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<SEC-DOCUMENT>0000950144-06-009344.txt : 20061006
<SEC-HEADER>0000950144-06-009344.hdr.sgml : 20061006
<ACCEPTANCE-DATETIME>20061006171954
ACCESSION NUMBER:		0000950144-06-009344
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20061002
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Termination of a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20061006
DATE AS OF CHANGE:		20061006

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CONSOLIDATED WATER CO LTD
		CENTRAL INDEX KEY:			0000928340
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			E6
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25248
		FILM NUMBER:		061134755

	BUSINESS ADDRESS:	
		STREET 1:		TRAFALGAR PL
		STREET 2:		WEST BAY RD
		CITY:			GRAND CAYMAN BWI CAY
		STATE:			E9
		ZIP:			00000
		BUSINESS PHONE:		8099474277

	MAIL ADDRESS:	
		STREET 1:		TRAFALGAR PLACE, WEST BAY ROAD, P.O. BOX
		STREET 2:		GRAND CAYMAN, CAYMAN ISLANDS, BWI

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CAYMAN WATER CO LTD
		DATE OF NAME CHANGE:	19941212
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>g03638e8vk.htm
<DESCRIPTION>CONSOLIDATED WATER CO. LTD.
<TEXT>
<HTML>
<HEAD>
<TITLE>Consolidated Water Co. Ltd.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">CURRENT REPORT<BR>
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Date of Report (Date of earliest event reported): October&nbsp;2, 2006
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>CONSOLIDATED WATER CO. LTD.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>(Exact Name of Registrant as Specified in its Charter)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Cayman Islands, B.W.I.</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>0-25248</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Not Applicable</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>(State or Other Jurisdiction of <BR>
Incorporation)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>(Commission File Number)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>(IRS Employer Identification No.)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The Regatta Office Park<BR>
Windward Three, 4 </B><SUP style="font-size: 85%; vertical-align: text-top"><B>th </SUP> Floor<BR>
West Bay Road, P.O. Box 1114 GT<BR>
Grand Cayman, Cayman Islands<BR>
(Address of Principal Executive Offices) (Zip Code)</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>(345)&nbsp;945-4277<BR>
(Registrant&#146;s telephone number, including area code)</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Not Applicable<BR>
(Former name or former address, if changed since last report)</B>
</DIV>


<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">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:</DIV>


<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD>
</TR>
</TABLE>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;1.01</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Entry into a Material Definitive Agreement.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 5, 2006, Consolidated Water (Bahamas) Ltd. (&#147;CW-Bahamas&#148;), a subsidiary of
Consolidated Water Co. Ltd. (the &#147;Company&#148;), entered into a
new $5.6&nbsp;million credit facility with Royal Bank of
Canada (the &#147;Lender&#148;), replacing its previous
$5.4&nbsp;million credit facility with the Lender. Unless otherwise
indicated, dollar amounts in this Item 1.01 are in Bahamian dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The new credit facility consists of (i)&nbsp;a $500,000 revolving working capital loan (the
&#147;Working Capital Revolver&#148;); (ii)&nbsp;term loans of US$38,062
(&#147;Term Loan A&#148;) and $127,276
(&#147;Term Loan B,&#148; together with Term Loan A, the &#147;Term Loans&#148;) and (iii)
$4.98&nbsp;million in bank guarantees (the &#147;Guarantees&#148;). The obligations under the credit
facility are secured by the assets of CW-Bahamas. Borrowings under
the Working Capital Revolver accrue
interest at the Nassau Prime rate plus 1.50% per annum; borrowings
under Term Loan A and
Term Loan B accrue interest at the 90&nbsp;day LIBOR rate plus 1.75% per annum and the Nassau
Prime rate plus 1.50% per annum, respectively; and fees for the
Guarantees equal 1.0% of the guarantee amounts, subject to annual
renegotiation. Outstanding borrowings under the credit facility include the US $38,062 Term Loan A, the $127,276
Term Loan B and approximately $4.88&nbsp;million under the Guarantees. No amounts are outstanding under
the Working Capital Revolver.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
new credit facility contains certain covenants applicable to
CW-Bahamas, including restrictions on additional debt,
guarantees and sale of assets. The credit facility limits the
payment of dividends by CW-Bahamas to available cash flow (as defined in
the loan agreement). The credit facility also requires CW-Bahamas to maintain a ratio of total
liabilities to tangible net worth (each as defined in the loan agreement) of not greater than 2:1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All obligations under the new credit facility are repayable on demand by the Lender. Until
demand is made, CW-Bahamas is required to repay any borrowings under
the Term Loans in
quarterly payments based on a ten year amortization schedule. The Guarantees expire annually or
upon certain events as set forth in the loan agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing description is only a summary of certain provisions of the new credit facility
and is qualified in its entirety by the loan agreement, a copy of which is attached hereto as
Exhibit&nbsp;10.1 and incorporated herein by reference.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;1.02</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Termination of a Material Definitive Agreement.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See the discussion under Item&nbsp;1.01 above, which is incorporated under this Item&nbsp;1.02 by reference.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;2.03</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See the discussion under Item&nbsp;1.01 above, which is incorporated under this Item&nbsp;2.01 by reference.
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;8.01</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Other Events.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;2, 2006, the Company was notified by Ocean Conversion (BVI)&nbsp;Ltd., the Company&#146;s
affiliate in the British Virgin Islands (&#147;OC-BVI&#148;), that the Ministry of Communications and Works
of the Government of the British Virgin Islands (the &#147;Ministry&#148;) had asserted a purported right of
ownership of OC-BVI&#146;s desalination plant in Baughers Bay, Tortola pursuant to the terms of a Water
Supply Agreement dated May&nbsp;1990 (the &#147;1990 Agreement&#148;) and had invited OC-BVI to submit a proposal
for its continued involvement in the production of water at the Baughers Bay plant in light of the
Ministry&#146;s planned assumption of ownership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the 1990 Agreement, upon the expiration of the initial seven year term in
May&nbsp;1999, the agreement would automatically be extended for
another seven year term unless the Ministry provided notice, at least
eight months prior to such expiration, of its decision to purchase
the plant from OC-BVI for approximately $1.42&nbsp;million.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In
correspondence between the parties from late 1998 through early 2000,
the Ministry indicated that the government was prepared to exercise the
option to purchase the plant but would be amenable to negotiating a
new water supply agreement, and that it considered the 1990 Agreement
to be in
force on a monthly basis until negotiations between the
government and OC-BVI were concluded. There have been occasional discussions between the parties
since 2000 without resolution
of the matter. OC-BVI has continued to supply water to the Ministry and has expended
approximately $4.7&nbsp;million to significantly expand the production capacity of the plant
beyond that contemplated in the 1990 Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Ministry is OC-BVI&#146;s sole customer and substantially all of
OC-BVI&#146;s revenue is generated from its operations at the
Baughers Bay plant. At
June&nbsp;30, 2006, the net book value of the Baughers Bay plant as
reflected on OC-BVI&#146;s balance sheet was approximately
$2.7&nbsp;million. For the year ended December&nbsp;31, 2005 and the six months ended June&nbsp;30, 2006, the Company
recognized approximately $1.4&nbsp;million and $732,000, respectively, in income from its equity
investment in the earnings of OC-BVI. For those same periods, the Company also recognized
approximately $680,000 and $667,000, respectively, in revenue from its management services
agreement with OC-BVI. As of June&nbsp;30, 2006, loans to, and equity investment in, OC-BVI by the
Company equaled approximately $13.1&nbsp;million and the recorded
value of the OC-BVI management services agreement,
which is reflected as an intangible asset on the Company&#146;s balance sheet, was approximately
$856,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OC-BVI has informed the Company that it and the Ministry have been and continue to be involved
in amicable discussions concerning a new contract for the Baughers Bay plant. OC-BVI has indicated
to the Ministry that it will submit a proposal to continue to supply water from the Baughers Bay
plant and has indicated to the Company that it believes that the matter will be resolved to the satisfaction of both parties.
</DIV>

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><U>Cautionary Language Concerning Forward-Looking Statements</U><BR>
This Current Report on Form 8-K contains forward-looking statements relating to the resolution of
the government&#146;s claims under the 1990 Agreement including, among other matters, OC-BVI&#146;s response
thereto and ability to negotiate a resolution with the Ministry to the satisfaction of both
parties. These forward-looking statements are based on estimates, projections, beliefs, and
assumptions and are not guarantees of future events or results. Actual future events and results
could differ materially from these statements as a result of many factors, including uncertainties
relating to OC-BVI&#146;s negotiations with the Ministry and interpretation of the 1990 Agreement, as
well as those factors set forth under Item&nbsp;1A &#147;Risk Factors&#148; of the Company&#146;s Annual Report on Form
10-K for the year ended December&nbsp;31, 2005, which is on file with the SEC. The Company undertakes no
obligation to update these forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors that may affect such forward-looking statements, except as
required by law.</DIV>


<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;9.01</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Financial Statements and Exhibits.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Exhibits.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loan Agreement dated as of October&nbsp;4, 2006, by and between Royal Bank of Canada
and Consolidated Water (Bahamas) Ltd.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>CONSOLIDATED WATER CO. LTD.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated: October 6, 2006&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Frederick W. McTaggart
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Frederick W. McTaggart&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>g03638exv10w1.htm
<DESCRIPTION>EX-10.1 LOAN AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.1 Loan Agreement</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.1
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Royal Bank of Canada<BR>
Commercial Banking Centre<BR>
101 East Hill Street, 3<SUP style="font-size: 85%; vertical-align: text-top">rd</SUP> Floor<BR>
P.O Box N-7549<BR>
Nassau, Bahamas<BR>
Transit: 02265<BR>
Tel: (242)&nbsp;356-8500<BR>
Fax: (242)&nbsp;325-8483
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">4 October&nbsp;2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Consolidated Water (Bahamas) Ltd. (formerly Waterfields Company Limited)<BR>
P.O. Box CR-54030<BR>
Nassau Bahamas</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B><I>Attn: Frederick McTaggart, President &#038; CEO</I></B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Sirs:
</DIV>


<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Further to our recent discussions, we are pleased to offer the Credit Facilities described below,
(which supersedes all previously advised facilities ) subject to the following terms and
conditions:</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>BORROWER:</B></U></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>Consolidated Water (Bahamas) Ltd.
(formerly Waterfields Company
Limited)<BR></B>
(the &#147;Borrower&#148;).</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>LENDER:</B></U></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Royal Bank of Canada (the &#147;Bank&#148;),
through its branch at Main Branch
at Bay Street; (the &#147;branch of
account&#148;).</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>CREDIT FACILITIES:</B></U></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">The Credit Facilities are available
in the following segments in
Bahamian dollars (or United States
dollars where stated) by way of</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 1.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Operating:<BR>
Royal Bank Nassau Prime based loans (&#147;NP
loans&#148;);</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Reducing Demand Loan:<BR>
NP and Libor loans;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bonds and/or Guarantees (L/G&#146;s);</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">(collectively the &#147;Borrowings&#148;).</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>AMOUNTS:</B></U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 1a:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">$500,000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">$38,062 (USD)</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">$127,276</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">$100,000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">$1,910,775</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3c.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">$2,968,985</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>PURPOSE:</B></U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 1a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Working capital and supplement L/G&#146;s.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To assist with construction and start-up
costs of desalination plant re. supply of water to
the Water &#038; Sewerage Corporation.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To assist with construction and start-up
costs of desalination plant re. supply of water to
the Water &#038; Sewerage Corporation.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To facilitate payment of customs duties on
plant materials and equipment.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To provide a guarantee to Water &#038; Sewerage
Corporation during the years of operations.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3c.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To facilitate a construction guarantee to
Water &#038; Sewerage Corporation for recently awarded
Blue Hills Plant.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>REPAYMENT:</B></U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 1a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Operating loans repayable on demand,
and L/G&#146;s expires December&nbsp;31, annually.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Repayable on demand but until such demand
shall be made this facility shall be reduced by
blended quarterly payments of $74,000 principal and
interest, based on a 10&nbsp;year amortization. Payments
to be adjusted at least annually to ensure payout
within the aforementioned amortization.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Repayable on demand but until such demand
shall be made this facility shall be reduced by
blended quarterly payments of $37,000 principal and
interest, based on a 10&nbsp;year amortization. Payments
to be adjusted at least annually to ensure payout
within the aforementioned amortization.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">On demand and expiring December&nbsp;31, annually.
Drawings will be charged to the Borrower&#146;s General
deposit account at maturity.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">On demand and expiring December&nbsp;31, annually
or until Water &#038; Sewerage Corporation authorizes the
release from same. Drawings will be charged to the
Borrower&#146;s general deposit account upon demand.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3c.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">On demand and expiring twelve months after
the &#147;substantial completion date&#148; (July&nbsp;2007) or
until released by Water &#038; Sewerage Corporation.
Drawings will be charged to the Borrower&#146;s general
deposit account upon demand.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B><U>OVERRIDING REPAYMENT:</U></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Although the same has been made clear to you in our
previous discussion for the avoidance of doubt we
reiterate that notwithstanding any previous
expressions or comments either herein or during
negotiations for the credit facilities outlined
herein to the contrary, the Credit Facilities
outlined herein, including the availability on any
undrawn facility, are extended to you at the sole
discretion of Royal Bank of Canada are in each and
every case and without exception repayable on
demand.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>AVAILABILITY:</B></U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 1.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">The Borrower may borrow, repay, and re-
borrow up to the amount of this
operating
facility.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"> L/G&#146;s will be issued for periods not exceeding
one year, except with the agreement of the Bank</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B>INTEREST</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><u><B>RATES &#038; FEES:</B></u>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 1a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nassau Prime (&#147;NP&#148;) plus 1.50%.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Libor (90&nbsp;days) plus 1.75%.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 2b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NP plus 1.50%.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3a.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1% per annum (to be renegotiated at next
review).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3b.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1% per annum (to be renegotiated at next
review).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Segment 3c.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1% per annum (to be renegotiated at next
review).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Interest on Bahamian dollar loans shall be computed on
the daily principal amounts outstanding, at the
aforementioned rates, based on the actual number of days
elapsed divided by three hundred and sixty-five (365),
and shall be payable in arrears on the 31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> of
each month for all operating loans and at each payment
date for reducing demand loans.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Interest on United
States dollar loans shall be computed on the daily principal amounts
outstanding, at the aforementioned rates, based on the actual number of</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">days elapsed divided by three hundred and sixty (360),
and shall be payable in arrears on each payment date for
reducing demand loans.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B>PAYMENT OF</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><u><B>INTEREST &#038; FEES:</B></u></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">L/G&#146;s &#151; The Borrower shall pay fees at the rates set
forth above in advance at the time of issue of the L/G.
This fee shall be based upon the amount of the instrument
issued and shall be calculated on the number of days that
it will be outstanding.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">The yearly rates of interest to which the rates
determined in accordance with the Payment of Interest &#038;
Fees section of this agreement are equivalent, are the
rates so determined and multiplied by the actual number
of days in the calendar year and divided by three hundred
and sixty five (365)&nbsp;for Bahamian dollar loans and three
hundred and sixty (360)&nbsp;for United States dollar loans.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>OTHER FEES</B></U><B>:</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">The Borrower acknowledges that for requests for loan increases over the amount
established in this letter, a negotiation fee will be levied.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><U><B>Renewal Fee</B></U><BR>
A renewal fee of 0.25% is payable at each annual review
with respect to segment 1a and 1% with respect to
segments 3a, 3b &#038; 3c (to be renegotiated at next review).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->


<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top"><u><B>COLLATERAL SECURITY:</B></u>
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#150;&nbsp;&nbsp; Registered demand debenture creating a fixed and
floating charge over the assets of Consolidated
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Water (Bahamas) Ltd. (formerly Waterfields Co. Ltd.)
with a right of access to the property. Stamped
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; for $6,418,440.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#150;&nbsp;&nbsp; Assignment of full covering risk insurance
(including hurricane) over plant assets.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#150;&nbsp;&nbsp; Acknowledged loan agreement.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B>CONDITIONS</B>
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><u><B>PRECEDENT:</B></u></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap valign="top" align="left">The obligation of the Bank to make available the Borrowings to
the Borrower is subject to and conditional upon:</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Receipt
by the Bank of the within stipulated collateral
security inform and substance satisfactory to the
Bank, together with such corporate authorizations
and legal opinions as the Bank may require.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">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 bank accounts.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">Receipt of acknowledged loan agreement.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B>REPRESENTATIONS</B>
</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>AND WARRANTIES:</B></U></TD>
<TD>&nbsp;</TD>
    <TD colspan="4"  valign="top" align="left">The Borrower represents and warrants to the Bank that:</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">a)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">it is a corporation validly incorporated under laws of the
Commonwealth of the Bahamas.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">b)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">the execution and delivery of this agreement has been
duly authorized by all necessary actions and does
not violate any law or any provision of its by-laws
or any unanimous shareholders&#146; agreement to which it
is subject.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>NON-MERGER:</B></U></TD>
    <TD colspan="5"  valign="top" align="left">The provisions of this agreement shall not merge with any
security given by the Borrower to the Bank, but shall continue
in full force for the benefit of the parties hereto.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>COVENANTS:</B></U></TD>
    <TD colspan="5"  valign="top" align="left">The Borrower agrees:</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">a)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">Upon demand to pay all sums of money due under this
agreement; or until such demand be made upon the
terms otherwise provided herein;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">b)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">To provide the Bank with quarterly in-house financial
statements within 45&nbsp;days of the end of each quarter
and audited financial statements within 120&nbsp;days of
each fiscal year-end;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">c)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">To provide the Bank with annual pro forma balance
sheets, profit and loss and cash flow statements for
the next year and such other reports as the Bank may
reasonably request from time to time including but
not limited to quarterly production reports within
45&nbsp;days of the end of each quarter;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">d)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">To give the Bank prompt notice of any breach of this
agreement or any event which, with time or notice,
would constitute a breach of this agreement;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">e)</TD>
    <TD  valign="top">&nbsp;</TD>
    <TD valign="top" colspan="2"><DIV style="margin-left:0px; text-indent:-0px">To maintain, on a consolidated basis, the ratio of
total Liabilities to Tangible Net Worth of not
greater than 2:1. Tangible Net Worth means the
aggregate of paid up capital, retained earnings and
debt which has been formerly postponed to the Bank,
less amounts due by related persons/entities,</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">goodwill, deferred costs, net leasehold improvements,
and other assets normally regarded as intangible
under Generally Accepted Accounting Principles.
Total liabilities include all direct liabilities, but
exclude amounts formally postponed to the Bank;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">f)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Not to grant, create, assume or suffer to exist any
mortgage, charge, lien, or other encumbrance
affecting any of its properties, assets or other
rights;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">g)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Not to sell, transfer, convey, lease or otherwise dispose
of any part of its property or assets, without the
prior written consent of the Bank except in the
ordinary course of business;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">h)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Not to, directly or indirectly, guarantee or otherwise
provide for, on a direct or indirect or contingent
basis, the payment of any monies or performance of
any obligations by any third party except as
provided herein;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">i)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To give the Bank 30&nbsp;days prior notice in writing of any
intended change in the ownership of its shares and
not to dispose of shares of any of its subsidiaries
without the Bank&#146;s prior written consent;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">j)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Not to change its name or merge, amalgamate or consolidate
with any other corporation without the Bank&#146;s prior
written consent;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">k)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Not to declare or pay dividends exceeding available cash
flow; which is defined as net income plus
depreciation &#038; amortization less principal
repayments less membrane replacement without the
prior written permission of the Bank;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">l)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">The Bank is empowered at any time or times (without
consulting the Borrower) to impress additional stamp
duties on its Mortgages/ Debentures from the
Borrower covering any sum or sums at any time or
times advanced to the Borrower by the Bank PROVIDED
ALWAYS that such Mortgages/Debentures are intended
and shall secure at all times the aggregate amount
or amounts actually advanced by the Bank to the
Borrower at any time or times whether or not the
Mortgages/Debentures shall have been stamped or
upstamped to cover such amounts;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">m)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">To keep all assets insured for at least replacement cost
and/or as per security documentation contained</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" colspan="4"><DIV style="margin-left:0px; text-indent:-0px">herein and to provide the Bank with evidence of all
insurance renewals within 30&nbsp;days of the expiry;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">n)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" colspan="3"><DIV style="margin-left:0px; text-indent:-0px">To ensure real property taxes are fully paid up and to provide
evidence of payment by March&nbsp;31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>,<SUP style="font-size: 85%; vertical-align: text-top">
</SUP>annually; and</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">o)</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" colspan="3"><DIV style="margin-left:0px; text-indent:-0px">To provide the bank with a singed compliance
certificate (as per attached &#147;Schedule&nbsp;A&#148;) on a
quarterly/annual basis, verifying compliance or
non-compliance with the covenants contained herein;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>EXPENSES:</B></U></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"  valign="top" align="left">The Borrower agrees to pay all of the Bank&#146;s costs incurred
from time to time in the preparation, negotiation and
execution of this agreement and the collateral security,
and any costs incurred in the operation or enforcement of
this agreement or any other agreement entered into pursuant
to this agreement.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>GOVERNING LAW:</B></U></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"  valign="top" align="left">This agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of the Bahamas
applicable therein.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD  align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><B>ACCEPTANCE:</B></U></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"  valign="top" align="left">Please acknowledge the terms and conditions of the loan agreement by signing and returning the enclosed copy at
your soonest opportunity.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Very truly
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>/s/ Brian L. Knowles</U><BR>
Brian L. Knowles<BR>
Account Manager

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Enc.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Before accepting the terms and conditions herein by signing hereof we again draw your attention the
overriding condition contained above that the credit facilities provided hereunder are in every
case repayable on demand notwithstanding any provisions for payment on terms. By signing hereof
you will be acknowledging that you fully understand that your loan or loans are always repayable on
demand.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">TERMS AND CONDITIONS HEREBY ACCEPTED
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">THIS 5<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> DAY OF OCTOBER 2006
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Consolidated Water (Bahamas) Ltd. (formerly Waterfields Company Limited)</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt"><U> /s/ Frederick W. McTaggart</U><BR>
Authorized signing officer - Frederick W. McTaggart
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt"><U> /s/ Wilmer Pergande</U><BR>
Authorized signing officer - Wilmer Pergande
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B><I>Compliance Certificate</I></B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>Schedule&nbsp;A.</I>
</DIV>


<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In accordance with the terms of our Letter Agreement dated (4 October&nbsp;2006), between Royal Bank of
Canada and Consolidated Water (Bahamas) Ltd. (formerly Waterfields Company Limited), (&#147;the
Company&#148;), I enclose the following:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Company Prepared/Audited financial statements
for the Company for quarter/year ending &#95;&#95;&#95;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Budget, forecast Income Statement, Balance
Sheet and Cash Flow Statement for the Company for the year ending
&#95;&#95;&#95;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Production report for the Company for the
quarter ending &#95;&#95;&#95;;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In addition, I also certify that as at (quarter/year) ending &#95;&#95;&#95;, these financial
statements confirm the following:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The ratio of Debt to Tangible Net Worth was
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;:1.00</U> and therefore <B>in compliance/not in compliance</B>
with the maximum permitted ratio of <U>2.00:1.00;</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Dividends declared by the company to date was
$&#95;&#95;&#95;, and therefore <B>in compliance/not in compliance </B>with
the maximum permitted.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%"><U>Consolidated Water (Bahamas) Ltd</U>.<BR><BR><BR>
Name:<BR>
Title:<BR>
Date:

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>


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