers.



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         The Customer and the Company shall be bound by the resulting valuation
         and the amount thereof shall be paid by the Customer to the Company as
         follows:

         a)       10% fourteen days after the date of the valuation (the
                  "Deposit")

         b)       90% by nine equal consecutive monthly payments the first of
                  which shall be paid thirty days after the date of payment of
                  the Deposit

         whereupon neither party shall have any further claim against the
         other."

14.      This Agreement shall be construed in accordance with the Laws of the
         Commonwealth of the Bahamas.


THE PARTIES HERETO have hereunto set their hands and seals the day and date
first above written.

EXECUTED by and on behalf of                CONSOLIDATED WATER CO. LTD.
The Company by

In the presence of:-

/s/ Melissa A. West                         /s/ Jeffrey M. Parker
-------------------------                   ------------------------------
Witness                                     Director


EXECUTED by and on behalf of                SOUTH BIMINI INTERNATIONAL LTD.
The Customer by

In the presence of:-

/s/ Lucille Russel                          /s/ Rupert W. Roberts Jr.
-------------------------                   ------------------------------
Witness                                     Director





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                                 FIRST SCHEDULE

The "Land" is described as that portion of allotments 18, 19 and 20 which are
bounded on the West by the Government Road and on the East by Big Duck Pond as
marked on the attached map. The location of the "Land" is Sampson Ridge, South
Bimini, Bimini Islands, Commonwealth of the Bahamas and is approximately 2.3
acres in size.


                               Plot plan omitted.

















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<PAGE>   9


                                 SECOND SCHEDULE


In accordance with Clause 8 the following prices shall apply:-

1.       BASE PRICE OF WATER

         With effect from the Commencement, Water per one thousand (1,000)
         United States gallons (USg) shall be invoiced at the following prices.

         When the total volume of Water actually supplied by the Equipment to
         the Customer and all other customers in any calendar month:-

         Is less than an average of twenty thousand (20,000) USg per day.

         US$25.27   per 1,000 USg

         Exceeds an average of twenty thousand (20,001) USg per day but is less
         than an average of thirty thousand (30,000) USg per day.

         US$25.27 per 1,000 USg for the first average 20,000 USg per day

         US$16.57 per 1,000 U.S. gallons for the excess

         Exceeds an average of thirty thousand (30,001) USg per day but is less
         than an average of forty thousand (40,000) USg per day.

         US$25.27 per 1,000 USg for the first average 20,000 USg per day

         US$16.57 per 1,000 USg for next average 10,000 USg per day

         US$14.08 per 1,000 USg for the excess

         Every customer shall be billed pro rata monthly at the Base Price, in
         arrears, for the volume of Water supplied to that customer in the
         preceding month.

         The Base Price of Potable Water shall be adjusted annually in
         accordance with 5 below.


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<PAGE>   10



2.       MINIMUM BILLING

         The Minimum Billing to every customer in every calendar month shall be
         3,000 U.S. gallons which billing shall include the rental fee for the
         Company's water meter installed at the customer's premises.

3.       FEE FOR CONNECTION AND RECONNECTION

         A Water supply requested by a customer shall be connected and a Water
         supply that has been discontinued at the request of the customer or by
         the Company for non-payment shall be re-connected upon payment of the
         following fee based on the size of the meter installed at the
         customer's premises:-

                  20mm                               US$50
                  25mm                               US$75
                  38mm                               US$110
                  50mm                               US$150
                  75mm                               US$225
                  100mm                              US$300
                  150mm                              US$350

4.       ENERGY ADJUSTMENT FACTOR

         Within fourteen days of the end of every calendar month, the Company
         shall determine the Energy Adjustment Factor for that month in
         accordance with the formula set out below and shall give notice thereof
         to the customer.

         Measurements and readings shall be taken by the staff of the Company
         but shall be subject to verification by the customer who may request
         any such additional information that in his opinion is necessary to
         verify the accuracy of the measurements, readings and calculations. It
         is agreed that copies of the supplier's invoices, certified as correct,
         shall constitute satisfactory evidence of purchase and consumption.

         The company shall add to the monthly bill of every customer in every
         month an Energy Adjustment Factor multiplied by the volume of Water
         invoiced by the Company to each customer for the relevant calendar
         month.




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         The Energy Adjustment Factor in US$ per 1,000 U.S. gallons is given
         by:-

                  EAF = 18 x (ET - US$0.17)

         Where:-

                  EAF -       is the amount in U.S.$ to be added to or
                              subtracted from the Base Price of Water per
                              1,000 U.S. gallons.

                  18 -        is the number of KWH of electricity required to
                              produce 1,000 U.S. gallons of Water

                  ET -        is the average cost in U.S.$ per KWH of
                              electricity in the relevant month

                  US$0.17 -   is the cost per KWH of electricity used in
                              computing the Base Price

5.       ANNUAL PRICE ADJUSTMENT FORMULA

         On January 1st in every year, commencing on January 1, 2001, the Base
         Price of Potable Water shall be amended in accordance with the Annual
         Price Adjustment Formula calculated as follows:-

         NBP = BP X 0.56 X USPPIL  +  BP X 0.44 X BCPIL
               ------------------     -----------------
                     USPPI99               BPPI99

         Where;-

         NBP is the new base price applicable from January 1st.

         BP                is the Base Price in 1 above

         USPPIL            is the United States Producer Price Index for
                           Industrial Commodities as at the preceding September
                           30th.

         USPPI99           is the United States Producer Price Index for
                           Industrial Commodities as at September 30, 1999.

         BCPIL             is the Bahamas Consumer Price Index as at the
                           preceding September 30th.

         BCPI99            is the Bahamas Consumer Price Index as at
                           September 30, 1999



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         EXCEPT THAT if the Government of the Bahamas does not produce a
         Consumer Price Index at any relevant date, the United States Consumer
         Price Indices shall be used.























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