Exhibit 10.1
Royal Bank of Canada
Commercial Banking Centre
101 East Hill Street, 3rd Floor
P.O Box N-7549
Nassau, Bahamas
Transit: 02265
Tel: (242) 356-8500
Fax: (242) 325-8483
4 October 2006
Consolidated Water (Bahamas) Ltd. (formerly Waterfields Company Limited)
P.O. Box CR-54030
Nassau Bahamas
Attn: Frederick McTaggart, President & CEO
Dear Sirs:
Further to our recent discussions, we are pleased to offer the Credit Facilities
described below, (which supersedes all previously advised facilities ) subject
to the following terms and conditions:

          BORROWER:   Consolidated Water (Bahamas) Ltd. (formerly Waterfields
Company Limited)
(the “Borrower”).        
 
LENDER:   Royal Bank of Canada (the “Bank”), through its branch at Main Branch
at Bay Street; (the “branch of account”).        
 
CREDIT FACILITIES:   The Credit Facilities are available in the following
segments in Bahamian dollars (or United States dollars where stated) by way of  
     
 
    Segment 1.  
Operating:
Royal Bank Nassau Prime based loans (“NP loans”);
    Segment 2.  
Reducing Demand Loan:
NP and Libor loans;
    Segment 3.  
Bonds and/or Guarantees (L/G’s);
    (collectively the “Borrowings”).        
 
AMOUNTS:   Segment 1a:  
$500,000
    Segment 2a.  
$38,062 (USD)
    Segment 2b.  
$127,276
    Segment 3a.  
$100,000
    Segment 3b.  
$1,910,775
    Segment 3c.  
$2,968,985

 

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          PURPOSE:   Segment 1a.  
Working capital and supplement L/G’s.
    Segment 2a.  
To assist with construction and start-up costs of desalination plant re. supply
of water to the Water & Sewerage Corporation.
    Segment 2b.  
To assist with construction and start-up costs of desalination plant re. supply
of water to the Water & Sewerage Corporation.
    Segment 3a.  
To facilitate payment of customs duties on plant materials and equipment.
    Segment 3b.  
To provide a guarantee to Water & Sewerage Corporation during the years of
operations.
    Segment 3c.  
To facilitate a construction guarantee to Water & Sewerage Corporation for
recently awarded Blue Hills Plant.
       
 
REPAYMENT:   Segment 1a.  
Operating loans repayable on demand, and L/G’s expires December 31, annually.
    Segment 2a.  
Repayable on demand but until such demand shall be made this facility shall be
reduced by blended quarterly payments of $74,000 principal and interest, based
on a 10 year amortization. Payments to be adjusted at least annually to ensure
payout within the aforementioned amortization.
    Segment 2b.  
Repayable on demand but until such demand shall be made this facility shall be
reduced by blended quarterly payments of $37,000 principal and interest, based
on a 10 year amortization. Payments to be adjusted at least annually to ensure
payout within the aforementioned amortization.
    Segment 3a.  
On demand and expiring December 31, annually. Drawings will be charged to the
Borrower’s General deposit account at maturity.
    Segment 3b.  
On demand and expiring December 31, annually or until Water & Sewerage
Corporation authorizes the release from same. Drawings will be charged to the
Borrower’s general deposit account upon demand.

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              Segment 3c.  
On demand and expiring twelve months after the “substantial completion date”
(July 2007) or until released by Water & Sewerage Corporation. Drawings will be
charged to the Borrower’s general deposit account upon demand.
       
 
OVERRIDING REPAYMENT:   Although the same has been made clear to you in our
previous discussion for the avoidance of doubt we reiterate that notwithstanding
any previous expressions or comments either herein or during negotiations for
the credit facilities outlined herein to the contrary, the Credit Facilities
outlined herein, including the availability on any undrawn facility, are
extended to you at the sole discretion of Royal Bank of Canada are in each and
every case and without exception repayable on demand.        
 
AVAILABILITY:   Segment 1.  
The Borrower may borrow, repay, and re- borrow up to the amount of this
operating facility.
    Segment 3.  
L/G’s will be issued for periods not exceeding one year, except with the
agreement of the Bank
       
 
INTEREST      
 
RATES & FEES:   Segment 1a.  
Nassau Prime (“NP”) plus 1.50%.
    Segment 2a.  
Libor (90 days) plus 1.75%.
    Segment 2b.  
NP plus 1.50%.
    Segment 3a.  
1% per annum (to be renegotiated at next review).
    Segment 3b.  
1% per annum (to be renegotiated at next review).
    Segment 3c.  
1% per annum (to be renegotiated at next review).
       
 
    Interest on Bahamian dollar loans shall be computed on the daily principal
amounts outstanding, at the aforementioned rates, based on the actual number of
days elapsed divided by three hundred and sixty-five (365), and shall be payable
in arrears on the 31st of each month for all operating loans and at each payment
date for reducing demand loans.        
 
    Interest on United States dollar loans shall be computed on the daily
principal amounts outstanding, at the aforementioned rates, based on the actual
number of

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              days elapsed divided by three hundred and sixty (360), and shall
be payable in arrears on each payment date for reducing demand loans.        
 
PAYMENT OF      
 
INTEREST & FEES:   L/G’s — The Borrower shall pay fees at the rates set forth
above in advance at the time of issue of the L/G. This fee shall be based upon
the amount of the instrument issued and shall be calculated on the number of
days that it will be outstanding.        
 
    The yearly rates of interest to which the rates determined in accordance
with the Payment of Interest & Fees section of this agreement are equivalent,
are the rates so determined and multiplied by the actual number of days in the
calendar year and divided by three hundred and sixty five (365) for Bahamian
dollar loans and three hundred and sixty (360) for United States dollar loans.  
     
 
OTHER FEES:   The Borrower acknowledges that for requests for loan increases
over the amount established in this letter, a negotiation fee will be levied.  
     
 
    Renewal Fee
A renewal fee of 0.25% is payable at each annual review with respect to segment
1a and 1% with respect to segments 3a, 3b & 3c (to be renegotiated at next
review).

          COLLATERAL SECURITY:      
–   Registered demand debenture creating a fixed and floating charge over the
assets of Consolidated      Water (Bahamas) Ltd. (formerly Waterfields Co. Ltd.)
with a right of access to the property. Stamped       for $6,418,440.
       
–   Assignment of full covering risk insurance (including hurricane) over plant
assets.
       
–   Acknowledged loan agreement.
CONDITIONS          
 
PRECEDENT:   The obligation of the Bank to make available the Borrowings to the
Borrower is subject to and conditional upon:     1.  
Receipt by the Bank of the within stipulated collateral security inform and
substance satisfactory to the Bank, together with such corporate authorizations
and legal opinions as the Bank may require.

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                2.  
The Borrower authorizes and directs the Bank to automatically debit by
mechanical, electronic or manual means, any bank account of the Borrower for all
amounts payable under this agreement, including but not limited to, the
repayment of principal and the payment of interest, fees and all charges for the
keeping of such bank accounts.
    3.  
Receipt of acknowledged loan agreement.
         
 
REPRESENTATIONS        
 
AND WARRANTIES:   The Borrower represents and warrants to the Bank that:     a)
 
it is a corporation validly incorporated under laws of the Commonwealth of the
Bahamas.
    b)  
the execution and delivery of this agreement has been duly authorized by all
necessary actions and does not violate any law or any provision of its by-laws
or any unanimous shareholders’ agreement to which it is subject.
         
 
NON-MERGER: The provisions of this agreement shall not merge with any security
given by the Borrower to the Bank, but shall continue in full force for the
benefit of the parties hereto.          
 
COVENANTS: The Borrower agrees:     a)  
Upon demand to pay all sums of money due under this agreement; or until such
demand be made upon the terms otherwise provided herein;
    b)  
To provide the Bank with quarterly in-house financial statements within 45 days
of the end of each quarter and audited financial statements within 120 days of
each fiscal year-end;
    c)  
To provide the Bank with annual pro forma balance sheets, profit and loss and
cash flow statements for the next year and such other reports as the Bank may
reasonably request from time to time including but not limited to quarterly
production reports within 45 days of the end of each quarter;
    d)  
To give the Bank prompt notice of any breach of this agreement or any event
which, with time or notice, would constitute a breach of this agreement;
    e)  
To maintain, on a consolidated basis, the ratio of total Liabilities to Tangible
Net Worth of not greater than 2:1. Tangible Net Worth means the aggregate of
paid up capital, retained earnings and debt which has been formerly postponed to
the Bank, less amounts due by related persons/entities,

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goodwill, deferred costs, net leasehold improvements, and other assets normally
regarded as intangible under Generally Accepted Accounting Principles. Total
liabilities include all direct liabilities, but exclude amounts formally
postponed to the Bank;
      f)  
Not to grant, create, assume or suffer to exist any mortgage, charge, lien, or
other encumbrance affecting any of its properties, assets or other rights;
      g)  
Not to sell, transfer, convey, lease or otherwise dispose of any part of its
property or assets, without the prior written consent of the Bank except in the
ordinary course of business;
      h)  
Not to, directly or indirectly, guarantee or otherwise provide for, on a direct
or indirect or contingent basis, the payment of any monies or performance of any
obligations by any third party except as provided herein;
      i)  
To give the Bank 30 days prior notice in writing of any intended change in the
ownership of its shares and not to dispose of shares of any of its subsidiaries
without the Bank’s prior written consent;
      j)  
Not to change its name or merge, amalgamate or consolidate with any other
corporation without the Bank’s prior written consent;
      k)  
Not to declare or pay dividends exceeding available cash flow; which is defined
as net income plus depreciation & amortization less principal repayments less
membrane replacement without the prior written permission of the Bank;
      l)  
The Bank is empowered at any time or times (without consulting the Borrower) to
impress additional stamp duties on its Mortgages/ Debentures from the Borrower
covering any sum or sums at any time or times advanced to the Borrower by the
Bank PROVIDED ALWAYS that such Mortgages/Debentures are intended and shall
secure at all times the aggregate amount or amounts actually advanced by the
Bank to the Borrower at any time or times whether or not the
Mortgages/Debentures shall have been stamped or upstamped to cover such amounts;
      m)  
To keep all assets insured for at least replacement cost and/or as per security
documentation contained

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herein and to provide the Bank with evidence of all insurance renewals within
30 days of the expiry;
    n)  
To ensure real property taxes are fully paid up and to provide evidence of
payment by March 31st, annually; and
    o)  
To provide the bank with a singed compliance certificate (as per attached
“Schedule A”) on a quarterly/annual basis, verifying compliance or
non-compliance with the covenants contained herein;
           
 
EXPENSES:   The Borrower agrees to pay all of the Bank’s costs incurred from
time to time in the preparation, negotiation and execution of this agreement and
the collateral security, and any costs incurred in the operation or enforcement
of this agreement or any other agreement entered into pursuant to this
agreement.            
 
GOVERNING LAW:   This agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of the Bahamas applicable therein.    
       
 
ACCEPTANCE:   Please acknowledge the terms and conditions of the loan agreement
by signing and returning the enclosed copy at your soonest opportunity.

Very truly
/s/ Brian L. Knowles
Brian L. Knowles
Account Manager
Enc.

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Before accepting the terms and conditions herein by signing hereof we again draw
your attention the overriding condition contained above that the credit
facilities provided hereunder are in every case repayable on demand
notwithstanding any provisions for payment on terms. By signing hereof you will
be acknowledging that you fully understand that your loan or loans are always
repayable on demand.
TERMS AND CONDITIONS HEREBY ACCEPTED
THIS 5th DAY OF OCTOBER 2006
Consolidated Water (Bahamas) Ltd. (formerly Waterfields Company Limited)
/s/ Frederick W. McTaggart
Authorized signing officer - Frederick W. McTaggart
/s/ Wilmer Pergande
Authorized signing officer - Wilmer Pergande

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Compliance Certificate
Schedule A.
In accordance with the terms of our Letter Agreement dated (4 October 2006),
between Royal Bank of Canada and Consolidated Water (Bahamas) Ltd. (formerly
Waterfields Company Limited), (“the Company”), I enclose the following:

  1.   Company Prepared/Audited financial statements for the Company for
quarter/year ending ___;     2.   Budget, forecast Income Statement, Balance
Sheet and Cash Flow Statement for the Company for the year ending ___;     3.  
Production report for the Company for the quarter ending ___;

In addition, I also certify that as at (quarter/year) ending ___, these
financial statements confirm the following:

  1)   The ratio of Debt to Tangible Net Worth was         :1.00 and therefore
in compliance/not in compliance with the maximum permitted ratio of 2.00:1.00;  
  2)   Dividends declared by the company to date was $___, and therefore in
compliance/not in compliance with the maximum permitted.

Consolidated Water (Bahamas) Ltd.

Name:
Title:
Date:

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