AN AGREEMENT made the 12th day of November, 1997
BETWEEN: COMMONWEALTH WATER LTD.
A Bahamian Company ("CW")
AND: RAV BAHAMAS LTD.
A Bahamian Company carrying on business: as Bimini
Bay Resort ("the Customer")
A. The Customer is desirous of obtaining a supply of potable water Water")
to its development known as Bimini Bay Resort ("the Property")
B. The Customer intends to enter into an agreement ("the WSC Agreement")
with the Water & Sewerage Commission of the Government of the
Commonwealth of the Bahamas ("Government") for the supply of Water for
the islands of North Bimini and South Bimini excluding Bimini Bay
C. The parties have agreed that CW will be the exclusive vehicle to be
used for the provision of potable water to any other area of the
Commonwealth of the Bahamas.
THE PARTIES AGREE that:
1. The Customer shall assign to CW all its rights and obligations under
the WSC Agreement. CW will supply Water to Government in accordance
2. Not later than ninety (90) days from the date of this Agreement ("the
Effective Date") CW will commence to supply Water by pipe to the
Property and to Government on the terms and conditions specified in
To that end, CW will, inter alia, provide for the following items:
a) Water supply xxxxx
b) Brine water disposal xxxxx
c) Buildings, plant and machinery necessary to provide all
required gallonage of Water during the pendency of this
d) Back-up power supply for the distribution pumps and fuel to
operate the same
e) De-oderizing equipment and chemicals to meet the Customer's
reasonable requirements as to odor elimination
f) Potable Water storage facilities for a minimum of three days
of maximum production
together referred to as "the Plant"
3. CW will xxxx the Customer monthly for Water. The Customer must pay
invoices in full on the later of:
a) ten (10) days after the invoice date, or
b) the 25th day of the month following the month to which the
CW will xxxx Government in accordance with the terms of the WSC
4. CW must supply at least one main meter for Water supplied to the
Property and one main meter for Water supplied to Government in
accordance with Clause 9.
CW will xxxx the Customer and Government based on the readings of the
The Customer and Government may supply and install individual meters
within the Property and the remainder of the islands of North and South
Bimini but it will be their responsibility to deal with any tenants,
guests or individual property owners.
5. CW need not supply Water either to the Customer or to Government if:-
a) The Customer or Government does not pay the charges payable by
either of them under this Agreement by the due date.
b) This Agreement cannot be carried out because of force majeure
which includes , without limitation, hurricane, windstorm,
fire, flood or other acts of God, accident, explosion, war,
strike, lockout, labour trouble, expropriation by Governmental
authority, regulation, orders or requests of Governmental
agencies or inability by the exercise of reasonable diligence
to obtain supplies, materials or power.
6. The Customer will convey to CW the land on which the Plant is situated
("xxx Xxxx") and CW will issue as consideration therefor that number of
shares of CW which equal 20% of the issued shares of CW.
The Customer will give CW such rights of access to the Land as are
necessary for constructing, maintaining and operating the Plant BUT CW
must repair any damage done by its servants or agents in the exercise
of those rights of access.
7. (a) The Customer must pay CW at its offices for Water supplied at
the rates specified in the Schedule and in this Agreement
adjusted annually as provided in Clause 12 of this Agreement.
Commencing twelve (12) months after the effective date the
Customer will be subject to minimum monthly charges specified
in the Schedule.
(b) Subject to clause 17 the Customer must pay the minimum monthly
charges even if it makes no use at all of CW's supply of Water
or if it uses less than the specified minimum quantity per
8. The Plant provided by CW shall be capable of producing the following
volumes of Water:-
a) During the six calendar months following the Effective Date -
50,000 United States gallons per day;
b) Thereafter 100,000 United States Gallons per day for the
c) The gallonage required by Government pursuant to the WSC
d) No later than one hundred and eighty (180) days after first
receiving notice from the Customer, that gallonage per day
requested by the Customer.
9. CW must furnish, fix and maintain in good repair meters for determining
the quantity of water used by the Customer or Government. If any meter
is damaged by the Customer or Government, or their servants or
invitees, CW must repair or replace the meter but at the Customer's or
Government's expense as the case may be. CW will charge the Customer or
Government for Water used based on the average Water consumption of the
previous twelve (12) months when the defective meter was working pro
rata for the period when the meter was not recording.
10. Subject as stated in the Schedule, CW must deliver Water to the
Property and to Government on terms and conditions set out in this
11. The quality of water that CW supplies must be within the present
standards established by the American Water Works Association (AWWA)
guidelines for potable water but must not exceed a maximum of 417 mg./L
total dissolved solids with a pH of between 7.0 and 7.5 at any given
time, as well as meeting, if not exceeding, the minimum water quality
standards for the Government of the Bahamas and the World Health
12. CW will adjust its charges per 1,000 United States gallons, as set out
in the Schedule, as follows:-
(a) On January 1 in each year the water charge per 1,000 US
gallons to be supplied in that calendar year will be adjusted
to the figure obtained by reference to the following formula:
US$4.35 X USPPIL + US$3.40 X BCPIL
For the purposes of this clause:
USPPIL is the United States Producer Price Index for Industrial
Commodities as at the preceding September 30th and USPPI96 is that
index at September 30, 1996, and
BCPIL is the Bahamas Consumer Price Index at the preceding September
30th and BCP196 is that index at September 30, 1996 BUT if the Bahamas
Government does not produce a Consumer Price Index at any relevant
date, the United States Government Consumer Price Indices must be used.
(b) Monthly, as an Energy Adjustment Factor in respect of any
change in the cost of electricity by reference to the
EAF = 16 x (ET - EB)
For the purpose of this clause:
EAF is the US$ amount to be added to or subtracted from the Water
Tariff Base Rate per 1,000 United States gallons.
ET is the average cost in US$ per KWH of electricity during the
EB is US$0.17 being the cost of electricity per KWH as at the date of
13. From the Effective Date CW will supply Water to the storage facilities,
presently of at least one million US gallons capacity provided by the
The Customer may cease to provide storage facilities for CW upon giving
160 days written notice of his intention so to do whereupon CW will
construct new storage facilities of at least that capacity on the Land.
14. All pipes for Water supply beyond the main meters referred to in clause
4 will be the responsibility of the Customer or Government as the case
The Customer and Government must, at their expense, install a lock down
shut off type valve on their side of their meter.
The design of the Water distribution system on the Property and
drawings of its reticulation system shall be undertaken and provided by
CW in accordance with the requirements of the Water and Sewerage
Commission of the Bahamas and the Customer shall supply necessary
topographical and/or aerial surveys to CW for this purpose.
15. Notwithstanding that CW has connected any Water supply to a hydrant or
sprinkler system on the Property, it is expressly agreed that CW will
be under no obligation to provide Water for fire fighting purposes, at
any time whatever or under any circumstances, and will only supply
Water for those purposes if it is able to do so, and will not be liable
for any damage to the Property whatever caused by fire or any related
16. Subject to Clause 10, the term of this Agreement is 10 years from the
Effective Date, renewable for like periods of time at the option of the
Customer upon not less than six months notice.
17. In the event that CW fails to supply the volumes set out in Clause 8 or
fails to meet the quality requirements set out in Clause 11 and fails
to remedy any breach of its obligations under those clauses within a
reasonable time after the Customer has given written notice to CW, the
Customer may require CW to vacate the Land and the Plant and may
operate the Plant itself or appoint some other person to operate it.
In the event that the Customer exercises its rights under this clause,
the Land and the Plant shall be valued by three (3) qualified valuers,
one appointed by the Customer, one by CW and a third agreed on by the
two (2) so appointed. The Customer and CW shall accept the agreed
valuation (which shall exclude any amount attributable to or in respect
of goodwill whether arising from the existence of this Agreement or
otherwise, but shall be determined as if the Land and the Plant form a
unit of production) and within a period of one year from the date of
the valuation the Customer shall pay the amount thereof to CW whereupon
neither party shall have any further claim against the other.
18. This Agreement shall be construed in accordance with the Laws of the
Commonwealth of the Bahamas.
Minimum Water pressure 30 lbs per square inch
WATER TARIFF BASE RATE
Rate applies to volume supplied in the billing period
Water charge - US$7.75 per 1,000 US
MINIMUM MONTHLY VOLUME CHARGE
For the first twelve (12) calendar
months after the Effective Date - Nil
Thereafter - 80% of the volume specified by the
customer as per clause 8 multiplied
by the number of days in the calendar
Signed by the CUSTOMER RAV BAHAMAS LTD
in the presence of:
/s/ X. Xxxxx /s/ Xxxxxxx Xxxx
Signed on behalf of COMMONWEALTH WATER LTD
in the presence of:
/s/ X.X. Xxxxxx Per /s/ Xxxxx X. Xxxxxxx
The parties hereto, Commonwealth Water Limited, a Bahamian company and Cayman
Water Company Limited, a Cayman company, and/or assigns, and RAV Bahamas Ltd., a
Bahamian company, and/or assigns, do hereby enter into this Memorandum of
Understanding this 12 Day of November, 1997.
The parties recognize that on the date thereof they have agreed upon Articles of
Association for Commonwealth Water Limited, and a water distribution agreement
for the supply of water to the Island of North Bimini in the Commonwealth of the
Bahamas and that further RAV Bahamas Ltd. and Cayman Water Company Limited are
the initial shareholders of Commonwealth Water Limited.
To further recognize and clarify prior agreements contained in Letters of
Intent, and/or Understanding dated 21 April, 1997 and 16 October, 1997 the
parties agree to the following:-
1) The convertibility feature granted unto RAV Bahamas, and/or assigns, to
convert their shares of stock of Commonwealth Water Limited into shares of stock
of Cayman Water Company Limited, which is a publicly traded company on the
NASDAQ stock exchange, as described in the Letter of Understanding of 16
October, 1997, is hereby adopted and incorporated herein and a true copy of said
letter of 16 October, 1997 is attached hereto.
2) That the initial capital contribution made by RAV Bahamas Ltd. and Cayman
Water Company Limited as stated in the Letter of Intent of 21 April, 1997 will
provide sufficient funds for the establishment of a water plant and support
facilities (not including a storage tank(s)) which will be capable of producing
200,000 US gallons of potable water per day. Any funds required to increase
production capacity will be provided or secured by Cayman Water Company Limited
through either borrowing from third parties, institutional financing or retained
earnings, all without in anyway diminishing the stock ownership position of RAV
Bahamas Ltd. in Commonwealth Water Limited, with the proviso that said funds
provided or secured by Cayman Water Company Limited shall be treated as a loan
on the books and records of Commonwealth Water Limited. Should RAV Bahamas
assist in providing said additional required funds and/or join in the borrowing
of funds from third parties including institutional lenders, then RAV Bahamas
will be credited with having made a shareholder loan on the books and records of
Commonwealth Water Limited.
In witness whereof the parties hereto have executed this Memorandum of
Understanding the day and date above written.
COMMONWEALTH WATER LIMITED
by: /s/ Xxxxx X. Xxxxxxx
CAYMAN WATER COMPANYY LIMITED
by: /s/ X.X. Xxxxxx
RAV BAHAMAS LTD
by: /s/ Xxxxxxx Xxxx
16 October 1997
Xx. Xxxxx Xxxxxxxx
Chairman & C.E.O.
Fidelity Bank & Trust FAX 000-000-0000
00 Xxxxxxxxx Xx.
In our telephone conversation last week you asked that we prepare agreements for
A basic draft of our Supply Agreement was sent to Xxxxx some weeks ago. Attached
is a final version, subject to your approval, "filling in the blanks" in the
draft with information reflecting the position as we understand it.
As Xxxx Xxxxxx advised you at your last meeting Commonwealth Water Limited (CW)
was incorporated on 21 August 1997 but at the present it has only a brief,
standard Memorandum and Articles of Association. Our Letter of Intent with Xxxxx
dated 21 April 1997 sets out our understanding of how CW is to be funded and
operated and, as a first step towards getting CW into shape we will send, by
courier, revised articles which we propose should be adopted to replace the
existing ones. We would appreciate any comments you may have and we will then
have them vetted by a Bahamian lawyer to ensure they comply with the Law.
We will need to know the names, addresses and occupations of the persons who are
to be directors appointed by RAV Bahamas Ltd. (RAV). The only other point from
the Letter of Intent not yet covered is the basis of conversion option we will
offer RAV. We have given this considerable thought. The object of the exercise,
as we see it, is to keep us "all on the same side" and ensure that RAV benefits
from the profitability which we hope the Bahamas will bring to a combined Cayman
Water. We would therefore suggest a conversion option based on the following
1) The option can be exercised starting 3 years after the effective date
of the Water Supply Agreement between CW and RAV.
2) At the time at which the option is exercised there must be in place a
water supply agreement with RAV, or others to whom RAV has sold
property, for total volumes and upon terms no less favorable to CW than
the initial agreement, with at least five years to run to its expiry.
3) The formula for determining the number of Cayman Water shares which RAV
would receive should be:-
(AP * EPSCW * RAVCW) / CP = SHSCAY
CAYMAN WATER COMPANY LIMITED, XX XXX 0000, XXXXX XXXXXX, XXXXXXX XXXX INDIES,
TEL: (000) 000 0000, FAX: (000) 0000 0000, E-MAIL XXXX@XXXXX.XX
Xx. Xxxxx Xxxxxxxx
16 October 1997
RAVCW = Number of Commonwealth Water shares owned by RAV.
EPSCW = Fully diluted Earnings per Share of Commonwealth Water for
the preceding financial year as audited.
AP = Average closing daily price of Cayman Water shares during the
preceding financial year on the Nasdaq stock market.
EPSCAY = Fully diluted Earnings per share of Cayman Water for the
preceding financial year as audited.
CP = Closing daily price of Cayman Water shares on the Nasdaq stock
market for the day on which notice to exercise is given.
SHSCAY = Number of Cayman Water shares.
Let us know your thoughts on this formula.
Obviously we are going to have to "jump" when this deal starts to roll. We would
come to the Bahamas to get the Company organization set up when we know we have
a deal on the water supply.
Cayman Water Company Limited
President & C.O.O.
cc. X. Xxxx Esq.