EXHIBIT 10.1
LOAN AGREEMENT
This Loan Agreement is made as of February 7,2003.
BETWEEN :
SCOTIABANK (CAYMAN ISLANDS) LTD., a banking institution organised and
existing under the laws of the Cayman Islands, with its principal place
of business located at Scotiabank Centre, Cardinal Avenue, Xxxxxx
Town, Grand Cayman,
- AND -
CONSOLIDATED WATER CO. LTD., a company incorporated in the Cayman
Islands, with its registered office located at P.O. Box 1114 GT,
Trafalgar Place, Xxxxxx Town, Grand Cayman, Cayman Islands,
WHEREAS
A) The Borrower is the registered proprietor with
absolute title to parcels 8 and 469 in Xxxxx 0X xx
xxx Xxxx Xxx Xxxxx Xxxx Registration Section of Grand
Cayman, parcels 8 and 40 in Block 11D of the West
Bay Beach North Registration Section of Grand Cayman,
and is also the proprietor of a leasehold interest in
parcel 79 REM 1 / 2 in Block 12D of the West Bay
Beach South Registration Section of Grand Cayman (all
such parcels of land being hereinafter referred to as
"the Property") the same being more particularly
described and depicted respectively in the Land
Registers and Registry Maps annexed hereto as
Schedule "A".
B) The Bank has agreed to make available to the Borrower
three Loans for the purposes herein set forth, in
the maximum aggregate amount of THIRTY NINE MILLION
ONE HUNDRED THOUSAND UNITED STATES DOLLARS
($39,100,000.00) in consideration of the various
representations, warranties, covenants, security and
other undertakings hereinafter set forth, made or
agreed by the Borrower.
C) The Borrower has agreed to borrow up to an aggregate
maximum of such amount constituting the three Loans
as more fully set out hereunder.
NOW THEREFORE in consideration of the premises and the mutual agreements
hereinafter contained, it is hereby agreed by and between the parties as
follows:
SECTION 1
DEFINITIONS AND RULES OF INTERPRETATION
SECTION 1.1 DEFINED TERMS
Except as otherwise expressly provided herein, capitalized terms used
in this Agreement and its Schedules and Exhibits shall have the respective
meanings assigned to such terms in Appendix A hereto.
SECTION 1.2 ACCOUNTING:PRINCIPLES
Except as otherwise,provided in this Agreement, all computations and
determinations as to financial matters, and all financial statements to be
delivered under this Agreement shall be made or prepared in Dollars in
accordance with U.S. GAAP (including principles of consolidation where
appropriate) applied on a consistent basis.
SECTION 2
THE WORKING LOAN
SECTION 2.1 WORKING LOAN
(a) The Bank agrees, upon the terms and conditions set
forth in this Agreement, to grant to the Borrower the
Working Loan, and the Borrower agrees to accept such
Working Loan from the Bank.
2
(b) The aggregate maximum amount of advances under the
Working Loan that may be outstanding at any time
shall be the lesser of i) the Borrowing Base or ii)
two million Dollars ($2,000,000.00).
(c) The Working Loan, in a maximum principal amount of
two million Dollars ($2,000,000.00), shall take the
form of: (i) a revolving overdraft facility evidenced
by the records of the Bank; and (ii) the GOCI Letter
of Credit. The Working Loan will be payable as
provided herein, will be subject to all the relevant
conditions as set out herein, and will be secured by
the Security Documents as provided in this Agreement.
(d) Upon the termination of the GOCI Letter of Credit in
accordance with the terms contained therein or upon
the reimbursement by the Borrower of any amount drawn
under the GOCI Letter of Credit by the beneficiary
thereof, such amounts so retired or reimbursed shall
constitute undrawn amounts under the Working Loan and
shall become available to Borrower for the purposes
of requesting further advances in accordance with the
terms hereof.
SECTION 2.2 PURPOSE OF THE WORKING LOAN
The proceeds of the Working Loan shall be utilized by the Borrower to:
(i) finance the Working Capital requirements of the Borrower; and (ii) issue the
GOCI Letter of Credit.
SECTION 2.3 ADVANCES FROM THE WORKING LOAN
(a) Provided that all the conditions precedent as set out
in Sections 11 and 12 hereunder have been met and the
Borrower is in compliance with all the terms and
conditions set out in this Agreement, then the
Borrower shall be entitled
3
from time to time as and when required to draw from this
Working Loan,
SECTION 3
THE ACQUISITION LOAN AND THE BRIDGE LOAN
SECTION 3.1 PURPOSE OF THE ACQUISITION LOAN
The proceeds of the Acquisition Loan shall be utilized by the Borrower
to finance the Acquisition and to pay existing credit facilities which the
Borrower currently has in place with other financial institutions.
SECTION 3.2 THE ACQUISITION LOAN AND POST ACQUISITION REVOLVING LOAN
(a) The Bank agrees, upon the terms and conditions set
forth in this Agreement, to grant to the Borrower the
Acquisition Loan, and the Borrower agrees to accept
the Acquisition Loan from the Bank, in the aggregate
maximum amount of twenty million Dollars
($20,000,000.00).
(b) Upon the request of the Borrower, the Acquisition
Loan may, with the Bank's prior written approval,
such approval to be in the sole discretion of the
Bank, be converted into the Post Acquisition
Revolving Loan provided that: (i) the Borrower has
repaid to the Bank all amounts outstanding under the
Bridge Loan; and (ii) the Borrower and the Bank shall
have come to a written agreement as to applicable
terms which shall govern the Post Acquisition
Revolving Loan.
(c) In the event that the Acquisition Loan is converted
to the Post Acquisition Revolving Loan, and the
Borrower is in compliance with all the terns and
conditions set out in this Agreement, then the
Borrower shall be entitled from time to time as and
when required to draw from the Post Acquisition
Revolving Loan. The Post Acquisition Revolving Loan
will be a revolving facility evidenced by a
promissory note (if deemed necessary by the Bank).
4
SECTION 3.3 PURPOSE OF THE BRIDGE LOAN
The proceeds of the Bridge Loan shall be utilized by the Borrower to
finance the Acquisition.
SECTION 3.4 THE BRIDGE LOAN
The Bank agrees, subject to the completion of the Acquisition and upon
the terms and conditions set forth in this agreement, to grant to the Borrower
the Bridge Loan, and the Borrower agrees to accept the Bridge Loan from the
Bank, in the aggregate maximum amount of seventeen million one hundred thousand
Dollars ($17,100,000.00).
SECTION 3.5 THE ACQUISITION AND BRIDGE LOANS
The Acquisition Loan and the Bridge Loan will be payable as provided
herein, will be subject to all the relevant conditions as set out herein, and
will be secured by the Security Documents as provided in this Agreement.
SECTION 3.6 ADVANCES
Whenever the Borrower wishes to draw down an Advance under either the
Acquisition or Bridge Loans:
(a) It shall give a Drawdown Notice to the Bank in
relation to the relevant Loan in the form of Schedule
3.6(a). Each Drawdown Notice shall specify;
(i) the Drawdown Date (which shall be a Business
Day),
(ii) the amount of the Advance or Advances, which
shall be not less
5
than five hundred thousand Dollars
$500,000.00, and
(iii) the Interest Period or Interest Periods.
(b) A Drawdown Notice in relation to each of the
Acquisition and Bridge Loans may be given to the Bank
no more frequently than monthly but may relate to
more than one Advance.
SECTION 3.7
The Bank shall have no obligation to make any Advance under any such
Drawdown Notice unless:
(a) All documents, certificates etc. referred to in
Sections 11 and 12 have been. received;
(b) at the time when the Drawdown Notice is received by
the Bank and at the time for making the Advance
referred to in such Drawdown Notice, the
representations and warranties made by Borrower in
this Agreement and any other documents delivered by
the Borrower to the Bank are true and accurate in all
material respects at such times respectively as if
repeated therein;
(c) at each such time no breach of covenants or other
event shall have occurred which is an Event of
Default or which with the giving of notice or the
lapse of time might constitute an Event of Default;
(d) the Security Documents and all transactions
contemplated by the Security Documents shall be in
form and substance satisfactory to the Bank, the
security intended to be conferred thereby shall be a
valid and enforceable
6
first lien, and the Bank shall have received such other
documents, authorizations, resolutions, consents, licenses or
opinions as it may reasonably request in relation to the
Security Documents; and
(e) the Bank is reasonably satisfied that no portion of the
Property has been, or is under threat of expropriation by any
government authority.
SECTION 3.8 EVIDENCE OF INDEBTEDNESS
The Borrower acknowledges that the actual recording of any Indebtedness
in connection with the Loans and interest, fees and other amounts due from the
Borrower pursuant to the terms of this Agreement in an account of the Borrower
maintained by the Bank in respect thereof and payments made under the Loans in
accordance with the terms of this Agreement shall constitute, except for
manifest error, conclusive evidence of the Borrower's indebtedness and liability
from time to time under this Agreement in respect of the Loans; provided that
the failure of the Bank to record same in such account shall not affect the
obligation of the Borrower to pay or repay such indebtedness and liability in
accordance with this Agreement.
SECTION 4
FEES
The Borrower agrees to pay to the Bank the fees specified in a fee
letter dated the same day as this Agreement addressed from the Bank to the
Borrower, such fees to be payable at the times and in the amounts specified in
such letter.
SECTION 5
SECURITY
As security for:
7
5.1 The repayment of the Loans and the payment of interest and all
other amounts owing by the Borrower to the Bank under this
Agreement or otherwise howsoever; and
5.2 The discharge by the Borrower of its other obligations
hereunder and under the Security Documents.
The Borrower shall provide, or cause to be provided, in a form and
content acceptable to the Bank, the following:
(a) The Debenture, to be stamped initially in the amount
of twenty-two million Dollars ($22,000,000.00), and
which may be up-stamped in accordance with Section
15.23 so as to provide the Bank, in its sole
discretion, adequate security.
(b) The collateral Charges over the Property stamped
collateral to the Debenture;
(c) The (Guarantees;
(d) The assignment of the "All Risks" insurance policy
and all other insurance policies of the Borrower
listed in Schedule 5.2(d) and required to be
maintained by this Agreement, to be executed by the
Borrower in favor of the Bank, the terms of such
insurance to meet the requirements more fully set out
in Section 15.6;
(e) Pledge of Shares providing a first charge over all
the Shares with the necessary notation or
registrations made on the books or registers of the
appropriate companies in order to properly reflect
the Bank's security interest in the Shares;
8
(f) Written undertakings from both Ocean Conversion
(Cayman) Ltd. and Waterfields Company Limited that
upon the occurrence of the agreed to triggering
events, as set out in the undertakings, the
respective parties shall provide to the Bank the
pledge of shares and guarantees in the format
attached to such undertakings; and
(g) The Bank's standard letter of credit reimbursement
agreement in respect of the GOCI Letter of Credit.
SECTION 6
INTEREST
SECTION 6.1 INTEREST RATE
(a) Working Loan - Advances under the Working Loan, other
than those amounts utilized for the GOIC Letter of
Credit, shall accrue interest at the Base Rate.
Advances in relation to the GOIC Letter of Credit
shall accrue interest at one percent (1%) per annum.
(b) Acquisition Loan - Pursuant to an appropriately
delivered Draw down Notice, the Borrower may select
an Interest Period of 30, 90 or 180 days in respect
of the LIBO Rate subject to the definition of
Interest Period in Annex "A". Advances shall accrue
interest at a rate per annum during each Interest
Period, equal to the sum of the LIBO Rate then
applicable to the Acquisition Loan plus the
Applicable Margin.
(c) Bridge Loan - Pursuant to an appropriately delivered
Draw down Notice, the Borrower may select an Interest
Period of 30, 90 or 180 days in respect of the LIBO
Rate subject to the definition of Interest Period in
Anwx "A". Advances shall accrue interest at a rate
per annum during
9
each Interest Period, equal to the sum of the LIB0
Rate then applicable to the Bridge Loan plus the
Applicable Margin.
(d) Applicable Margin - The Applicable Margin shall be
determined in respect of the Acquisition Loan and the
Bridge Loan on the first Interest Calculation Date
and each annual anniversary thereafter, by
calculating the ratio of Debt to EBITDA based on
information contained in the annual audited Financial
Statements of the Borrower and applying such ratio
pursuant to the table set out below. Notwithstanding
the above, the parties agree that the Margin shall be
equal to 2.75% per annum for the purposes of
calculating the effective interest rate on any
Interest Calculation Date prior to the date that the
year 2002 annual audited Financial Statements of the
Borrower are made available to the Bank. Thereafter,
on each annual anniversary of the Interest
Calculation Date, the most recent annual audited
Financial Statement of the Borrower shall be utilized
for the purposes of calculating the Applicable
Margin.
If the ratio of the Debt to EBITDA is less than or equal to 1.5 1.5%
If the ratio of the Debt to EBITDA is greater than 1.5 but equal to 1.75%
or less than 2.0
If the ratio of the Debt to EBITDA is greater than 2.0 but equal to 2%
or less than 2.5
If the ratio of the Debt to EBITDA is greater than 2.5 but equal to 2.25%
or less than 3.0
If the ratio of the Debt to EBITDA is greater than 3.0 but equal to 2.5%
10
or less than 3.5
If the ratio of the Debt to EBITDA is greater than 3.5 but equal to 2.75%
or less than 4
If the ratio of the Debt to EBITDA is greater than 4 3%
SECTION 6.2 INTEREST RATE SELECTION PROCEDURE
(a) Not later than five (5) Business Days prior to an
Interest Period the Borrower shall request;
(i) an Interest Period as permitted pursuant to
Section 6.l(b) and (c), and/or
(ii) the Fixed Period, when and if applicable
pursuant to Section 6.3,
and the Bank shall thereafter notify the Borrower of the
interest rate applicable two (2) Business Days prior to the
beginning of the Interest Period.
(b) If the Borrower fails to select an Interest Period in
accordance with Section 6.1 (b) or (c) above, it
shall be deemed to have selected a LIBOR Interest
Period of one (1) month;
(c) The Interest Period selected or deemed to be selected
as contemplated in this Section shall be irrevocable
and binding on the Borrower; and
(d) Other than the last Interest Period, the termination
of which, must coincide with the last scheduled
principal repayment of the Acquisition Loan, Interest
Periods
11
selected, to the extent possible, should coincide
with the scheduled principal repayment dates for the
Acquisition Loan.
SECTION 6.3 FIXED RATE FUNDING OPTION
(a) Upon the request of the Borrower, and at the sole
discretion of the Bank, as an alternative to the LIB0
Rate Loans, fixed rate funding for all, or no less
than five million Dollars ($5,000,000.00),of the
Acquisition Loan for periods not exceeding sixty (60)
months or the last Repayment Date applicable to the
Acquisition Loan (whichever shall first occur) shall
be available, from time to time, with rates to be
provided on a quotation basis subject to the
availability to the Bank of matching deposits in
accordance with the following:
(i) Subject to the Bank's consent, and at the
verbal request of the Borrower, the Bank
shall notify the Borrower verbally of the
fixed rate of interest applicable to the
amount of the Acquisition Loan, as specified
in the Borrower's request, to which the
Fixed Rate Funding Option applies; and
(ii) The Fixed Rate Funding Option may then be
exercised by the Borrower by delivering an
irrevocable written request to the Bank at
least five (5) Business Days before the last
day of the then current interest Period with
respect thereto, stipulating that, on the
last day of such interest Period, the Fixed
Rate Funding Option shall be applicable to
all or no less than five million Dollars
($5,000,000.00)of the Acquisition Loan at
the rate of interest specified in such
written request delivered by the Borrower to
the Bank and acknowledged by the Bank.
12
SECTION 6.4 POST-MATURITY RATES
On any overdue portion of each Loan, the Borrower shall pay, but only
to the extent permitted by law, interest on such overdue amount at a rate per
annum equal to the LIB0 Rate of an Interest Period of one (1) month duration
plus the highest Applicable Margin pursuant to Section 6.l(d) plus an additional
2%.
SECTION 6.5 PAYMENT OF INTEREST
(a) Interest on amounts outstanding under the Working
Loan shall be payable monthly in arrears on the last
Business Day of each month.
(b) For any period that the Acquisition or Bridge Loans
are LIBOR funded, interest shall be paid on the last
day of every Interest Period unless the Interest
Period is in excess of ninety (90) days, in which
event interest will be paid at the end of each ninety
(90) days within such Interest Period, and shall also
be payable at the end of the Interest Period.
(c) For any period that the Acquisition or Bridge Loans
are based upon a Fixed Rate or is Base Rate funded,
interest shall be paid every ninety (90) days in
arrears.
(d) Each payment of interest shall be paid at the Bank's
offices in Cayman in immediately available funds, not
later than 12:00 noon Cayman time on the date each
payment is due or to such other location as the Bank
may designate in writing, acting reasonably. In the
event that the Bank designates an alternative place
of payment which results in the imposition of a tax
not otherwise payable but for the Bank's designation,
the Borrower shall not be responsible for the payment
of such tax.
13
SECTION 6.6 COMPUTATION OF INTEREST
Interest shall accrue from day to day for the actual number of days
elapsed. Interest shall be calculated a) on the basis of a 360 day year, and b)
so as to include the first day but exclude the last day. All computations
(of interest shall be made by the Bank.
SECTION 6.7 USURY INTEREST
It is the intention of the Borrower and the Bank to comply with all
applicable usury laws; accordingly, it is agreed that no provisions in this
Agreement or any of the other Security Documents shall require the payment or
permit the collection of interest in excess of the maximum rate of interest that
can be charged in Cayman from time to time on Loans of this nature. If any
interest in excess of the Maximum Rate is provided for, or shall be adjudicated
to be so provided for, then in such event, i) the provisions of this section
shall govern, ii) neither the Borrower, or Guarantors, nor their respective
heirs, legal representatives, successors or assigns nor any other Person liable
for the payment, shall he obligated to pay interest to the extent that it is in
excess of the Maximum Rate, iii) any excess interest which may have been
collected shall, at the Bank's option, be either applied as a credit against the
then unpaid principal indebtedness or refunded to the Borrower, and iv) the
effective rate of interest automatically shall be reduced to the Maximum Rate;
provided, however, if from time to time thereafter the interest rate otherwise
then in effect shall be less than the Maximum Rate then in force, the interest
rate then in effect shall he automatically increased to the Maximum Rate and
remain at the Maximum Rate until the total amount of; (a) any excess interest
theretofore credited or repaid to the Borrower (pursuant to the foregoing
provisions of this Section); and (b) any interest which would have been earned
if the interest rate had not been reduced to the Maximum Rate (as provided in
this Section) has been fully repaid or paid to the Bank.
SECTION 7
REPAYMENT AND PREPAYMENT
14
SECTION 7.1 REPAYMENT OF THE WORKING LOAN
Any amounts drawn under the GOCI Letter of Credit shall be repayable in
accordance with the terms contained in the Bank's standard letter of credit
reimbursement agreement. Principal, interest and all other amounts outstanding
in respect of the Working Loan (other than in connection with the GOCI Letter of
Credit), shall be paid in full upon demand.
SECTION 7.2 REPAYMENT OF THE ACQUISITION LOAN
(a) The Borrower shall repay the Acquisition Loan over a
seven (7) year term. The seven (7) year term shall
commence as of the date of first draw down of the
Acquisition Loan. Principal payments shall be made in
equal installments of seven hundred and fourteen
thousand, two hundred and eighty-five Dollars and
seventy-one cents ($714,285.71), on a quarterly
basis, in arrears and shall be applied against such
Advance or Advances in the inverse order of maturity
if applicable, and if not applicable, as the Borrower
may direct in writing and in the absence of such
written direction, as the Bank, in its sole
discretion, may determine. The first principal
payment shall be due and payable on the three (3)
month anniversary of the first draw down.
(b) In the event that the Acquisition Loan is converted
into the Post Acquisition Revolving Loan pursuant to
the provisions of section 3.2(b), the entire
principal, interest and all other amounts outstanding
at any given time shall he paid in full upon demand.
SECTION 7.3 REPAYMENT OF BRIDGE LOAN
The Borrower shall repay the Bridge Loan at any time during a period of
six (6) months from the date of first draw down.
15
SECTION 7.4 PLACE OF PAYMENT
Each installment shall be paid by the Borrower to the Bank at the
Bank's offices in Cayman, in immediately available funds, not later than 12:OO
noon Cayman time on the date each installment is due or to such other location
as the Bank may in writing designate, acting reasonably. In the event that the
Bank designates an alternative place of payment which results in the imposition
of a tax not otherwise payable but for the Bank's designation, the Borrower
shall not be responsible for the payment of such tax.
SECTION 7.5 OPTIONAL PREPAYMENTS
The Borrower shall have the right at any time on giving not less than
five (5) Business Days written notice, to prepay all or a part of the principal
amount of the Acquisition Loan provided that:
(a) In the case of a partial Prepayment, such Prepayment
shall be in multiples of five hundred thousand
Dollars ($500,000.00);
(b) With respect to the Acquisition Loan, payments shall
be applied against such Advance or Advances ,in the
inverse order of maturity, if applicable, and if not
applicable, as the Borrower may direct in writing and
in the absence of such written direction as the Bank,
in its sole discretion, may determine;
(c) During any period that the relevant Advance is LlBOR
funded, the Prepayment may only he made on the last
day of an Interest Period; and
(d) All accrued interest on the amount of such
Prepayment is paid at the same time.
SECTION 7.6
16
The foregoing notwithstanding, neither the requirement to provide the
Bank with at least five (5) Business Days notice nor the requirement that
Prepayments shall be in multiples of five hundred thousand Dollars ($500,000.00)
shall apply to any Prepayment resulting from the application by the Bank to the
outstanding principal of the relevant Loan of any casualty insurance proceeds or
compensation for compulsory acquisition by a Governmental Authority of any
Property.
SECTION 7.7 BUSINESS DAY
Whenever any payment to be made hereunder shall be stated to be due, or
whenever the last day of an Interest Period would otherwise occur, on a day
other than a Business Day, such payment shall be made, and the last day of such
Interest Period shall occur, on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest, provided, however, if such extension would cause payment of
interest on or principal of loan portions to be made in the next following
calendar month, such payment shall be made on the preceding Business Day.
SECTION 7.8 INTERNATIONAL TRANSACTION - FOREIGN CURRENCY
This Loan Agreement is an international financial transaction.
Therefore, the payment in Dollars is an essential part of this contract and the
Borrower expressly undertakes to make all payments under this contract only in
said currency, this being an essential condition for the granting of the Loans,
The Borrower also acknowledges that its obligation to make payments in Dollars
will not be affected for any reason whatsoever and that it will not claim any
excuse or justification and waives expressly any right, advantage, exception,
defence, claim, counterclaim, suit or demand to or for paying in any other
currency, or to deliver a lesser amount or suspend payments or object to the
right of the Bank to be paid in Dollars.
SECTION 8
WITHHOLDING TAXES
17
SECTION 8.1 TAXES
(a) Subject to clause 6.5(d) and 7.4, all payments to be
made by the Borrower to the Bank pursuant to this
Agreement or the Security Documents shall he made
free and clear of and without deduction for or on
account of Tax, unless such Borrower is required to
make such a payment subject to the deduction or
withholding of Tax (other than a tax imposed on the
net income of the Bank), and in which case the sum
payable by the Borrower in respect of which such
deduction or withholding is required to be made shall
be increased to the extent necessary to ensure that,
after the making of such deduction or withholding,
the Bank receives and retains (free from any
liability in respect of any such deduction or
withholding) a net sum equal to the sum which it
would have received and so retained had no such
deduction or withholding been made or required to be
made.
(b) Without prejudice to the provisions of Section
8.l(a), if the Bank is required to make any payment
on account of Tax or otherwise (not being a Tax
imposed on its net income of the Bank) on or in
relation to any sum received or receivable hereunder
by the Bank (including, without limitation, any sum
received or receivable under this Section 8) or any
liability in respect of any such payment is asserted,
imposed, levied or assessed against the Bank, the
Borrower shall, upon demand of the Bank, promptly
indemnify the Bank against such payment or liability,
together with any interest, penalties and expenses
payable or incurred in connection therewith.
(c) If the Bank intends to make a claim pursuant to
Section 8.l(b), then it shall; (i) notify the
Borrower of the event by reason of which it is
entitled to do so; and (ii) use commercially
reasonable efforts to file any
18
certificate or document reasonably requested by the
Borrower if the making of such filing would avoid the
need for or reduce the amount of any such indemnity
payment or additional amount which may thereafter
accrue and such filing change is not, in the
determination of the Bank, inconsistent with that
Bank's internal policies.
SECTION 8.2 TAX RECEIPTS
(a) If, at any time, the Borrower is required by law to
make any deduction or withholding from any sum
payable by it hereunder (or if thereafter there is
any (change in the rates at which or the manner in
which such deductions or withholdings are
calculated), it shall promptly notify the Bank.
(b) If the Borrower makes any payment hereunder in
respect of which it is required to make any deduction
or withholding, it shall pay the full amount
required to be deducted or withheld to the relevant
taxation or other authority within the time allowed
for such payment under applicable law and shall
deliver to the Bank, upon the Bank's request, an
original receipt (or a certified copy thereof) issued
by such authority evidencing the payment to such
authority of all amounts so required to be deducted
or withheld in respect of such payment.
SECTION 9
CHANGES IN CIRCUMSTANCES
SECTION 9.1 INCREASED COSTS
(a) If, by reason of;
(i) The introduction of or any future change
(including, without limitation, any change
by way of imposition or increase of any
19
reserve requirements) in or in the
interpretation of any Cayman law or
regulation, or
(ii) The compliance with any future guideline or
request from any central bank or other
Governmental Authority (whether or not
having the force of law),
there shall be any increase in the cost to the Bank
of agreeing to make or making, funding or maintaining
any of the Loans made to the Borrower hereunder,
including any increase in the cost of making
continuing or maintaining the Loans as LIBO Rate
Loans and including, without limitation, and any such
cost (i) results from (a) the imposition or amendment
of any Tax; or (b) the imposition or amendment of any
reserve, special deposit or similar requirement
against assets of, liabilities of, deposits with or
for the account of, or loans by the Bank, other than
a requirement resulting from or specifically
attributable to any change in the constitution or
financial condition of the Bank, and (ii) results in
an increase in cost or reduction in profit to the
Bank by an amount reasonably deemed material by the
Bank, then the Borrower shall, from time to time on
demand of the Bank, promptly pay it the Bank amounts
sufficient to indemnify the Bank against such
increased cost; provided, however, that the Bank is
then seeking reimbursement with respect to
substantially all other similar loans it has
outstanding to other borrowers of a class similar to
the Borrower.
(b) If the Bank intends to make a claim pursuant to
Section 9.l(a), it shall promptly notify the Borrower
of the event by reason of which it is entitled to do
so, such notice to state, in reasonable detail, the
reasons therefore and the additional amount required
fully to compensate the Bank for such
20
increased cost or amount.
SECTION 9.2 ILLEGALITY
If, at any time, it is unlawful for the Bank to make, fund or allow to
remain outstanding all or any of the Loans made by it hereunder, then the Bank
shall, promptly after becoming aware of the same, deliver to the Borrower a
certificate to that effect and the Bank shall not thereafter be obliged to make
any Advances hereunder and the amount of the Loans remaining available for
drawing shall be immediately reduced to zero.
SECTION 10
LIBOR, FIXED RATE FUNDING PROVISIONS
SECTION 10.1 LIBO RATE LENDING UNLAWFUL
If the Bank shall determine (which determination shall, so long as the
Bank shall then be taking the same action with respect to substantially all
other similar loans it may have outstanding to other borrowers, upon notice
thereof to the Borrower be conclusive and binding on the Borrower) that the
introduction of, or any change in, or in the interpretation of, any Cayman
Islands law makes it unlawful, or Governmental Authority asserts that it is
unlawful, for the Bank to make, continue, or maintain any Loan as, or to convert
any Loan into, a LIBO Rate Loan, the obligations of the Bank to make, continue,
maintain or convert such Loan shall, upon such determination, forthwith be
suspended until the Bank shall notify the Borrower that the circumstances
causing such suspension no longer exist, and all LIBO Rate Loans shall
automatically convert into loans on which interest shall be calculated and
accrue at the Alternative Rate or at the Substitute Basis as hereinafter
provided, which conversion shall be effective at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION 10.2 ALTERNATIVE INTEREST RATES
21
If the principle London, England office of The Bank of Nova Scotia
determines that at 1 1:OO a.m. two (2) Business Days prior to an Interest
Period, no LIBO Rate is quoted for the proposed duration of such Interest Period
for an applicable Advance, then:
(a) The Bank shall promptly notify the Borrower of such
event specifying in reasonable detail the
circumstances of such event;
(b) the duration of that Interest Period shall be one (1)
month or less, such that it shall not end after the
Repayment Date; and
(c) the rate of interest applicable to such Advance
during such Interest Period shall be the rate per
annum which is the sum of the Applicable Margin and
the rate per annum determined by the Bank to be the
arithmetic mean (rounded upwards, if not already such
a multiple, to the nearest whole multiple of
one-hundredth of one percent(100(th) of 1%) of the
rate or rates of the Bank which express as a
percentage rate per annum the Bank's lowest cost
alternate source of funding for commercial loans
comparable to such Advance during such Interest
Period,
provided, however, that (b) and (c) shall not apply if the Bank and the
Borrower agree on a Substitute Basis in accordance with Section 10.3.
SECTION 10.3 SUBSTITUTE LENDING RATE
If, (i) the event mentioned in Section 10.2 occurs, or (ii) by reason
of circumstances affecting the London Interbank Market during any period of
three (3) consecutive Business Days, no LIBO Rate is published in the London
Interbank Market, then:
(a) The Bank shall promptly notify the Borrower of such
event specifying in
22
reasonable detail the circumstances of such event;
(b) if the Bank or Borrower so requires, within five
(5)days of such notification, the Bank and the
Borrower shall enter into negotiations with a view to
agreeing a Substitute Basis, (i) for determining the
rates of interest from time to time applicable to the
affected Advances, and/or (ii) upon which the
Advances may be maintained thereafter and any such
Substitute Basis that is agreed shall take effect in
accordance with its terms and be binding on each
party hereto; and
(c) if the Bank and Borrower have not reached agreement
on the last day of the then current Interest Period
applicable to the affected Advance, the Alternative
Rate shall thereafter apply to the affected Advance
until such time as the condition which resulted in
the change of interest rate pursuant to Section 10.2
no longer exists. The Bank agrees to give the
Borrower prompt notice as to the non-existence of
such condition and the Borrower shall thereafter have
the right to borrow at a rate fixed to the LIBO Rate.
SECTION 10.4 FUNDING LOSSES
In the event the Bank shall incur any loss or expense (including any
loss or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by the Bank to make, continue or maintain any
portion of the principal amount of any Loan as, or to convert any portion of the
principal amount of any loan into, a LIBO Rate Loan) as a result of:
(a) Any conversion or repayment or Prepayment of the
principal amount of any Fixed Rate Loans and/or LIBO
Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto;
23
(b) any Loans not being made as LIBO Rate Loans or Fixed
Rate Loans in accordance with the Draw down Notice
therefore due to the acts or omissions of the
Borrower;
(c) any Loans not being continued as, or converted into,
LIBO Rate Loans or Fixed Rate Loans in accordance
with a Draw down Notice;
(d) any payment made in reduction of principal which does
not coincide with a principal repayment date (other
than a payment made pursuant to the provisions of
Section 9.1); or
(e) any action taken upon the occurrence of an Event of
Default.
then, upon the written notice of the Bank to the Borrower, the Borrower
shall, within five (5) days of their receipt thereof, pay directly to the Bank
such amount as will (in the reasonable determination of the Bank) reimburse the
Bank for such loss or expense. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower
SECTION 11
CONDITIONS PRECEDENT
The obligations of the Bank hereunder to grant the Loans are subject to
the performance by the Borrower of all the Borrower's obligations which are to
be performed prior to disbursement of any Advance, and, where applicable, to the
condition that the Bank shall have first received all of the following, in form
and substance satisfactory to the Bank in its sole discretion, and to the extent
applicable, duly executed copies by the parties thereto:
11.1 All the documents that are referenced in Section 5 above.
24
11.2 A plan drawn up by a registered land surveyor, showing the
layout of the Property, and indicating the buildings located
thereon, which shall confirm to the satisfaction of the Bank
that all buildings and facilities to be located on the
Property arc located within the property lines or such other
evidence as is reasonably satisfactory to the Bank.
11.3 Copies, certified to be a true, complete and up-to-date copy
of the following documents of the Borrower and each
Subsidiary.
(a) Memorandum and Articles of Association;
(b) Certificate of Incorporation;
(c) Register of Directors and Officers;
(d) Certificates of good standing;
(e) Register of shareholders (other than for the
Borrower); and
(f) Register of Mortgages or Charges.
11.4 In respect of the Borrower, a certificate of an Authorized
Signatory of the Borrower under its seal (if applicable) to
the effect that the requisite resolutions have been duly and
properly passed at duly convened and constituted meetings of
the board of directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and each
of the Security Documents to which the Borrower is a party and
(ii) a named person or persons specified therein and whose
specimen signatures appear thereon to sign, on behalf of the
Borrower, this Agreement and each of the Security Documents to
which the Borrower is a party and to give any notices or
25
certificates required in connection herewith or therewith, and
confirming that such resolutions are still in effect and have
not been varied or rescinded; (iii) that all government fees
and royalties payable under relevant licenses, taxes and
duties relating to the Property or the business of the
Borrower have been paid; and (iv) that all amounts payable to
regulatory authorities in connection with the acquisition by
the Borrower of the relevant shareholdings in the Subsidiary
has been paid in full.
11.5 In respect of each Guarantor a certificate of an Authorized
Signatory of the party (if applicable) under its seal to the
effect that the requisite resolutions have been duly and
properly passed at duly convened and constituted meetings of
the board of directors of each party authorizing (i) the
execution, delivery and performance of each of the Guarantee
to which it is a party and (ii) a named person or persons
specified therein and whose specimen signatures appear thereon
to sign, on behalf of each party the Guarantee to which it is
a party and to give any notices or certificates required in
connection herewith or therewith, and confirming that such
resolutions are still in effect and have not been varied or
rescinded.
11.6 Payment of all fees as provided for in the fee letter executed
by the Borrower in favour of the Bank and this Agreement.
11.7 A favourable opinion from legal counsel for the Borrower
confirming, inter alia:
(a) The corporate status of the Borrower;
(b) that the Borrower is in possession of all relevant
agreements, licences and permits necessary to enable
it to conduct its business including the production
and sale of water;
26
(c) that this Agreement and the relevant Security
Documents are valid and enforceable against the
Borrower;
(d) details of all amounts payable to regulatory
authorities in connection with the acquisition by the
Borrower of the relevant shareholdings in the
Subsidiaries and confirmation that all such amounts
have been paid in full;
(e) that, subject to a favourable ruling regarding the
effect of the Land Holding Companies Share Transfer
Tax Law on the sale of the Borrower's shares listed
on a public stock exchange, all government fees,
royalties payable under the relevant licenses, taxes
and duties relating to the Property or the business
of the Borrower have been paid;
(f) that all authorizations (if any), other than those
acquired through the payment of nominal stamp duty,
necessary or desirable for, or in connection with,
the entry into and performance of this Agreement, and
for any other matter or thing contemplated by this
Agreement, have been properly obtained and are in
full force and effect;
(g) that, where necessary, the appropriate authorizations
have been obtained from the relevant Governmental
Authorities in order to acquire the Shares; and
(h) that there is no litigation, arbitration or
administrative proceedings in process or presently
pending or threatened against the Borrower or any its
assets, and to the best of their knowledge, no such
litigation, arbitration or proceeding is threatened.
27
11.8 A favourable opinion from legal counsel for each of the
Guarantors confirming, inter alia:
(a) The corporate status of each Guarantor;
(b) that each Guarantor is in possession of all relevant
agreements, licences and permits necessary to enable
it to conduct its business including the production
and sale of water; and
(c) that the respective Guarantee is valid and
enforceable against the respective Guarantor.
11.9 An opinion of counsel to the Bank in a form reasonably
acceptable to the Bank, with respect to the Bank's rights in
the Collateral Charges and the Debenture.
11.10 A copy of the latest audited Financial Statements for the
Borrower.
11.11 A certificate from an Authorized Officer of the Borrower
setting out: (i) the name of each of the Subsidiaries in
which the Borrower intends to acquire an ownership interest
utilizing the funds available pursuant to this Agreement; (ii)
the percentage shareholding, of each Subsidiary being
acquired; (iii) the total consideration being paid for the
percentage shareholding to be acquired in each Subsidiary; and
(iv) executed copies of the various agreements of purchase and
sale and all ancillary transaction documents thereto for each
of the Subsidiary.
11.12 Copies certified by an Authorized Officer of the Borrower as
true and accurate of all relevant licences and permits
necessary to enable it to conduct its business.
11.13 Statements from the existing lenders to the Credit Parties
setting out the terms of such
28
existing facilities, (i) the outstanding balance of such
facilities, (ii) the applicable interest rate, (iii) the terms
and conditions for repayment, (iv) the current status of such
facilities, and (v) the security obtained in relation to each
existing facilities.
11.14 Copies of all necessary approvals and authorizations from the
relevant regulatory authorities for the contemplated
acquisition by the Borrower of various shareholdings in the
Subsidiary.
11.15 Copies of all necessary approvals and authorizations from the
existing lenders of the various Subsidiaries for the
contemplated acquisition by the Borrower of various
shareholdings in the Subsidiaries.
11.16 With respect to each Subsidiary, and in connection with the
Pledge of Shares, delivery to the Bank of such other
documents, including without limiting the generality of the
foregoing, stock transfer forms, the share certificates and
written acknowledgements from the Board of Directors of each
Subsidiary confirming that they will not permit the respective
Subsidiary to register the transfer to a third party of the
pledged Shares without the Bank's consent and as are necessary
to perfect the interest of the Bank in and to the Shares with
the priority contemplated by the Pledge of Shares agreements.
11.17 Reference letter(s) from the existing lenders of the
Borrower.
11.18 Evidence of a binding purchase and sale agreement for the
purchase by the Borrower of the shares of the Subsidiary for
which financing is currently being requested.
SECTION 12
CONDITIONS PRECEDENT TO DISBURSEMENT
(a) The obligation of the Bank to make the initial
disbursement or any subsequent
29
disbursement is subject to the additional conditions
precedent that:
(i) The Bank shall have received all of the
documents listed in Section 11 above.
(ii) The Bank shall have received an irrevocable
Draw down Notice not less than five (5)
Business Days before the date for the making
of the Advance.
(iii) The proposed date for the making of the
Advance is a Business Day.
(iv) There has been no Material Adverse Effect
with respect to the Borrower or any
Subsidiary.
(v) No event has occurred which is or would
become (with the passage of time, the
giving of notice, the making of any
determination hereunder or any combination
thereof) an Event of Default.
(vi) Evidence, satisfactory to the Bank that, all
government fees, taxes and duties applicable
to each Credit Party have been paid and are
current.
(b) The representations and warranties set out
in Section 13 of this Agreement shall remain
true and accurate in all respects at the
time of the relevant disbursement.
(viii) The obligations of the Bank to make the
initial disbursement or any subsequent
disbursement under the Post Acquisition
Revolving Loan is subject to the additional
condition precedent that prior to any
drawdown under the Post Acquisition
Revolving Loan, the Bank shall have received
30
evidence from the Registrar of Lands (or
other appropriate Governmental Authority),
satisfactory to the Bank in its sole
discretion, that the Debenture is valid and
sufficiently stamped to provide valid and
complete security for any amounts which may
become outstanding under the Post
Acquisition Revolving Loan.
SECTION 13
BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement the Borrower
hereby represents and warrants to the Bank that:
SECTION 13.1 VALID EXISTENCE
The Borrower is a corporation, organized, existing and in good standing
under the laws of Cayman.
SECTION 13.2 DUE AUTHORIZATION
The execution, delivery and performance by the Borrower of this
Agreement and the other Security Documents is within its corporate powers, have
been duly authorized by all necessary corporate action, and do not contravene
(c) Its Memorandum or Articles of Association; or
(d) any law or any contractual restriction binding on or
affecting it or its property.
SECTION 13.3 NO GOVERNMENT APPROVALS
31
No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or other regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the other Security Documents other than the consents set out in this Agreement.
SECTION 13.4 BINDING OBLIGATION
This Agreement is and the other Security Documents to which it is a
party, when delivered hereunder, will be, legal, valid and binding obligations
of it enforceable against it in accordance with its terms, subject to the effect
of bankruptcy, insolvency, winding-up, non-viability, moratorium,
reorganization, liquidation and other laws relating to or affecting the
enforcement of creditors' rights generally.
SECTION 13.5 BUSINESS PERMITS
It has obtained from the relevant Governmental Authorities all
necessary business licences to conduct the business activities.
SECTION 13.6 ABSENCE OF DEFAULT
No Event of Default, nor any matter which with the passage of time,
occurrence of a condition or giving of notice will become an Event of Default,
has occurred and is continuing.
SECTION 13.7 NO CONTRAVENTIONS
No event has occurred which constitutes, or which with the giving of
notice or the lapse of time or a relevant determination, or any combination
thereof, would constitute a contravention of, or default under, any agreement or
instrument by which it or any of its assets is bound or affected, and which has,
or could be regarded as having, a Material Adverse Effect on its ability to
observe
32
or perform any of its obligations under this Agreement.
SECTION 13.8 LITIGATION
No litigation, arbitration or administrative proceeding or claim which
might itself or together with any other such proceedings or claims have a
Material Adverse Effect on its ability to observe or perform its obligations
under this Agreement, is presently in progress or pending, or to the best of the
knowledge, information and belief of it, threatened against it, or any of its
assets.
SECTION 13.9 TAXES
All necessary returns, if any, have been delivered by or on behalf of
it to the relevant taxation authorities and it is not in default in the payment
of any Taxes, and no claim is being asserted with respect to Taxes which has not
been disclosed to the Bank except any such Taxes which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with generally accepted accounting principles shall have
been set aside on its books.
SECTION 13.10 FULL DISCLOSURE
It has fully disclosed in writing to the Bank all facts relating to it
which it knows or should reasonably how and which are material for disclosure to
the Bank in the context of this Agreement.
Section 13.11 OWNERSHIP OF PROPERTIES
It has good and marketable title to all of its material properties and
assets, real and personal, of any nature whatsoever, free and clear of all liens
except as permitted hereby. It is the owner of good title to all of its personal
property (together with all replacements, renewals and substitutions thereof and
therefor, the "Personal Property"), free and clear of any liens (other than
liens in favour
33
of the Bank), contingent or otherwise, of any nature whatsoever.
SECTION 13.12 BANKRUPTCY
It has not taken any action, nor has any step been taken by or against
or with reference to it for the winding-up, dissolution, bankruptcy or
re-organisation of it or for the appointment of a receiver, trustee or similar
'officer of it with respect to any or all of the assets or revenues of it.
SECTION 13.13 MATERIAL LIABILITY
There are no current liabilities or contingent liabilities which would
have a Material Adverse Effect on the Borrower.
SECTION 13.14 ENFORCEABILITY
To the best of the Borrower's knowledge and belief, the registration of
the Security Documents by the Bank will not violate any judgement, order decree,
or statute.
SECTION 13.15 FINANCIAL INFORMATION
All Financial Statements, shareholders' equity, and all other financial
information of it which have been or shall hereafter be furnished by or on
behalf of the Borrower to the Bank for the purposes of or in connection with
this Agreement or any transaction contemplated hereby, have been or will be
prepared in accordance with US GAAP and do or will present fairly the financial
condition of the Borrower as at the dates thereof and the results of its
operations for the periods then ended.
SECTION 13.16 LABOUR CONTROVERSIES
34
There are no labour controversies pending or, to the best knowledge of
the Borrower, threatened against the Borrower which, if adversely determined,
would have a Material Adverse Effect on the Borrower.
SECTION 13.17 UTILITY SERVICES
All utility services necessary for the operation of its business are in
place and are functioning.
SECTION 13.18 PROTECTION UNDER SECURITY DOCUMENTS
Upon the due registration of the relevant Security Documents and as
long as the obligations which are secured by such !Security Documents shall be
outstanding, the Borrower shall undertake no voluntary action which shall have
the effect of granting a security interest senior to the Bank's security
interest.
SECTION 13.19 ENVIRONMENTAL PROCEEDINGS
To the best of the Borrower's knowledge and belief based on its
environmental due diligence, there are no conditions or circumstances associated
with its property or that of the Subsidiaries which could result in a violation
of Environmental Law at the time this representation is provided.
SECTION 13.20 MATERIAL ADVERSE EFFECT
There has been no Material Adverse Effect in the condition of either
Credit Party since October 4,2002.
The representations and warranties set out in this Section shall
survive the execution of this
35
Agreement and shall be deemed to be included in each Draw down Notice of the
Borrower as if set forth in full. The representations and warranties set out in
this Section shall be deemed to be repeated on each Draw down Date with
reference to the facts and circumstances then subsisting five days prior to such
date, unless the Bank is notified in the five day interim period in writing that
each or any of the representations or warranties contained in this Section 13
is not correct for the date for which the representation or warranty is being
made.
SECTION 14
BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that from the date hereof and until
payment in full of the principal of and the interest on the Loans and all other
obligations hereunder and under the other Security Documents, that it shall not,
unless the Bank otherwise consents to in writing:
14.1 LIENS
Incur any Indebtedness, nor incur, create, assume or suffer to exist
any real or personal property mortgage, pledge, title retention lien,
charge, security interest, financing statement or any other lien or
encumbrance of any nature whatsoever, any legal, voluntary, involuntary
or consensual liens or encumbrances, on any of its assets or
properties now or hereafter owned, except liens in favour of the Bank.
14.2 GUARANTEES
Guarantee, assume, endorse or otherwise become or be responsible in any
way for the obligations of any other Person other than those guarantees
set out in Schedule 14.4 and provided to the Bank.
14.3 PROPERTIES
36
Sell, transfer or alienate in any manner a substantial part of its
assets or inventory. Alter, destroy, abandon, remove or use its assets
or properties for any purpose other than that for which it is now
proposed other than in the ordinary course of business.
14.3 MERGER, CONSOLIDATION
Liquidate, dissolve, merge into or consolidate with any other
corporation or entity.
14.4 CONDITIONAL SALES
Incur any obligations under a purchase contract or otherwise acquire
any property subject to any conditional sale or title retention
agreement, unless in the ordinary course of its business.
14.5 CORPORATE FACILITIES INVESTMENTS
Save in the ordinary course of business, make any loans, grant any
credit to or for the benefit of any person, including any Subsidiary,
or otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person;
14.6 CORPORATE DISTRIBUTIONS
Pay any dividends or make any other distribution of funds to any
shareholder, other than from Cash Flow.
14.7 PAYMENT OF OTHER LIABILITIES
If there is an Event of Default under this Agreement, pay the principal
amount on any debt that has been subordinated to the Loans.
37
14.8 CHANGE OF BUSINESS
Change its core line of business from that of reverse osmosis plant
construction, design, installation and operation of potable water and
waste water treatment facilities.
14.9 CHANGE IN OWNERSHIP OF SUBSIDIARY COMPANIES
Permit the sale, transfer, pledge, hypothecation or alienation of the
Shares.
14.10 MEMORANDUM AND ARTICLES OF ASSOCIATION
Make any material amendment to its Memorandum or Articles of
Association.
14.11 INVESTMENTS
Acquire any investments other than investments which do not contravene
any term of this Agreement or the Security Documents.
14.12 CAPITAL EXPENDITURE
Make in aggregate any capital expenditure in excess of two million
Dollars $2,000,000.00 during any Financial Year.
14.13 SHARE RETENTION REQUIREMENTS
Dispose of its ownership interests (or voting rights) or otherwise
allow a change of control of any of the Subsidiaries, or grant a pledge
or any other form of security interest over its ownership interests in
the Subsidiaries.
38
14.14 INTER-COMPANY PAYABLES/RECEIVABLES
Other than in the normal course of its business, permit any
inter-company payables or receivables between the Borrower and any of
its Affiliates.
SECTION 15
BORROWER'S AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, from the date hereof and until
payment in full of the principal of and the interest on the Loans and the
discharge of all other obligations hereunder and under the Security Documents,
it shall, unless the Bank otherwise consents in writing:
SECTION 15.1 EXISTENCE AND BUSINESS LICENCES.
Preserve and keep in full force and effect its corporate existence and
its qualification to do business, and its good standing with the Registrar of
Companies in Cayman.
SECTION 15.2 CONDUCT OF BUSINESS
Continue to conduct and operate its business as substantially described
to the Bank in connection with this Agreement.
SECTION 15.3 MAINTENANCE AND DEVELOPMENT OF BANKING RELATIONSHIP
To the extent that pricing is competitive, and the quality of service
is equal to that available at other banks, maintain all of its banking and
banking related business with the Bank or its designate, where the Bank or its
designate provides the service.
39
SECTION 15.4 LICENCES, PERMITS
Maintain, preserve and protect at all times all licences and permits
necessary for the existence or operations of the Borrower, including all the
required licenses (including environmental), and comply in all material respects
with each and all of the terms, conditions and requirements of such licences and
permits. A list of the licenses and permits required is set out on Schedule 15.4
attached hereto.
SECTION 15.5 ASSETS AND PROPERTIES
Preserve all of its assets and properties that are used in the conduct
of its business particularly those securing the Loans, keep the same in good
repair, working order and condition, and from time to time make or cause to be
made all needed and proper repairs, renewals, replacements, betterments and
improvements thereto to preserve and maintain their value, normal wear and tear
excepted, so that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 15.6 PROPERTY AND LIABILITY INSURANCE
(a) Insure all Assets (other than underground piping and
earthen berm reservoirs) at all times with
responsible, reputable insurance companies or
associations, to be approved by the Bank, exercising
reasonable discretion, in such amounts and covering;
(i) loss or damage to the properties (including
fire, earthquake, windstorm, flood,
hurricane, and such other risks),
(ii) business interruption insurance, and
40
(iii) insurance against liability to Persons,
all for such risks and hazards and in such amounts and with such
deductibles and from insurance companies as are reasonably acceptable to the
Bank.
(b) All such insurance policies, except those relating to
liability coverage, shall provide for payment of the
proceeds thereof to the Bank as loss payee, and all
shall contain an endorsement providing that the
insurance shall not be cancellable except upon 30
days prior written notice to the insured. From time
to time at the request of the Bank, Borrower shall
deliver to the Bank an insurance certificate
indicating all insurance policies then in force.
(c) If any of the Assets are destroyed or damaged by any
cause whatsoever while a Loan is outstanding, then
the Borrower may apply the proceeds of the insurance
policy covering the Assets in the following manner
set out in sub-sections (d) and (e) inclusive,
provided that;
(i) all amounts due under this Agreement at the
time of the damage had been paid,
(ii) payment of any instalment of principal or
interest is not more than three months in
arrears at the time the proceeds of the
insurance policy are received, and
(iii) any arrears of principal or interest on the
Loans are paid to the Bank within one (1)
month of the receipt of the insurance
proceeds.
In the event that any of the above conditions are not
complied with, the
41
Bank shall have the right, in its sole discretion, to
either apply any insurance policy proceeds received
to reduction or satisfaction of the amounts
outstanding on the Loans, or to apply such funds to
the restoration of all or a portion of the Assets. In
the event that Bank agrees to make the insurance
proceeds available for reconstruction and repair, if
any of the events referred to in items (i) to (iii)
have transpired, the Bank shall disburse such funds
in the manner set out in sub-section (e) below;
(d) if the damages are less than fifty percent (50%) of
the replacement cost of the Assets, then all
proceeds of the insurance policy covering the Assets
shall be payable directly to the Borrower for the
purpose of repairing or replacing the Assets;
(e) if the damages are more than fifty percent (50%) of
the replacement cost of the Assets, and the proceeds
of the insurance policy covering the Assets together
with any other funds of the Borrower are sufficient
to repair the damages incurred, then the Borrower may
apply the insurance proceeds for the purpose of
repairing or replacing the Assets, provided that the
Borrower shall provide to the Bank certification that
the repairs or replacements have been completed, and
all such insurance proceeds shall be delivered to and
held by the Bank and shall be disbursed to the
Borrower to facilitate repairs or reconstruction of
the Assets in accordance with disbursement procedures
satisfactory to the Bank in its reasonable
discretion, and any insurance proceeds remaining
after the completion of repairs or reconstruction
shall be applied by the Bank against Loan repayments
in inverse order of maturity;
(f) In the event any damages are occasioned to the Assets
and only a portion of such damages are covered by the
insurance maintained by the
42
Borrower, then such insurance proceeds shall be
applied to the reconstruction/repair of the damaged
assets only in the event that the Borrower is able to
demonstrate, to the sole satisfaction of the Bank,
that the Borrower has sufficient capital (either by
way of additional equity or subordinated debt (the
terms and conditions of such subordinated debt to be
satisfactory to the Bank in its sole discretion))
when added to the insurance proceeds, to fully
rebuild all of the damaged Assets (both insured and
uninsured);
(g) Application of insurance policy proceeds to reduction
or satisfaction of the amounts outstanding on the
Loans, or to restoration of all or a portion of the
Assets shall be without prejudice to any other right
or remedy of the Bank as provided in this Agreement.
(h) Furnish to the Bank without separate request on the
annual anniversary date of the insurance policies, or
on request, duplicate originals of all policies or
contracts or certificates of insurance effected
pursuant to the foregoing covenants together with
confirmation from the relevant insurer or insurers
that the premiums in respect of such insurances have
been paid and that such insurances are in full force
and effect and that the Bank is recorded as loss
payee.
SECTION 15.7 ACCOUNTING RECORDS AND FINANCIAL STATEMENTS
Make available upon request in Cayman the appropriate books of record
and accounts, and an accounting system which records are in conformity with
full, true and correct entries of all dealings and transactions in relation to
its business and affairs, and shall reasonably protect such books and accounts
against loss or damage.
43
SECTION 15.8 INSPECTION
Permit the Bank, its agents or representatives to visit and inspect at
reasonable times, upon reasonable prior notice, Borrower's assets, properties,
books of record and accounts, and to discuss the same and the financial
condition of the Borrower with its officers. The Bank shall he entitled from
time to time as it deems necessary, and upon good cause, to cause the Property
or any portion thereof to be inspected at the Borrower's expense, by a firm of
consulting architects or engineers designated by the Bank.
SECTION 15.9 REPORTING REQUIREMENTS
MONTHLY STATEMENTS
(a) Deliver to the Bank as soon as available and in any
event within forty-five (45) days after the end of
each calendar quarter, its unaudited consolidated
Financial Statements.
(b) Provide to the Bank within twenty (20) days of the
end of each month, the Borrowing Base Calculation
stating on a consolidated basis for the Borrower and
each of its Affiliates: (i) the gross accounts
receivables; (ii) those accounts over ninety (90)
days outstanding; (iii) all offsets recorded; (iv)
inter-company accounts receivables; (v) amounts due
by officers and shareholders; (vi) and as soon as
available the value of the inventories.
SECTION 15.10 FINANCIAL YEAR
Deliver to the Bank as soon as available and in any event within one
hundred and twenty days after the end of its Financial Year, its annual audited
Financial Statements prepared by an independent public accounting firm
satisfactory to the Bank.
44
SECTION 15.11 UTILIZATION OF PROCEEDS
Utilize the proceed of each Loan in accordance with Section 2.2,3.1
and 3.3
SECTION 15.12 ENVIRONMENTAL INDEMNIFICATION
(a) Defend, indemnify and hold harmless the Bank and its
respective affiliates, and the directors, officers,
employees, agents, attorneys, consultants and
advisors of or to any of the foregoing (each of the
foregoing being "Indemnitee") from and against; (a)
all Environmental Liabilities and Costs arising from
or connected with the past, present or future
operations of the Borrower involving any of the
Property, or damage to real or personal property or
natural resources or harm or injury alleged to have
resulted from any Release of Contaminants on, upon or
into such property or any contiguous real estate; (b)
any costs or liabilities incurred in connection with
the investigation, removal, cleanup and/or
remediation of any Contaminant present or arising out
of the operations of any Loan of the Borrower; (c)
any costs or liabilities incurred in connection with
any Environmental Lien; (d) an costs or liabilities
incurred in connection with any other matter
affecting any Loan pursuant to Environmental Laws and
any applicable property transfer laws, whether, with
respect to any of the foregoing, such Indemnitee is a
mortgagee pursuant to any leasehold mortgage, a
mortgagee in possession, the successor in interest to
the Borrower, or the owner, lessee or operator of any
Loan of the Borrower by virtue of foreclosure,
except, with respect to any of the foregoing referred
to in clauses (a), (b), (c) and (d), to the extent
incurred following (1) enforcement by the Bank of its
interests under the Security Documents, or (2) the
Bank having become the successor in interest to the
Borrower, attributable solely to acts of the
45
Bank, (e) the making of any assignments of or
participations in the Loan, or (f) the use or
intended use of the proceeds of the Loan or in
connection with any investigation of any potential
matter covered hereby (collectively, the "Indemnified
Matters"); provided, that the Borrower shall not have
any obligation under this Section to any Indemnitee
with respect to any Indemnified Matter caused by or
resulting from the gross negligence or wilful
misconduct of that Indemnitee, as determined by a
court of competent jurisdiction in a final
non-appealable judgment or order.
(b) The Bank agrees that in the event that any such
investigation, litigation or proceeding set forth in
sub-section a) above is asserted or threatened in
writing or instituted against it or any other
Indemnitee, or any remedial, removal or response
action is requested of it or any of its officers,
directors, agents and employees, for which any
Indemnitee may desire indemnity or defence hereunder,
such Indemnitee shall promptly notify the Borrower
in writing.
(c) The Borrower, at the request of any Indemnitee, shall
have the obligation to defend against such
investigation, litigation or proceeding or requested
remedial, removal or response action. In the event
that such Indemnitee requests the Borrower to defend
against such investigation, litigation or proceeding
or requested remedial, removal or response action,
the Borrower shall promptly do so with legal counsel
of the Borrower's choice reasonably acceptable to the
Bank, and such Indemnitee shall have the right to
participate in such defence. If however there is a
conflict of interest between the Bank and the
Borrower, then the Bank shall be entitled, for the
cost of the Borrower, to appoint legal counsel of its
choice. No action taken by legal counsel chosen by
such Indemnitee in
46
defending against any such investigation, litigation
or proceeding or requested remedial, removal or
response action shall vitiate or in any way impair
the Borrower's obligation hereunder to indemnify and
hold harmless such Indemnitee.
(d) The Borrower shall give the Bank reasonable prior
notice of any proposed settlement, compromise or
similar disposition by the Borrower of any
investigation, litigation or proceeding pursuant to
which the Borrower has an obligation to defend, and
take reasonable and due cognisance of any of the
Bank's views.
(e) The obligations of the Borrower under this Section
15.12 shall survive the repayment of the Loan.
SECTION 15.13 THE BANK'S RIGHTS WITH RESPECT TO CONTAMINANTS
The Borrower shall comply with all Environmental Laws and will assume
all Environmental Liabilities and Costs, except:
(a) In cases where the Borrower is in a good faith
dispute concerning the application of the
Environmental Laws;
(b) the Borrower is in a good faith dispute concerning
the liability and cost of any Environmental
Liabilities and Costs; and
(c) where the obligations of this section pass to the
Bank or its successor in respect of acts or omissions
of the Bank occurring after the Bank acquires title
to the Property through foreclosure or otherwise. The
Borrower shall continue to be liable where the cause
of action arose prior to the Bank
47
acquiring title to the Property through foreclosure
or otherwise.
Except in the instances set forth in subsections a) and b) above, in
the event that the Borrower fails to comply with all Environmental Laws, the
Bank may, after having given the Borrower five (5) days written notice to
comply, and the Borrower having failed to take appropriate action to comply, do
so, at its election, but without the obligation so to do, give such notices
and/or cause such work to be performed at the Property and/or take any and all
other actions as the Bank shall deem necessary or advisable in order to comply
with all Environmental Laws, and any amounts paid as a result thereof, together
with interest thereon at the post-maturity rate as set out in Section 6.4 hereof
from the date of payment by the Bank, shall be immediately due and payable by
the Borrower to the Bank and until paid shall be added to and become a part of
the Indebtedness secured by the Security documents.
SECTION 15.14 CONDEMNATION
(a) The Borrower, immediately upon obtaining knowledge of
the institution of any expropriation proceedings in
relation to the Property or any portion thereof,
shall notify the Bank in writing of the pendency of
such proceedings. The Bank, at its election and in
its discretion, may participate in any such
proceedings and the Borrower from time to time shall
deliver to the Bank all instruments requested by it
to permit such participation. All expropriation
payments in relation to the Property or any portion
thereof, shall be paid in accordance with the
provisions of this Section. All expropriation
payments in relation to the Property, or any part of
the foregoing, are hereby assigned to and shall be
paid to the Bank. The: Borrower, upon the request by
the Bank, shall make, execute and deliver any and all
instruments requested for the purposes of confirming
the assignment of the aforesaid awards and
compensation to the Bank free and clear of any liens,
charges or encumbrances of any kind or nature
48
whatsoever. The Borrower hereby authorizes the Bank
to collect and receive such expropriation payments,
to give proper receipts and acquittances therefore
and in the Bank's sole discretion to apply the same
toward the payment of the Loans, notwithstanding the
fact that the Loans may not then be due and payable,
or to the purchase of replacement assets and
property.
(b) In the event that the whole of the Property shall be
expropriated by any Governmental Authority, or if any
part thereof shall be so expropriated and the
Borrower cannot feasibly continue to operate its
business with the part thereof not so expropriated
(the foregoing being referred to as a "Complete
Taking"), then, any payment payable in connection
therewith shall be paid to the Bank and applied as
follows: first, to the payment of delinquency, post
maturity date charges, if any; second, to accrued and
unpaid interest; third, to the reduction of the
principal amount of the Loans; fourth, to any other
unpaid sums whether or not then owing under this
Agreement or the Security Documents, and any portion
of any payment remaining thereafter shall be paid to
the Borrower.
(c) Notwithstanding any taking by eminent domain,
alteration of the grade of any street or other injury
to or decrease in value of the Property by any
Governmental Authority, the Borrower shall continue
to make all payments due hereunder.
SECTION 15.15 PAYMENT OF TAXES
49
Timely file or cause to be filed any and all tax returns and reports.
Timely pay and discharge or cause to be paid and discharged any and all taxes
and assessments, and any and all governmental impositions, fees, charges or
levies (including but not limited to: any income taxes, municipal taxes, real
estate and personal property taxes, social security, unemployment, workers
compensation premiums), imposed upon it, its operations, or upon its income and
profits, or upon any of its properties, real, personal or mixed, or upon any
part thereof, or upon its payroll, by no later than the last day on which such
taxes may be paid without incurring any penalty. The Borrower shall provide the
Bank with evidence acceptable to the Bank of the aforesaid payments.
Notwithstanding this clause, the Borrower shall have no obligation to pay such
taxes as long as it shall be contesting the validity or amount of any such taxes
in good faith.
SECTION 15.16 STATUTORY COMPLIANCE
Comply in all material respects with all applicable statutes,
regulations, judgments, decrees, resolutions and orders of, and all applicable
restrictions imposed by, any and all governmental entities or authorities,
judicial or administrative, applicable to the conduct of its business and
activities, the ownership of its property, its licences and permits.
SECTION 15.17 CONTRACTUAL COMPLIANCE
Comply with the terms and conditions of any indentures, agreements,
contracts or other instruments to which it is a party and\or which may have a
Material Adverse Effect on its ability to make payment under this Agreement.
SECTION 15.18 THE SECURITY DOCUMENTATION
At its own cost and expense, forthwith and without any delay execute
and deliver any certifications, statements, deeds, and other documents and
instruments requested by the Bank that
50
may be required, necessary and proper, in order to enable the Bank to record and
create as valid first liens the Security Documents.
SECTION 15.19 NOTICE OF LITIGATION
Furnish the Bank by notice in writing immediately upon the Borrower
becoming aware:
(a) of any and all material litigation, administrative or
arbitration proceedings before or of any court
(judicial or administrative), or government
authority, tribunal, arbitrator(s) or other body
affecting the Borrower or any Subsidiary or which may
be threatened, instituted or commenced and which is
or is likely to have a Material Adverse Effect on the
business(es), assets or financial condition of the
Borrower or any Subsidiary or which does or is likely
to have a Material Adverse Effect on the Borrower's
or any Subsidiary's ability to perform its
obligations under this Agreement;
(b) of any material and adverse development which shall
occur in any litigation, arbitration, governmental
investigation or proceeding previously disclosed by
the Borrower or any Subsidiary to the Bank; and
(c) with copies of all written demands of one hundred
thousand Dollars $100,000.00 or greater served upon
the Borrower or any Subsidiary.
SECTION 15.20 EVENT OF DEFAULT NOTICE
Notify the Bank in writing of any Event of Default or event which with
the giving of notice, lapse of time, or other condition, would constitute an
Event of Default forthwith upon the occurrence thereof.
51
SECTION 15.21 FOREIGN CURRENCY
If applicable, maintain in good standing the required authorizations
for and to diligently request the allocation of foreign currency for the service
of these Loans and for the fulfilment of the other obligations of the Borrower
under this Agreement.
SECTION 15.22 MAINTAIN FINANCIAL RATIOS
(a) The Borrower shall, prior to the full repayment of the Bridge
Loan, on a consolidated basis with the other Credit Parties,
maintain, on a quarterly basis, the following ratios:
(i) A maximum ratio of the Acquisition Loan to EBITDA of
2.5:1.0.
(ii) A Debt Service Coverage Ratio at least equal to or
greater than 1.25:1.00
(iii) A maximum ratio of the aggregate of the Acquisition
Loan, Bridge Loan and any other debt owed to a third
party lending institution to EBITDA of 4.00:1.00.
(b) Upon the Borrower repaying all amounts outstanding under the
Bridge Loan, the financial ratios set out in section l5.22(a)
shall be adjusted pursuant to the mutual agreement of the Bank
and the Borrower. If the parties are unable to reach a mutual
agreement as to the adjusted ratios, the ratios as set out in
Section 15.22(a) shall continue to be effective.
SECTION 15.23 UP-STAMPING OF DEBENTURE
In the event that: (i) any portion of the Bridge Loan remains
outstanding and owing to the
52
Bank upon the termination of the agreed to six (6) month term, then within three
(3) Business Days of the end of such term, the Borrower shall submit whatever
documentation or registrations are required together with whatever stamp duties
are payable in order to up-stamp the Debenture by the total amount of the Bridge
Loan outstanding at that time, and within thirty (30) days thereafter provide
the Bank with confirmation from the Registrar of Land that the Debenture has
been so up-stamped; and/or (ii) the Borrower desires to make a draw down under
the Post Acquisition Revolving Loan and Bank determines pursuant to Section
12(b) that there is a need to up-stamp the Debenture in order to be adequately
secured, the Borrower shall up-stamp the Debenture by an amount, sufficient to
the Bank, to provide adequate security.
SECTION 15.24 REMEDIAL WORK
Ensure that, as soon as reasonably possible, Ocean Conversion (Cayman)
Ltd. completes all work and takes all steps necessary in order to ensure that
Ocean Conversion (Cayman) Ltd. is in full compliance with all Environmental
Laws.
SECTION 15.25 BAHAMAS INVESTMENT AUTHORITY
Solely with respect to the acquisition of a controlling interest in
Waterfields Limited Company, submit an application to the relevant Bahamian
governmental authorities for the acquisition of a controlling interest, the
grant by Waterfields Company Limited of a guarantee, and a pledge by the
Borrower of such controlling interest to the Bank.
SECTION 15.26 TERMINATION OF THE OCEAN CONVERSION (CAYMAN) LIMITED
WATER PURCHASE AGREEMENT #3
Ensure that the Water Purchase Agreement #3 between the Borrower and Ocean
Conversion (Cayman) Limited dated October 21, 1994, shall be mutually terminated
as between the respective
53
parties thereto and each party shall waive and release any claim, right or
action it may have against the other in relation thereto whether it arose prior
to the date hereof or subsequently.
SECTION 16
GENERAL CONDITIONS
SECTION 16.1 BANKER'S REFERENCE LETTERS
The Bank shall have received letters from the current
bankers/financiers of each of the Credit Parties, acceptable to the Bank in its
reasonable discretion, which state that based upon the relevant Credit Parties'
financial history and dealings with their current bankers/financiers, such
bankers and/or financiers consider the relevant Credit Party to be financially
sound and desirable customers in that they have not defaulted on any obligations
owed to such bankers or financiers.
SECTION 16.2 WORKING LOAN LIMITATIONS
Notwithstanding anything to the contrary in this Agreement, the
aggregate amount outstanding under the Working Loan shall at no time be greater
than the Borrowing Base.
SECTION 16.3 AGGREGATE PURCHASE PRICE
The aggregate purchase price of the shareholdings being acquired in the
Subsidiaries shall be equal to or less than the aggregate amount of the
Acquisition Loan and the Bridge Loan.
SECTION 17
DEFAULT
SECTION 17.1 EVENTS OF DEFAULT
Any one or more of the following shall constitute an Event of Default
hereunder:
54
(a) Borrower fails to pay when due any instalment of
either principal or interest under this Agreement;
(b) Borrower fails to pay when due any other amount
(other than as set out in a) above) payable under
this Agreement, and such default continues unremedied
for a period of at least three (3) days after notice
thereof has been given to the Borrower;
(c) any licence, permit or consent, obtained by the
Borrower shall lapse, unless the Borrower has applied
for the renewal of such licence, permit or consent
prior to its expiry and is diligently following up
same, and there is a reasonable expectation of the
grant of the renewal;
(d) any material representation or statement made by the
Borrower or any party (other than the Bank) in
relation to this Agreement, any Security Document or
in any notice or other document, certificate or
statement delivered by it pursuant hereto or in
connection herewith is or proves to have been
incorrect or misleading in any material respect as of
the date when made, unless (a) the condition giving
rise to such false or incorrect representation or
warranty is capable of being remedied (in the
reasonable determination of the Bank), and the party
making such statement has commenced and is
diligently pursuing such efforts to effectuate a cure
within fifteen (15) days after such party first
learns or should have learned, after due inquiry,
that such representation or warranty was incorrect or
misleading, provided that the party in question shall
have an additional thirty (30) days or such
additional time as shall be necessary to remedy such
condition (in the reasonable determination of the
Bank) if, in the reasonable determination of the
Bank, such condition while curable, is not
susceptible of cure within the initial fifteen (15)
day period, or (b)
55
the failure of such representation or warranty could
not reasonably be expected to have a material adverse
effect on the financial condition, operations,
assets, business or properties of such party;
(e) an event of default shall occur under a Security
Document and is not cured prior to the expiration of
any applicable grace or notice period;
(f) the validity or enforceability of this Agreement or
any of the Security Documents shall be successfully
contested by any government authority, third party or
any agency or instrumentality thereof;
(g) Borrower or any Subsidiary shall become
insolvent, or admit in writing its inability to pay
its debts as they mature, or make an assignment for
the benefit of creditors, or Borrower or any
Subsidiary shall apply for or consent to the
appointment of any receiver, trustee, or similar
officer for it or for all or any substantial part of
its property, or such receiver, trustee or similar
officer shall be appointed without the application or
consent of Borrower or any Subsidiary and such
appointment shall continue undischarged for a period
of 60 days, or Borrower or any Subsidiary shall
institute (by petition, application, answer, consent
or otherwise) against Borrower or any Subsidiary any
bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or
similar proceeding relating to them under the laws of
any jurisdiction or any such proceeding shall be
instituted (by petition, application or otherwise)
against Borrower or any Subsidiary and shall remain
undismissed for a period of 60 days; or any judgment,
writ, warrant of attachment or execution or similar
process shall be issued or levied against material
assets of Borrower or any Subsidiary and such
judgment, writ or similar
56
process shall not be released, vacated or fully
bonded within 30 days after its issue or levy;
(h) Borrower fails for a term in excess of 15 days after
being so requested in writing to reimburse to the
Bank any amounts that the latter has properly
incurred, expended or disbursed because of the
Borrower's failure to comply with any of its
obligations, covenants or undertakings under this
Agreement or under the relevant Security Documents;
(i) any judgment, injunction or decree is entered or
issued and becomes final and beyond appeal against
Borrower or any Subsidiary, preventing the same from
continuing to operate a material part or all of its
business affairs in the normal course of business;
(j) any execution or other legal process to secure the
effectiveness of a judgment is issued against
Borrower or any Subsidiary affecting a material
portion of its assets or property or preventing it
from operating its business in the normal course, and
Borrower or any Subsidiary fail, for a term in excess
of 60 days after being served with a copy of the
same, to have the same stayed, quashed, cancelled or
set aside;
(k) if judgment, decree or order final and beyond appeal
is entered or issued against Borrower or any
Subsidiary in an amount in excess of two hundred and
fifty thousand Dollars $250,000.00 and remains
unsatisfied for a period in excess of 60 days;
(l) Borrower fails to pay when due any payment for land
taxes or municipal charges over the Property secured
to the Bank, provided that the Borrower
57
is not contesting such taxes in good faith;
(m) Borrower fails to use the proceeds of the respective
Loans for the purposes as set out in Section 2.2, 3.1
and 3.3 of this Agreement respectively;
(n) the Borrower fails to maintain its Assets, and fails
to take reasonable steps to remedy such breach after
it has received 15 days written notice from the Bank
to do so;
(o) any material provision of any Security Document after
delivery thereof pursuant to Section 5 shall for any
reason cease to be valid and binding on the Borrower
or Subsidiary party thereto unless the applicable
Borrower or Subsidiary shall within ten (10) days
after notice thereof by Bank execute and deliver such
further instruments and agreements and take such
further actions as shall be necessary in the Bank's
reasonable judgment to afford the Bank with all of
the rights and benefits contemplated by the terms of
the Security Documents notwithstanding the invalidity
or unenforceability of such material provision, or
the Borrower or any Subsidiary shall claim in writing
that any material provision of any Security Document
is invalid or enforceable as against the Borrower or
any Subsidiary;
(p) any Security Document shall for any reason (other
than pursuant to the terms thereof) cease to create a
valid and perfected security interest in any, i)
material portion of the Property, or ii) item or
items of security described in the Security
Documents, the loss of which would have a Material
Adverse Effect on Bank's security, and in either
event, if any claim with priority to the security
interest created by the Security Documents shall be
upheld by any court of competent jurisdiction or
58
shall be consented to by the Borrower, other than the
existing liens on the Property and other security
contemplated herein;
(q) Borrower or any Subsidiary shall fail to perform or
observe, after any applicable notice or grace period,
any term, covenant or condition contained in, i) this
Agreement, ii) in any of the Security Documents, or
iii) any other material agreement or instrument to
which Borrower or any Subsidiary is a party, and such
failure has a Material Adverse Effect on the
Borrower;
(r) without the prior written consent of the Bank, the
Borrower ceases to carry on the business it carries
on at the date hereof or enters into any unrelated
business;
(s) there is a change in the Borrower or any Subsidiary
which has a Material Adverse Effect; and
(t) Any part of the Bridge Loan remains outstanding and
unpaid to the Bank at the end of the six (6) month
term thereof and the Debenture has not, within thirty
(30) Business Days from the end of such term, been
up-stamped by the amount of the Bridge Loan which
remains outstanding at that time.
SECTION 17.2 ACCELERATION
(a) If any Event of Default occurs, the Bank may, at its
option, and without notice to the Borrower, after
expiration of any applicable cure period; a) declare
the balance owing under the Loans to be immediately
due and payable including any accrued interest,
commission, costs and any other
59
amounts due pursuant to the terms of this Agreement;
and b) declare that any undrawn portion of the Loans
shall be cancelled; provided, however, that in the
event of an actual or deemed entry or an order for
relief with respect to the Borrower under the
applicable laws of Cayman regarding bankruptcy,
reorganization or judicial administration, the
balance of the Loans, together with interest and all
such amounts shall automatically become and be due
and payable.
(b) If pursuant to Sub-section (a) above the Bank
declares the Advances to be due and payable, then at
any time thereafter the Bank may select an Interest
Period of three months or less.
(c) Thereafter the Bank may proceed to exercise all its
rights and recourses granted to it by the law, to
enforce collection by summary proceedings or
otherwise, to foreclose any and all warranties,
without being required to present any request,
demand, protest or notification of any kind and to
enforce any Guarantee at its option.
SECTION 17.3 SET OFF
(a) Except to the extent such accounts are pledged,
assigned or hypothecated to creditors other than the
Bank, pursuant to written agreement given by the
Bank, following an Event of Default, the Bank may, at
its option, combine, consolidate or merge all or any
of the Borrower's accounts with any liabilities to
the Bank, and may set off or transfer any sum
standing to the credit of any such accounts in or
towards the satisfaction of any of the Borrower's
liabilities to the Bank under this Agreement, and may
do so notwithstanding that the balance on such
accounts and liabilities may not
60
be expressed in the same currency.
(b) For the purposes of the foregoing accounts, monies or
investments held whether in trust or otherwise for or
on behalf of the Borrower by any branch of the Bank
wheresoever situated shall be treated as if such
accounts, monies or investments were held by the Bank
and the rights of the Bank under sub section (a)
above shall apply to such accounts, monies or
investments as if they were held by the Bank.
SECTION 17.4 OTHER REMEDIES
If an Event of Default occurs, in addition to the remedies provided in
the above subsection, the Bank shall also be entitled to:
(a) Any other remedies and rights provided in this
Agreement or any of the Security Documents; and
(b) any other remedies at law or equity.
SECTION 17.5 DEFAULT INDEMNITY
The Borrower shall indemnify the Bank against any loss or expense which
the Bank may sustain or incur as a consequence of:
(a) The occurrence of any Event of Default;
(b) any action taken or not taken by the Bank under
Section 17.2 above, included but not limited to any
loss incurred in liquidating or funding the Loans or
any part thereof, as to which the certificate of the
Bank shall, in
61
the absence of manifest error, be conclusive; and
(c) such indemnity shall include all reasonable legal
costs and expenses (including reasonable attorneys
fees on a full indemnity basis) incurred by the Bank
in connection with any of the foregoing matters
including without limitation, the enforcement by the
Bank of all its legal rights under this Agreement.
SECTION 18
MISCELLANEOUS
SECTION 18.1 COSTS AND EXPENSES
(a) The Borrower shall forthwith on demand of the Bank
and whether or not the Loans are disbursed, pay to
the Bank such amounts as are necessary fully to
reimburse the Bank for all the customary costs,
charges and expenses (including, without limitation,
external and in house legal fees and expenses),
communication, travel and all other out-of-pocket
expenses incurred in the preparation, execution,
administration, monitoring and enforcement of this
Agreement ( including the costs of a Receiver) and
the Security Documents.
(b) In addition to the amount contemplated in sub-section
a) above, the Borrower shall, forthwith on demand of
the Bank, pay all present and future stamp and other
like duties (including interest and penalties, if
any) payable in respect of the Security Documents and
the registration, recording and other like
governmental fees, if any, to which this Agreement,
the Security Documents or any other document or
instrument issued in relation herewith may be subject
or give rise to.
62
(c) The Borrower shall, from time to time on demand of
the Bank, reimburse the Bank for all expenses
incurred by the Bank in remedying any breach of
Environmental Laws, policies or guidelines which may
have occurred or as a result of any environmental
remedial action taken by the Bank on behalf of the
Borrower. In the event that the Borrower does not
provide immediate reimbursement, the Bank shall be
entitled to add all expenses arising pursuant hereto
to the principal outstanding under the Loans and all
amounts arising hereunder shall apply mutatis
mutandis to the provisions of this Agreement relating
to outstanding principal.
(d) A certificate signed by an officer of the Bank
setting out the expenses in connection with this
section shall be deemed to be presumptive evidence of
such expenses.
(e) The obligations of the Borrower under this Section
shall survive the repayment of the Loans and the
payment of all interest due thereon and other sums
payable hereunder.
SECTION 18.2 NO JOINT VENTURE
Nothing herein contained shall constitute or be construed to be or to
create a joint venture and or a partnership between the Borrower and the Bank.
The Bank does not assume and shall not bear any business risks directly or
indirectly related to the Borrower.
SECTION 18.3 BANK'S OPTION RIGHT TO PAY OR PERFORM IN BORROWER'S STEAD
The Borrower agrees that, upon the occurrence of an Event of Default
the Bank shall have the right without notice to the Borrower to advance all or
any part of amounts owing or to perform any or all required actions. No such
advance or performance shall be deemed to have cured such
63
default by the Borrower or any Event of Default with respect thereto. All sums
advanced and all expenses incurred by the Bank in connection with such advances
or actions, and all other sums advanced or expenses incurred by the Bank
hereunder or under applicable law (whether required or optional and whether
indemnified hereunder or not) shall bear interest at the post-maturity rate as .
set out in Section 6.4 hereof, be reimbursed by Borrower, and shall be secured
by the Charge and Debenture. The Borrower hereby appoints the Bank its true and
lawful attorney-in-fact to make the payments and effect the performance
contemplated by the aforesaid provisions of this Section in the name and on
behalf of the Borrower. This power, being coupled with an interest, shall be
irrevocable so long as any amounts shall remain unpaid.
SECTION 18.4 ASSIGNMENT, PARTICIPATION BY THE BANK
The Bank may, at no cost to the Borrower, assign to one or more banks
or other Persons, or may grant participations to one or more banks or other
Persons in or to all or any part of the Loans and the Bank's rights and
obligations under the Security Documents.
SECTION 18.5 PUBLICITY
The Bank shall, upon obtaining the prior written consent of
the Borrower, such consent not to be unreasonably withheld or delayed, have the
right to publicize that it has granted financing to the Borrower.
SECTION 18.6 SEVERABILITY
Any provision of this Agreement that is held to be inoperative,
unenforceable or invalid in whole or in part as to any party or in any
jurisdiction shall, as to that party or jurisdiction, be inoperative,
unenforceable or invalid to such extent without affecting the remaining
provisions or the operation, enforceability or validity of that provision as to
the other party or in any other
64
jurisdiction and to this end, the provisions of this Agreement are declared to
be severable.
SECTION 18.7 NO WAIVER, CUMULATIVE REMEDIES
(a) No failure or delay by the Bank in exercising any
right, remedy, power or privilege under this
Agreement or any of the other Security Documents
shall operate as a waiver thereof. The partial or
single exercise of any right, remedy, power or
privilege under this Agreement or any of the other
Security Documents shall not operate as a waiver or
as an estoppel regarding any rights under the same.
All rights and remedies provided in this Agreement
and the other Security Documents are cumulative and
may be exercised contemporaneously or successively,
and are in addition and not exclusive of any other
rights and remedies provided by law.
(b) Any waiver by either party of a breach of any part of
this Agreement caused by the other party will not
operate as or be interpreted as a waiver of any other
breach. The failure of a party to insist on strict
adherence to any term of the Agreement on one or more
occasions is not to be considered to be a waiver of
any of its rights under this Agreement or to deprive
that party of the right to insist upon strict
adherence to that term or any other term in the
future. No waiver shall be of any effect unless it is
in writing and authenticated by the waiving party.
SECTION 18.8 SURVIVAL
All representations and warranties made by the Borrower in this
Agreement and the other Security Documents, its covenants and undertakings
therein, shall survive the execution of the same and the disbursements of the
Loans, and shall continue in full force and effect until the Loans are
65
paid in full, all for a period exceeding such payment in the cases so
established in this Agreement.
SECTION 18.9 JUDGMENT CURRENCY
If for the purpose of obtaining judgment in any court or for any other
purpose hereunder it is necessary to convert an amount due hereunder in the
currency in which it is due (the "Original Currency") into another currency (the
"Judgement Currency"), the rate of exchange applied shall be that at which, in
accordance with normal banking procedures, the Bank could purchase, in the New
York foreign exchange market, at the Bank's option, the Original Currency with
the Judgement Currency on the date two Business Days preceding that on which
judgment is given. The Borrower agrees that its obligation in respect of any
Original Currency due from it to the Bank shall, notwithstanding any judgment of
payment in such other currency, be discharged only to the extent that, on the
Business Day following receipt of any sum so paid or adjudged to be due
hereunder in the Judgement Currency, the Bank may, in accordance with normal
banking procedures, purchase, in the New York foreign exchange markets, the
Original Currency with the amount of the Judgement Currency so paid or so
adjudged to be due; and, if the amount of the Original Currency so purchased is
less than the amount originally due in the Original Currency, the Borrower
agrees as a separate obligation and notwithstanding any such payment or judgment
to indemnify the Bank against such loss.
SECTION 18.10 NOTICES
All notices, requests, consents, demands, directions, agreements or
other instruments or communications between the Bank and the Borrower required
to be given hereunder shall be in writing and shall be; (a) sent by private
courier service, next day delivery, or by telefax, or other similar form of
rapid transmission, confirmed by sending (by private courier service, next day
delivery) written confirmation; or (b) personally delivered to the receiving
party or, if not an individual, to an officer or general partner of the
receiving party. All such communications shall
66
be sent or delivered addressed as follows:
If to the Borrower:
Consolidated Water Co. Ltd.
X.X.Xxx 0000 XX
Xxxxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx.
Attn: Mr. Xxxxxxx Xxxxxx
Telephone No: 000-000-0000
Fax No: 000-000-0000
If to the Bank:
Scotiabank (Cayman Islands) Ltd.
Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxxx,
X.X.Xxx 000,
Xxxxx Xxxxxx.
Attn: Commercial Banking Manager
Telephone: 000-000-0000
Fax # 000- 000-0000
Any party hereto may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, requests or other
communications shall be sent. All such notices and other communications shall be
effective when received.
SECTION 18.11 APPLICABLE LAW & JURISDICTION
(a) This Agreement and all other Security Documents shall
be construed and enforced in accordance with, and
governed by, the laws of Cayman.
67
(b) The parties hereto irrevocably submit to the
jurisdiction of the courts of Cayman.
(c) The submission to the jurisdiction of the courts of
Cayman shall not (and shall not be construed so as
to) limit the right of the Bank to take proceedings
against the Borrower in any other court of competent
jurisdiction, nor shall the taking of proceedings in
any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether
concurrently or not.
SECTION 18.12 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
a manually executed counterpart of this Agreement.
SECTION 18.13 INTERPRETATION
(a) This Agreement and each of the other Security
Documents supplement each other.
(b) In this Agreement, the singular includes the plural
and vice versa, and references to any gender include
any other gender.
(c) The clause headings and the titles of the paragraphs
and sections of this Agreement and other Security
Documents are inserted for convenience only and shall
be ignored in construing this Agreement. References
to
68
sections are references to sections in this
Agreement.
SECTION 18.14 THE BANK'S DISCRETION
(a) Except as otherwise indicated, whenever the Bank's
judgment, consent or approval is required hereunder
for any matter, or the Bank shall have an option or
election hereunder, such judgment, the decision as to
whether or not to consider or approve the same or the
exercise of such option or election shall be in the
sole discretion of the Bank, acting reasonably.
(b) Notwithstanding anything contained in any of the
Security Documents to the contrary, in the event that
the Bank i) fails or refuses to grant consent or
approval when required hereunder or under any other
Security Document for any matter or ii) acts
unreasonably or unreasonably withholds or delays
acting in any circumstance where by law or under this
Agreement or the other Security Documents it has an
obligation to act reasonably or promptly, the parties
agree that the damages which might arise as a result
of any such actions are incapable of accurate
determination, and accordingly agree that the
remedies of specific performance and injunctive
relief are and should be the sole remedies of the
Borrower against the Bank with respect to such
actions, and the Borrower hereby irrevocably and
unconditionally waives all claims for damages with
respect thereto, provided however the aforegoing
shall not apply if the Bank has acted with gross
negligence or wilful misconduct.
SECTION 18.15 MODIFICATION, AMENDMENT
The Agreement and the other Security Documents may not be modified,
altered nor amended
69
in any manner whatsoever, except by another written agreement executed by the
parties with the same solemnities as the document being modified, altered or
amended.
SECTION 18.16 ENTIRE AGREEMENT
The Agreement and the other Security Documents contain all of the
representations and warranties, undertakings, covenants and agreements between
the parties. All prior negotiations, understandings, undertakings, covenants,
representations and agreements, whether oral or written, in connection with the
Loans are merged herein.
SECTION 18.17 JUDGMENT ON A COVENANT
The taking of a judgment or judgments on any covenant or covenants
herein contained shall not operate as a merger of the said covenant or covenants
or affect the Bank's right to interest at the rate and times herein set forth.
REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK
70
SIGNED, SEALED, AND DELIVERED
CONSOLIDATED WATER CO. LTD
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Authorized Signatory
SCOTIABANK (CAYMAN ISLANDS) LTD.
By: /s/ Xxxx Xxxxx
------------------------
Authorized Signatory
71
ANNEX A
DEFINITIONS
"ACQUISITION" means the acquisition by the Borrower of the Shares.
"ACQUISITION LOAN" shall have the meaning ascribed to it in Section
3.2(a) of this Agreement and includes where the context requires the
Post Acquisition Revolving Loan.
"ADVANCE" means, the principal amount of each borrowing from the Bank
by the Borrower.
"AFFILIATE" means, with respect to any Person, (a) any other Person
that is directly or indirectly controlled by, under common control with
or controls such Person, (b) any other Person owning beneficially or
controlling more than twenty percent (20%) of the Voting Stock of such
Person, or (c) any officer, director or partner of such Person. As used
herein, the term "control" is defined hereunder.
"AGREEMENT" means, the Loan Agreement dated February 7th, 2003 between
Consolidated Water Co. Ltd. and Scotiabank (Cayman Islands) Ltd.
"ALTERNATIVE RATE" shall have the meaning ascribed to it in Section
10.2(c) of the Agreement.
"APPLICABLE MARGIN" shall have the meaning set out in Section 6.l(d).
"ASSETS" means, in respect of the Borrower and each of the
Subsidiaries, their respective moveable assets, equipment, machinery,
and structures.
"AUTHORIZED SIGNATORY" means, at any time, in relation to any party and
any communication to be made or any document to be executed or
certified by it, any person or persons who is or are at such time duly
authorized by or pursuant to board resolutions, equivalent corporate or
other action or in such other manner as may be acceptable to the party
receiving such communication to make such communication or to execute
or certify such document on behalf of such party.
"BANK" means Scotiabank (Cayman Islands) Ltd. as more fully described
at the beginning of this Agreement.
"BASE RATE" means, the variable per annum reference rate of interest
(as announced and adjusted by Scotiabank (Cayman Islands) Ltd. from
time to time in Grand Cayman, Cayman Islands) for United States dollar
loans used as a reference by borrowers in their day to day operations,
or by third parties, and which rate the Borrower and the Bank select
for the purposes of the Working Loan. The Borrower hereby acknowledges
that such rate is objectively determined and publicly known. Base Rate
is subject to periodic changes and each change in Base Rate will
simultaneously cause a change, effective at the
-2-
beginning of that day, in the rate of interest charged to Borrower for
Advances under the Working Loan for which interest is being charged
based upon the Base Rate.
"BINDING SALE AGREEMENTS" means, various agreements of purchase and
sale in respect of the Shares of each of the Subsidiaries copies of
which have been supplied to the Bank, and which are fully executed and
represent legally binding obligations upon the Borrower, as purchaser,
and each respective vendor to close the transaction.
"BORROWER" means Consolidated Water Co. Ltd., as more fully described
at the beginning of this Agreement.
"BORROWING BASE" means, the aggregate of, (i) seventy-five percent
(75%) of the consolidated good quality accounts receivable excluding,
(a) accounts receivable greater than ninety (90) days after the date of
the invoice, (b) offsets, (c) accounts receivable which are in default,
and (d) accounts receivable between the Borrower and any Affiliate,
shareholder of the Borrower or any Affiliate or any officer of Borrower
or Affiliate plus fifty percent (50%) of the Borrower's consolidated
net inventory, less security interests or charges held by other parties
and specific payables which have or may have priority interest over the
Bank's security.
"BRIDGE LOAN" shall have the meaning ascribed to it in Section 3.2 of
this Agreement.
"BUSINESS DAY" means;
(a) as to LIBOR funded portions of the Loan, a day on which
dealings are carried on in the London interbank market and
banks are open for business in Xxxxxx, Xxx Xxxx, Xxxxxxx and
Cayman; and
(b) as to Fixed and Base Rate funded portions of the Loan, a day
on which banks are open for business in New York, Toronto and
Cayman.
"CASH FLOW" means, the consolidated net income (that is, the aggregate
of all amounts which would be included as net income on the annual
audited Financial Statements of the Borrower on a consolidated basis)
of the Borrower for a Financial Year, plus non-cash charges, less
capital expenditure and all debt repayment for such Financial Year.
"CAYMAN" means, The Cayman Islands.
"COLLATERAL CHARGE" means, a charge, in prescribed form, of the
Property pursuant to the Registered Land Law.
"CONTAMINANT" means, any waste, pollutant, hazardous substance, toxic
substance, hazardous waste and any substance regulated or forming the
basis of
-3-
liability under any Environmental Law, including, without limitation,
any special waste, petroleum or petroleum-derived substance or waste,
or any constituent of such substance or waste.
"CONTROL" means, possession by the Borrower, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of partnership
interests or voting securities, by contract or otherwise.
"CREDIT PARTY" means, any one of the Borrower or the Guarantors.
"DEBENTURE" means, the substituted first ranking Debenture, stamped
initially to secure an amount of $22 million bearing even date herewith
as executed by the Borrower in a format acceptable to the Bank.
"DEBT" means, the aggregate outstanding and unpaid Indebtedness of the
relevant Credit Party (taking into consideration any requested
Advance).
"DEBT SERVICE COVERAGE RATIO" means, for any period, EBITDA divided by
the current portion of long term debt plus short term bank debt plus
interest on these items.
"DOLLARS"and "$" each means, lawful currency of the United States of
America. (All currency figures referred to in this Agreement are in
lawful currency of the United States of America unless set out to the
contrary).
"DRAW DOWN DATE" means, any date upon which an Advance is made by the
Bank to the Borrower pursuant to the terms of this Agreement.
"DRAW DOWN NOTICE" means, any valid and effective notice received by
the Bank from the Borrower with respect to the draw down of an Advance,
substantially in the form set out in Schedule 2.
"EBITDA" means, for any Financial Year, the Net Income of the Borrower
for such period plus; (a) to the extent deducted in determining such
Net Income for such period, the aggregate amount of, (i) interest
expense (excluding amortization of debt expense incurred in connection
with the Loans hereunder), (ii) Taxes, (iii) depreciation, (iv)
amortization and other similar non-cash charges, and (v) any
extraordinary or other non-recurring non-cash loss minus; (b) any
extraordinary or other non-recurring gain, confirmed by the
consolidated Financial Statements of the Borrower.
"ENVIRONMENTAL LAW" means, all laws, statutes, ordinances and
regulations, now or hereafter in effect in Cayman and any other
jurisdiction in which a Subsidiary carries on business, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation,
any judicial or administrative order, consent decree or judgment,
relating to the regulation and protection of human health, safety, the
environment
-4-
and natural resources (including, without limitation, ambient air,
surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation).
"ENVIRONMENTAL LIABILITIES AND COSTS" means, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, , costs and expenses
(including, without limitation, all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation
and feasibility studies), fines, penalties, sanctions and interest
incurred as a result of any claim or demand, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil
statute, including, without limitation, any thereof arising under any
Environmental Law, Permit, order or agreement with any governmental
authority or other Person, which relate to any environmental, health or
safety condition, or a Release or threatened Release, and result from
the past, present or future operations of the Property.
"ENVIRONMENTAL LIEN" means, any lien in favour of any governmental
authority for Environmental Liabilities and Costs.
"EVENT OF DEFAULT" means, any one or more of the events or
circumstances specified in Section 17.1.
"FINANCIAL STATEMENTS" means, a balance sheet and statement of profit
and loss account and statement of cash flow, including all notes
thereto and in the case of audited Financial Statements, the auditor's
report and the chairman's or director's report(s), if any, prepared in
accordance with GAAP; and a monthly balance sheet and profit and loss
statement in a form as reasonably agreed to by the Bank.
"FINANCIAL YEAR" means, the accounting period of the Borrower
commencing each year on 1st January and ending on 31st December or such
other accounting period of the Borrower, as the Borrower may from time
to time designate as its accounting year with the Bank's prior written
approval.
"FIXED RATE" means, the rate of interest per annum, quoted, by the
Bank, when available, and at the Bank's sole discretion, for a fixed
period of time, and accepted by the Borrower.
"FIXED RATE FUNDING OPTION" shall have the meaning ascribed to it in
Section 6.3 of the Agreement.
"GAAP" means, generally accepted accounting principles of the United
States of America in effect from time to time, applied on a consistent
basis as to classification of items and accounts.
"GOCI LETTER OF CREDIT" means the standby letter of credit or letter of
guarantee issued by the Bank at the request of the Borrower, for a term
of no greater than six (6) months from the date of issue, in a format
acceptable to the Bank in its
-5-
reasonable discretion, and the issuance of which shall constitute an
advance under the Working Loan.
"GOVERNMENTAL AUTHORITY" means, any department, commission, statutory
board, bureau or instrumentality of the government of Cayman or any
governmental or quasi-governmental authority, now existing or hereafter
created, having jurisdiction over the Property, the Borrower or the
Bank;
"GUARANTEE(S)" means, the various corporate guarantees to be provided
by the Guarantors to the Bank.
"GUARANTORS" means, DesalCo (Barbados) Ltd., and DesalCo Limited.
"INDEBTEDNESS" means, for any Person, all obligations of such Person
for borrowed money, whether present or future, actual or contingent, or
for the repayment of which such Person, either directly or indirectly,
is obliged or otherwise responsible (including without limitation any
such obligations evidenced by bonds, debentures, notes or other similar
instruments but excluding any obligation to pay trade credit in the
normal course of business).
"INTEREST CALCULATION DATE" shall have the meaning ascribed to it
Section 6.2(a) of the Agreement.
"INTEREST PERIOD" means, the period beginning on (and including) the
date on which an Advance pursuant to the Term or Bridge Loan is made or
remains outstanding pursuant to Section 6.1 and shall end on (but
exclude) the day which numerically corresponds to such date one, three,
six or twelve months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), as the
Borrower may select in its relevant notice pursuant to Section 6.1b)
and c); provided, however, that:-
(a) the Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates
occurring on more than four (4) different dates;
(b) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business
Day is the first Business Day of a calendar month, in which
case such Interest Period shall end on the Business Day next
preceding such numerically corresponding day);
(c) no Interest Period may end later than the last day for the
repayment of the final instalment of principal; and
-6-
(d) if the Borrower fails to give such notice of its selection in
relation to an Interest Period, the duration of that Interest
Period shall be one (1) month.
"LIBOR" means, for any Interest Period, the rate of interest per annum
at which deposits of equal or like amounts in Dollars for delivery on
the first day of such Interest Period and for the durations thereof,
appear on the relevant page of the Telerate screen (Page 3750) at or
about 11:00 A.M. (London time) two (2) Business Days before the first
day of an Interest Period.
"LIBO RATE" means, the sum of LIBOR for any relevant Interest Period
plus the applicable margin.
"LIBO RATE LOAN" means, a facility bearing interest, at all times
during an Interest Period applicable to such facility, at a fixed rate
of interest determined by reference to the LIBO Rate;
"LOANS" collectively means, each of the Working Loan, the Acquisition
and Post Acquisition Revolving Loan and the Bridge Loan, and the
principal amount outstanding, and accrued interest payable, from time
to time, thereunder.
"MATERIAL ADVERSE EFFECT", with respect to a Person, means, an effect,
resulting from any occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental
investigation or proceeding), materially adverse to the financial
condition, business operations, assets or revenues, when taken as a
whole, of such Person.
"MAXIMUM RATE" shall have the meaning ascribed to it in Section 6.7 of
the Agreement.
"NET INCOME" means, for any period, the aggregate of all amounts which,
in accordance with generally accepted accounting principles of the
United States of America, would be included as net income on the annual
audited Financial Statements of the Borrower.
"PERMIT" means any permit, approval, authorization, license, variance
or permission required from a governmental authority under an
applicable Requirement of Law.
"PERSON" means an individual, partnership, corporation (including,
without limitation, a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
governmental authority.
"POST ACQUISITION REVOLVING LOAN" shall have the meaning ascribed to it
in Section 3.2(b) of this Agreement.
"PREPAYMENT" means, a non-scheduled repayment of all or any portion of
the principal amount of the Loan.
-7-
"PROPERTY" is defined in recital A) of the Agreement, and includes all
improvements on and under the land, together with all rights,
easements, rights of way and other appurtenances.
"RELEASE" any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
indoor or outdoor environment or into or out of the Properties,
including, without limitation, the movement of Contaminants through or
in the air, soil, surface water, ground water or property, except that
which is legally permissible.
"REMEDIAL ACTION" means, all actions required or voluntarily undertaken
to; a) clean up, remove, treat or in any other way address Contaminants
in the indoor or outdoor environment; b) prevent the Release or threat
of Release or minimize the further Release of Contaminants so they do
not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; or c) perform
pre-remedial studies and investigations and post-remedial monitoring
and care.
"REPAYMENT DATE" means, the date upon which the final payment or
instalment is due and payable in respect of the relevant Loan.
"REQUIREMENT OF LAW" means, as to any Person, all laws, rules and
regulations, including, without limitation, Environmental Laws, and all
orders, judgments, decrees or other determinations of any Governmental
Authority or arbitrator, applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"SECURITY DOCUMENTS" means, all those documents as set out in Section 5
of this Agreement, and any amendments, waivers or substitutions thereof
and any document agreed between the Borrower and the Bank to be a
Security Document.
"SHARES" means, the shares, partnership interests or any other form or
instrument of ownership of each of the various Subsidiaries acquired by
the Borrower.
"SUBSIDIARIES" means, the Guarantors, Ocean Conversion (Cayman) Ltd.,
Ocean Conversion (BVI) Limited, Waterfields Company Limited, or any
other company in which the Borrower acquires an interest using the
funds provided pursuant to this Agreement; provided that each such
company shall only be considered a Subsidiary once the Borrower has
completed the purchase of the shares of such company.
"SUBSIDIARY LOAN" means any loan or financing provided by the Bank to a
Subsidiary.
"SUBSTITUTE BASIS" shall have the meaning ascribed to it in Section
10.3(b) of the Agreement.
-8-
"TAX" or "TAXES" means any and all income, withholding or other taxes,
or other governmental levies, imposts, deductions, charges, compulsory
loans and withholdings whatsoever together with interest thereon and
penalties thereto, if any.
"WORKING CAPITAL" means, the difference in value between the current
assets and current liabilities of the Borrower, as defined by GAAP.
"WORKING LOAN" shall have the meaning ascribed to it in Section 2.1 of
this Agreement.
SCHEDULE "A" TO THE LOAN AGREEMENT
LEGAL DESCRIPTION OF THE PROPERTY
Parcels 8 and 469 in Xxxxx 0X xx xxx Xxxx Xxx Xxxxx Xxxx Registration Section of
Grand Cayman, parcels 8 and 40 in Block 11D of the West Bay Beach North
Registration Section of Grand Cayman.
Leasehold interest in parcel 79 REM 1/2 in Block 12D of the West Bay Beach
South Registration Section of Grand Cayman.
72
SCHEDULE"3.6(a)"TO THE LOAN AGREEMENT
DRAWDOWN NOTICE
Commercial Banking Manager
Scotiabank (Cayman Islands) Ltd.
Scotia Centre P.O. Box 699,
Cardinal Avenue Xxxxxx Town,
Grand Cayman Cayman Islands
Re: Drawdown Notice
Pursuant to Section 3.6 of the Loan Agreement (the "Loan Agreement") dated
, 2003 between CONSOLIDATED WATER CO. LTD., a company incorporated
under the laws of The Cayman Islands (the "Borrower") and Scotiabank (Cayman
Islands) Ltd. (the "Bank"), the Borrower hereby irrevocably requests an Advance
as follows:
a) from the ACQUISITION LOAN of the sum of US$20,000,000.00
(twenty million) on the_____day of______.
b) from the BRIDGE LOAN of the sum of US$___________ on
the_______day of________.
All capitalized terms not elsewhere defined in this Drawdown Notice shall have
the respective meaning ascribed to such terms in the Loan Agreement. The
Borrower requests that the Advance be made as a LIBO Rate Loan having an
interest period of_______________ months.
The Borrower hereby confirms that (a) all conditions to the above requested
Advance, as set forth in the Loan Agreement have been satisfied or waived, and
(b) all of the documentation delivered to the Lender on behalf of the Borrower
in compliance with the conditions precedent to an Advance are true and correct
originals or copies (as the case may be).
Further, the Borrower hereby acknowledges that, pursuant to Section 13 of the
Loan Agreement, the delivery of this Drawdown Notice constitutes a
representation and warranty by the Borrower that, on the date of such Advance,
and before and after giving effect thereto and to the application of the
proceeds therefrom all statements set forth in Section 13 are true and correct
in all material respects.
The undersigned certifies that they are an Authorized Signatory of the Borrower
and in such capacity is authorized to execute and deliver this Drawdown Notice
on behalf of the Borrower.
The Advance shall be paid as follows:
1. US$ to [details of payment to Vendors to be set out];
2. US$[insert amount] to the Bank in payment of the fees due to the
Bank;
3. US$ [insert agreed amount] to the Bank in payment of the legal fees
for the work attended to with respect to this loan transaction,
including stamp taxes and disbursements.
CONSOLIDATED WATER CO. LTD.
Per:____________________________
Authorized Signatory
SCHEDULE "5.2(d)" TO THE LOAN AGREEMENT
The following list comprises insurance policies required by Section 15.6:
Type of Insurance Name of Insurance Maximum Insurable Details
Policy Company Benefits
Public and Products Royal and Sun CI$1,000,000.00 Coverage in the
Liability Alliance Insurance Cayman Islands and
Policy No. (Bahamas)Limited the Bahamas only.
APL 099907863 Deductible of
CI$1,000.00 per loss.
Loss of Profit Royal and Sun CI$5,203,000.00
Policy No. Alliance (Bahamas)
CBI 099907861 Limited
Plant and Equipment Royal and Sun C1$5,172,415.00 Deductible 1% of sum
all risks Alliance (Bahamas) insured per item -
Policy No. Limited minimum
EMB09990823Y/03 CI$1,000.00
Property all risk Royal and Sun CI$2,200,000.00 Coverage for
Policy No. Alliance (Bahamas) buildings and storage
CFA 099907860/01 Limited tanks. Deductible 2%
of sum insured per
item.
GUARANTEE SCHEDULE 14.2
Upon completion of the acquisition, the Borrower is securing the release of or
giving its own replacement guarantee for the following:
A guarantee limited to US$2,400,000.00 in respect of the obligations of
OCC by EGL in favour of The Bank of N.T. Xxxxxxxxxxx & Son Limited
undated but executed by virtue of a resolution of the directors of EGL
passed on 5(th) March 2002;
A guarantee in respect of the obligations of OCC by EGL in favour of
the Governor of the Cayman Islands dated 5 May 1994.
A guarantee limited to US$343,750.00 in respect of the obligations of
OCBVI by EGL in favour of The Bank of N.T. Xxxxxxxxxxx & Son Limited
dated 14(th) May 2002; and
A guarantee limited to US$343,750.00 in respect of the obligations of
OCBVI by NAMF in favour of The Bank of N.T. Xxxxxxxxxxx & Son Limited
dated 14(th) May 2002.
-1-
SCHEDULE "15.4" TO THE LOAN AGREEMENT
The following list comprises all licenses and permits currently held by the
Borrower and required in order to conduct its business as is currently be
conducted at the time of execution of the Loan Agreement:
Trade and Business (Licensing) Board license to carry on business of
Suppliers of Desalinated Water, License No. 16551/02 valid until May 2,
2003.
License to Produce Potable Water granted by the Cayman Islands
Government dated July 11, 1990 and for a stated term of 20 years.
