CONSOLIDATED WATER CO.
LTD.
Philadelphia, Pennsylvania
December 7, 2006
JANNEY
MONTGOMERY SCOTT LLC
BOENNING & SCATTERGOOD, INC.
BREAN MURRAY, CARRET & CO., LLC
As Representatives of the Several Underwriters Named in
Schedule I hereto
c/o Janney Montgomery Scott LLC
1801 Market Street
Philadelphia, PA 19103
Consolidated
Water Co. Ltd., a Cayman Islands corporation (“CWCO”),
proposes, subject to the terms and conditions stated herein, to
sell to the several Underwriters named in Schedule I
hereto (the “Underwriters”), for whom Janney Montgomery
Scott LLC, Boenning & Scattergood, Inc., and Brean Murray,
Carret & Co., LLC are serving as Representatives (the
“Representatives”), an aggregate of 1,500,000 Ordinary
Shares, par value CI$0.50 per share (the “Ordinary
Shares”) of CWCO. The Ordinary Shares to be sold to the
Underwriters by CWCO are referred to herein as the “Firm
Shares.” The respective amounts of the Firm Shares to be
purchased by the several Underwriters are set forth opposite their
names in
Schedule I hereto. The Firm Shares shall be offered to the
public at a public offering price of $24.90 per Firm Share (the
“Offering Price”).
In order to
cover over-allotments in the sale of the Firm Shares, the
Underwriters may, at the Underwriters’ election and subject
to the terms and conditions stated herein, purchase ratably in
proportion to the amounts set forth opposite their respective names
in Schedule I hereto, for the Underwriters’ own
accounts up to 225,000 additional shares of Ordinary Shares from
CWCO. Such 225,000 additional shares of Ordinary Shares are
referred to herein as the “Optional Shares.” If any
Optional Shares are purchased, the Optional Shares shall be
purchased for offering to the public at the Offering Price and in
accordance with the terms and conditions set forth herein. The Firm
Shares and the Optional Shares are referred to collectively herein
as the “Shares.”
CWCO and the
Underwriters, intending to be legally bound, hereby confirm their
agreement as follows:
1.
Representations and Warranties of CWCO . CWCO represents
and warrants to, and agrees with, the several Underwriters
that:
(a) CWCO
has prepared and filed with the Securities and Exchange Commission
(the “SEC”), in accordance with the provisions of the
Securities Act of 1933, as amended (the “Act”), and the
rules and regulation thereunder (the “Regulations”) a
registration statement on Form F-3 (File No. 333-137970), including
a prospectus, relating to the Shares. The term “Registration
Statement” as used herein means the registration statement
(including all exhibits and information incorporated by reference
therein) as amended at the time it becomes effective or, if the
registration statement became effective prior to the execution of
this Agreement, as supplemented or amended prior to the execution
of this Agreement and includes information (if any) contained in
the Prospectus (as defined below). If it is contemplated, at the
time this Agreement is executed, that a post-effective amendment to
the Registration Statement will be filed and must be declared
effective before the offering of the Shares may commence, the term
“Registration Statement” as used herein shall mean the
Registration Statement as amended by such post-effective amendment.
If CWCO has filed or files on or after the date of this Agreement a
registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Act
(“Rule 462(b) Registration Statement”), then any
reference herein to the term “Registration Statement”
shall be deemed to include such Rule 462(b) Registration Statement.
The term “Preliminary Prospectus” shall mean any
preliminary prospectus included in the Registration Statement or
filed with the SEC pursuant to Rule 424(a) of the Regulations. The
term “Statutory Prospectus” shall mean any Preliminary
Prospectus, as amended or supplemented, relating to the Shares that
is included in the Registration Statement immediately prior to the
Initial Sale Time (as defined herein), including any document
incorporated by reference therein. The term
“Prospectus” shall mean the final prospectus relating
to the Shares that is first filed pursuant to Rule 424(b) after the
effective date of the Registration Statement (the “Effective
Date”) or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Shares
included in the Registration Statement at the Effective Date. The
term “Issuer Free Writing Prospectus” shall have the
meaning ascribed to it in Rule 433 of the Regulations relating
to the Shares, in the form filed or required to be filed with the
SEC or, if not required to be filed, in the form retained in
CWCO’s record pursuant to Rule
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433(g) of the
Regulations. The term “Disclosure Package” shall mean
(i) the Statutory Prospectus, (ii) the Issuer Free
Writing Prospectus, if any, identified in Schedule II
hereto and ( iii) any other free writing prospectus defined
in Rule 405 of the Regulations that is required to be filed by
CWCO with the SEC or retained by CWCO under Rule 433 of the
Regulations and that all parties hereto expressly agree to treat as
part of the Disclosure Package (the “Other Free Writing
Prospectus”). For purposes of this Agreement, the
“Initial Sale Time” shall mean 5:00 p.m. (Eastern
Standard Time) on the date of this Agreement. All references in
this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus, the Statutory
Prospectus, the Prospectus, the Issuer Free Writing Prospectus, the
Other Free Writing Prospectus or any amendments or supplements to
any of the foregoing, shall include any copy thereof filed with the
SEC pursuant to its Electronic Data Gathering, Analysis and
Retrieval System (“EDGAR”).
(b) The
Registration Statement has become effective under the Act, and the
SEC has not issued any stop order suspending the effectiveness of
the Registration Statement or preventing or suspending the use of
the Statutory Prospectus or the Prospectus, nor has the SEC
instituted or, to the knowledge of CWCO, threatened to institute
proceedings with respect to such an order. For purposes of this
Agreement, “to the knowledge of CWCO,” means the actual
knowledge of CWCO and/or any executive officer or director of CWCO,
and an individual shall be deemed to have “knowledge”
of a particular fact, circumstance or other matter if:
(i) such person is actually aware of such fact or matter or
(ii) an individual could have obtained such fact, circumstance
or other matter through a reasonable inquiry concerning the truth
or existence of such fact, circumstance or other matter. No stop
order suspending the sale of the Shares in any jurisdiction
designated by the Representatives as provided for in Section 5(f)
hereof has been issued, and no proceedings for that purpose have
been instituted or, to the knowledge of CWCO, threatened. CWCO has
complied in all material respects with all requests of the SEC, or
requests of which CWCO has been advised of any state or foreign
securities commission in a state or foreign jurisdiction designated
by the Representatives as provided for in Section 5(f) hereof, for
additional information to be included in the Registration
Statement, the Disclosure Package or the Prospectus.
(c)
(i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) the
Registration Statement, the Statutory Prospectus and the Prospectus
comply and, as amended or supplemented, if applicable, will comply
in all material respects with the Act and the Regulations,
(iii) the Statutory Prospectus and the Prospectus do not
contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, except that the representations and warranties set
forth in this paragraph do not apply to omissions from or
statements in the Registration Statement, the Statutory Prospectus
or the Prospectus based upon and in conformity with written
information furnished to CWCO by any Underwriter specifically for
use therein, and (iv) the statistical and market-related data
included or incorporated by reference in the Registration
Statement, the Disclosure Package or the Prospectus are based on or
derived from sources that CWCO believes to be reliable and
accurate. With respect to the exception set forth at sub-clause
(iii) above, CWCO acknowledges that the
3
only
information furnished by any Underwriter for use in the
Registration Statement, the Statutory Prospectus or the Prospectus
is the information as set forth in Section 13 of this
Agreement.
(d) As
of the Initial Sale Time, the Disclosure Package complied in all
material respects with the Act and the Regulations and, if filed by
electronic transmission pursuant to EDGAR (except as may be
permitted by Regulation S-T under the Act), was identical to
the copy thereof delivered to the Underwriters for use in
connection with the offer and sale of the Shares. The Disclosure
Package, at the Initial Sale Time, did not, and at the Closing Date
will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The preceding sentence
does not apply to omissions from or statements in the Disclosure
Package based upon and in conformity with written information
furnished to CWCO by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that
the only such information furnished by any Underwriter for use in
the Disclosure Package is the information as set forth in
Section 13 of this Agreement.
(e) CWCO
(including its agents and representatives, other than the
Underwriters in their capacity as such) has not used, authorized,
approved or referred to and will not use, authorize, approve or
refer to any Issuer Free Writing Prospectus, other than the
documents listed on Schedule II hereto. Each such
Issuer Free Writing Prospectus complied in all material respects
with the Act and has been filed in accordance with the Act (to the
extent required thereby). Each Issuer Free Writing Prospectus, as
of its issue date and at all subsequent times through the
completion of the public offer and sale of the Shares or until any
earlier date of which CWCO notified or notifies the Representatives
as described in the next sentence, did not, does not and will not
include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement. If at
any time following issuance of an Issuer Free Writing Prospectus,
there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would
conflict with the information then contained in the Registration
Statement or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances prevailing at that subsequent time, not
misleading, (i) CWCO has promptly notified or will promptly
notify the Representatives and (ii) CWCO has promptly amended or
will promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement
or omission. The foregoing sentences do not apply to omissions from
or statements in any Issuer Free Writing Prospectus based upon and
in conformity with written information furnished to CWCO by any
Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such
information furnished by any Underwriter for use in any Issuer Free
Writing Prospectus is the information as set forth in
Section 13 of this Agreement.
(f) CWCO
has not distributed and will not distribute, prior to the later of
the last Option Closing Date and the completion of the
Underwriters’ distribution of the Shares, any offering
material in connection with the offering and sale of the Shares,
other than the Registration Statement, the Disclosure Package or
the Prospectus.
4
(g) Any
documents incorporated by reference into the Prospectus pursuant to
Item 6 of Form F-3 under the Act, at the time they were filed
with the SEC, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended
(“Exchange Act”) and with the rules and regulations
promulgated under or pursuant to the Exchange Act, and did not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein, or necessary to make
the statements therein, not misleading.
(h) CWCO
is a corporation duly organized, validly existing and in good
standing under the laws of the Cayman Islands, and has the
corporate power and authority to own or lease and operate its
properties and to conduct its current business as described in the
Registration Statement, the Disclosure Package or the Prospectus,
and to execute, deliver and perform this Agreement. Cayman Water
Company Limited (“Cayman Water”) is a corporation duly
organized, validly existing and in good standing under the laws of
the Cayman Islands, and has the corporate power and authority to
own or lease and operate its properties and to conduct its current
business as described in the Registration Statement, the Disclosure
Package or the Prospectus, and to execute, deliver and perform this
Agreement. Consolidated Water (Belize) Limited, a corporation
incorporated in Belize (“Belize Water”), is a wholly
owned subsidiary of CWCO. Belize Water is a corporation duly
organized, validly existing and in good standing under the laws of
Belize, and has the corporate power and authority to own or lease
and operate its properties and to conduct its current business as
described in the Registration Statement, the Disclosure Package or
the Prospectus. DesalCo Limited (“DesalCo”) is a
company duly organized, validly existing and in good standing under
the laws of the Cayman Islands, and has the corporate power and
authority to own or lease and operate its properties and to conduct
its current business as described in the Registration Statement,
the Disclosure Package or the Prospectus. Ocean Conversion (Cayman)
Limited (“OCC”) is a company duly organized, validly
existing and in good standing under the laws of the Cayman Islands,
and has the corporate power and authority to own or lease and
operate its properties and to conduct its current business as
described in the Registration Statement, the Disclosure Package or
the Prospectus. Ocean Conversion (BVI) Ltd.
(“OCBVI”) is a company duly organized, validly existing
and in good standing under the laws of the British Virgin Islands,
and has the corporate power and authority to own or lease and
operate its properties and to conduct its current business as
described in the Registration Statement, the Disclosure Package or
the Prospectus. DesalCo (Barbados) Ltd. (“DesalCo
Barbados”) is a company duly organized and validly existing
under the laws of the Barbados, and has the corporate power and
authority to own or lease and operate its properties and to conduct
its current business as described in the Registration Statement,
the Disclosure Package or the Prospectus. Consolidated Water
(Bahamas) Ltd. (“CWBL”) is a company duly organized,
validly existing and in good standing under the laws of The
Bahamas, and has the corporate power and authority to own or lease
and operate its properties and to conduct its current business as
described in the Registration Statement, the Disclosure Package or
the Prospectus. Aquilex, Inc. (“Aquilex”) is a company
duly organized, validly existing and in good standing under the
laws of the State of Florida, and has the corporate power and
authority to own or lease and operate its properties and to conduct
its current business as described in the Registration Statement,
the Disclosure Package or the Prospectus. Consolidated Water
(Bermuda) Limited (“CWBRL”) is a company duly
organized, validly existing and in good standing under the laws of
Bermuda, and has the corporate power and authority to own or lease
and operate its properties and to conduct its business as described
in the Registration
5
Statement, the
Disclosure Package or the Prospectus. CWCO, Cayman Water, Belize
Water, DesalCo, OCC, OCBVI, DesalCo Barbados, CWBL, Aquilex and
CWBRL are duly qualified to do business, and are in good standing,
in all jurisdictions in which such qualification is required,
except where the failure to so qualify would not have a material
adverse effect on the general affairs, properties, condition
(financial or otherwise), results of operations,
shareholders’ equity, business or prospects (collectively,
the “Business Conditions”) of CWCO, Cayman Water,
Belize Water, DesalCo, OCC, OCBVI, DesalCo Barbados, CWBL, Aquilex
and CWBRL. Cayman Water, Belize Water, DesalCo, OCC, OCBVI, DesalCo
Barbados, CWBL and Aquilex are hereinafter sometimes collectively
referred to as the “CWCO Subsidiaries” and CWCO and the
CWCO Subsidiaries are hereinafter sometimes collectively referred
to as the “CWCO Group.”
(i) Neither
CWCO nor the CWCO Subsidiaries owns any stock or other interest
whatsoever, whether equity or debt, in any corporation, partnership
or other entity other than (i) CWCO’s ownership of the
CWCO Subsidiaries; (ii) CWCO’s ownership of stock in
Belize Water Services Limited; (iii) CWCO’s ownership of
stock in CWBRL; (iv) DesalCo’s ownership of DesalCo
Barbados; (v) DesalCo’s ownership of stock in OCBVI; and
(vi) OCBVI’s ownership of stock in JVD Ocean
Desalination Limited.
(j) The
currently outstanding shares of CWCO’s capital stock have
been duly authorized and are validly issued, fully paid and
non-assessable, and none of such outstanding shares of CWCO’s
capital stock has been issued in violation of any preemptive rights
of any security holder of CWCO. The holders of the outstanding
shares of CWCO’s capital stock are not subject to personal
liability solely by reason of being such holders. All previous
offers and sales of the outstanding shares of CWCO’s capital
stock made by or on behalf of CWCO, whether described in the
Registration Statement, the Disclosure Package or the Prospectus or
otherwise, were made in conformity with applicable federal, state
and foreign securities laws. The authorized capital stock of CWCO,
including, without limitation, the outstanding Ordinary Shares, the
Shares being issued pursuant hereto, and the outstanding options to
purchase Ordinary Shares conform in all material respects with the
descriptions thereof in the Registration Statement, the Disclosure
Package or the Prospectus, and such descriptions conform in all
material respects with the instruments defining the
same.
(k) All
of the outstanding shares of capital stock of the CWCO Subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable, and none of the outstanding shares of the CWCO
Subsidiaries’ capital stock has been issued in violation of
any preemptive rights of any security holder of any of the CWCO
Subsidiaries. All shares of the CWCO Subsidiaries, except for
OCBVI, owned by CWCO, are owned by CWCO free and clear of all
liens, encumbrances and security interests, except as otherwise
disclosed in the Registration Statement, the Disclosure Package or
the Prospectus; all shares of OCBVI capital stock owned by DesalCo
are owned by DesalCo free and clear of all liens, encumbrances and
security interests, except as otherwise disclosed in the
Registration Statement, the Disclosure Package or the Prospectus;
and no options, warrants or other rights to purchase, agreements or
other obligations to issue, or other rights to convert any
obligations into shares of capital stock or ownership interests in
any of the CWCO Subsidiaries or securities convertible into or
exchangeable for capital stock of, or other ownership interests in
any of the CWCO Subsidiaries
6
are
outstanding, except as disclosed in the Registration Statement, the
Disclosure Package or the Prospectus.
(l) There
are no legal or governmental proceedings pending or, to the
knowledge of CWCO, threatened to which any member of the CWCO Group
is a party or to which any of the properties of any member of the
CWCO Group is subject that are required to be described in the
Registration Statement, the Disclosure Package or the Prospectus
and are not so described, and there are no statutes, regulations,
contracts or other documents concerning the CWCO Group that are
required to be described in the Registration Statement, the
Disclosure Package or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required.
(m) This
Agreement has been duly authorized, executed and delivered by CWCO
and constitutes its legal, valid and binding obligation,
enforceable against CWCO in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors’ rights
generally and subject to applicability of general principles of
equity and except, as to this Agreement, as rights to indemnity and
contribution may be limited by federal and state securities laws or
principles of public policy.
(n) The
execution, delivery and performance of this Agreement and the
transactions contemplated herein do not and will not, with or
without the giving of notice or the lapse of time, or both,
(i) conflict with any term or provision of any member of the
CWCO Group’s respective governing instruments;
(ii) result in a breach of, constitute a default under, result
in the termination or modification of, result in the creation or
imposition of any lien, security interest, charge or encumbrance
upon any of the properties of the CWCO Group or require any payment
by the CWCO Group or impose any liability on the CWCO Group
pursuant to, any contract, indenture, mortgage, deed of trust,
commitment or other agreement or instrument to which any member of
the CWCO Group is a party or by which any of their respective
properties are bound or affected other than this Agreement, except
where such breach, default, modification, termination, lien,
security interest, charge, encumbrance, payment or liability could
not reasonably be expected to have a material adverse effect on the
Business Conditions of the CWCO Group, taken as a whole; (iii)
assuming compliance with the rules of the National Association of
Securities Dealers, Inc. (the “NASD”) applicable to the
offer and sale of the Shares, violate any law, rule, regulation,
judgment, order or decree of any government or governmental agency,
instrumentality or court, domestic or foreign, having jurisdiction
over the CWCO Group or any of their respective properties or
businesses, except where such violation could not reasonably be
expected to have a material adverse effect on the Business
Conditions of the CWCO Group, taken as a whole; or (iv) result
in a breach, termination or lapse of any member of the CWCO
Group’s corporate power and authority to own or lease and
operate their respective properties and conduct their respective
businesses, except as disclosed in the Registration Statement, the
Disclosure Package or the Prospectus.
(o) At
the date or dates indicated in the Registration Statement, the
Disclosure Package or the Prospectus, CWCO had the duly authorized
and outstanding capitalization set forth in the Registration
Statement, the Disclosure Package or the Prospectus under the
caption “Capitalization” and will have, as of the
issuance of the Firm Shares on the Closing Date (as
7
defined below),
the as adjusted capitalization set forth therein as of the date
indicated in the Registration Statement, the Disclosure Package or
the Prospectus. On the Effective Date, the Closing Date and any
Option Closing Date (as defined below), there will be no options or
warrants or other outstanding rights to purchase, agreements or
obligations to issue or agreements or other rights to convert or
exchange any obligation or security into, capital stock of CWCO,
except as described in the Registration Statement, the Disclosure
Package or the Prospectus, or securities convertible into or
exchangeable for capital stock of CWCO, except as described in the
Registration Statement, the Disclosure Package or the Prospectus or
the grant of options after the date of the Registration Statement,
the Disclosure Package or the Prospectus under option plans of
CWCO. The information in the Registration Statement, the Disclosure
Package or the Prospectus, insofar as it relates to all outstanding
options and other rights to acquire securities of CWCO as of the
dates referred to in the Registration Statement, the Disclosure
Package or the Prospectus, is true and correct in all material
respects.
(p) When
the Shares have been duly delivered against payment therefor as
contemplated by this Agreement, the Shares will be validly issued,
fully paid and non-assessable, and the holders thereof will not be
subject to personal liability solely by reason of being such
holders. The certificates representing the Shares are in proper
legal form under, and conform in all respects to the requirements
of, the laws of the Cayman Islands. Neither the filing of the
Registration Statement, the Disclosure Package or the Prospectus,
nor the offering or sale of Shares as contemplated by this
Agreement, gives any security holder of CWCO any rights for or
relating to the registration of any Ordinary Shares or any other
capital stock of CWCO or any rights to convert or have redeemed or
otherwise receive anything of value with respect to any other
security of CWCO.
(q) No
consent, approval, authorization, order, registration, license or
permit of, or filing or registration with, any court, government,
governmental agency, instrumentality or other regulatory body or
official is required for the valid and legal execution, delivery
and performance by CWCO of this Agreement and the consummation of
the transactions contemplated hereby or described in the
Registration Statement, the Disclosure Package or the Prospectus,
except (i) such as may be required for the registration of the
Shares under the Act, the Exchange Act, and for compliance with the
applicable state securities laws or the Bylaws, rules and other
pronouncements of the NASD and (ii) as disclosed in the
Registration Statement, the Disclosure Package or the
Prospectus.
(r) The
Ordinary Shares (including the Shares) are registered pursuant to
Section 12(b) of the Exchange Act. The issued and outstanding
Ordinary Shares are included for quotation on The Nasdaq Global
Select Market. Neither CWCO nor, to the knowledge of CWCO, any
other person has taken any action designed to cause, or likely to
result in, the termination of the registration of the Ordinary
Shares under the Exchange Act. CWCO has not received any
notification that the SEC or The Nasdaq Global Select Market is
contemplating terminating such registration or
quotation.
(s) The
statements in the Registration Statement, the Disclosure Package or
the Prospectus, insofar as they are descriptions of or references
to contracts, agreements or other documents, are accurate in all
material respects and present or summarize fairly, in all material
respects, the information required to be disclosed under the Act or
the Regulations, and there are
8
no contracts,
agreements or other documents, instruments or transactions of any
character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as exhibits to
the Registration Statement that have not been so described,
referred to or filed, as required.
(t) Each
contract or other instrument (however characterized or described)
to which each member of the CWCO Group is a party or by which any
of their respective properties or businesses is bound or affected
and which is material to the conduct of the CWCO Group’s
business has been (i) duly and validly executed by the respective
member of the CWCO Group and, (ii) to the knowledge of CWCO,
by the other parties thereto. Each such contract or other
instrument is in full force and effect and is enforceable in all
material respects against the parties thereto in accordance with
its terms, except as disclosed in the risk factor on page 6 of the
Preliminary Prospectus relating to OCBVI’s Baughers Bay plant
(the “Risk Factor”) and except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors’ rights generally and subject to
applicability of general principles of equity, and no member of the
CWCO Group is, and to the knowledge of CWCO, no other party thereto
is, in default thereunder, except where such default would not have
a material adverse effect on the Business Conditions of the CWCO
Group, and no event has occurred that, with the lapse of time or
the giving of notice, or both, would constitute a default under any
such contract or other instrument. All necessary consents under
such contracts or other instruments to the disclosure in the
Registration Statement, the Disclosure Package or the Prospectus
with respect thereto have been obtained.
(u) The
consolidated financial statements of CWCO (including the notes
thereto) filed as part of, or incorporated by reference in, the
Registration Statement, the Disclosure Package or the Prospectus
present fairly, in all material respects, the financial position of
CWCO as of the respective dates thereof, and the results of
operations and cash flows of CWCO for the periods indicated
therein, all in conformity with generally accepted accounting
principles. The supporting notes included in the Registration
Statement, the Disclosure Package or the Prospectus fairly state in
all material respects the information required to be stated therein
in relation to the financial statements taken as a whole. The
financial information included in the Registration Statement, the
Disclosure Package or the Prospectus under the captions
“Prospectus Summary — Summary Financial Data,”
“Use of Proceeds,” “Capitalization,”
“Dilution” and “Selected Consolidated Financial
Data,” presents fairly the information shown therein and has
been compiled on a basis consistent with that of the financial
statements incorporated by reference in the Registration Statement,
the Disclosure Package or the Prospectus. The unaudited pro forma
adjustments to financial information included in the Registration
Statement, the Disclosure Package or the Prospectus have been
properly applied to the historical amounts in the compilation of
that information to reflect the sale by CWCO of the Shares offered
thereby at an assumed offering or actual price set forth in the
Registration Statement, the Disclosure Package or the Prospectus,
as the case may be, and the application of the estimated net
proceeds therefrom.
(v) The
consolidated financial statements of OCBVI (including the notes
thereto) filed as part of, or incorporated by reference in, the
Registration Statement, the Disclosure Package or the Prospectus
present fairly, in all material respects, the financial position of
OCBVI as of the respective dates thereof, and the results of
operations and cash flows
9
of OCBVI for
the periods indicated therein, all in conformity with generally
accepted accounting principles. The supporting notes included in
the Registration Statement, the Disclosure Package or the
Prospectus fairly state in all material respects the information
required to be stated therein in relation to the financial
statements taken as a whole.
(w) Since
the respective dates as of which information is given in the
Registration Statement, the Disclosure Package or the Prospectus,
except as otherwise stated therein, there has not been (i) any
material adverse change (including, whether or not insured against,
any material loss or damage to any material assets), or development
involving a prospective material adverse change, in the Business
Conditions of the CWCO Group; (ii) any material adverse
change, loss, reduction, termination or non-renewal of any material
contract to which a member of the CWCO Group is a party;
(iii) any transaction entered into by a member of the CWCO
Group not in the ordinary course of its business that is material
to the CWCO Group; (iv) any dividend or distribution of any
kind declared, paid or made by CWCO on its capital stock;
(v) any liabilities or obligations, direct or indirect,
incurred by any member of the CWCO Group that are material to the
CWCO Group other than the issuance of shares pursuant to the
exercise of options or the grant of options under CWCO’s
stock option plans; (vi) any change in the capitalization of
any member of the CWCO Group; or (vii) any change in the
indebtedness of any member of the CWCO Group that is material to
the CWCO Group. The members of the CWCO Group have no contingent
liabilities or obligations that are material to the CWCO Group that
are not expressly disclosed in the Registration Statement, the
Disclosure Package or the Prospectus.
(x) CWCO
has not distributed, and will not distribute, any offering material
in connection with the offering and sale of the Shares other than
the Registration Statement, a Preliminary Prospectus, the
Disclosure Package and the Prospectus. Except for the letter
agreement dated September 8, 2006 between CWCO and Janney
Montgomery Scott LLC (the “Letter Agreement”) and this
Agreement, neither CWCO nor any of its officers, directors or
affiliates has (i) taken, nor shall CWCO or such persons take,
directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Ordinary Shares, or
(ii) since the filing of the Registration Statement
(A) sold, bid for, purchased or paid anyone any compensation
for soliciting purchases of, the Shares or (B) paid or agreed
to pay to any person any compensation for soliciting another to
purchase any other securities of CWCO.
(y) Except
for Aquilex’s federal and state tax returns for fiscal year
2005, each member of the CWCO Group has filed with the appropriate
federal, state and local governmental agencies, and all foreign
countries and political subdivisions thereof, all material tax
returns that are required to be filed or have duly obtained
extensions of time for the filing thereof and have paid all taxes
shown on such returns or otherwise due and all material assessments
received by them to the extent that the same have become due. Each
member of the CWCO Group has not executed or filed with any taxing
authority, foreign or domestic, any agreement extending the period
for assessment or collection of any income or other tax and none of
them is a party to any pending action or proceeding by any foreign
or domestic governmental agency for the assessment or collection of
taxes, and no claims for assessment or collection of taxes have
been asserted against any member of the CWCO Group that might
materially adversely affect the Business Conditions of the CWCO
Group.
10
(z) To
the knowledge of CWCO, (i) Rachlin, Cohen & Holtz
(“Rachlin”), which has given its report on certain
financial statements included, or incorporated by reference, as
part of the Registration Statement, the Disclosure Package or the
Prospectus, is a firm of independent certified public accountants
as required by the Act and the Regulations with respect to CWCO,
and (ii) KPMG Cayman Islands, which has given its report on
certain financial statements included, or incorporated by reference
as part of the Registration Statement, the Disclosure Package or
the Prospectus, is a firm of independent certified public
accountants as required by the Act and the Regulations with respect
to CWCO.
(aa) No
member of the CWCO Group is in violation of, or in default under,
any of the terms or provisions of (i) its governing
instruments and (ii) except where any such default would not
reasonably be expected to have a material adverse effect on the
Business Conditions of the CWCO Group, (A) any indenture,
mortgage, deed of trust, contract, commitment or other agreement or
instrument to which it is a party or by which it or any of its
assets or properties is bound or affected, (B) any law, rule,
regulation, judgment, order or decree of any government or
governmental agency, instrumentality or court, domestic or foreign,
having jurisdiction over it or any of its properties or business,
or (C) any license, permit, certification, registration,
approval, consent or franchise.
(bb) Except
as expressly disclosed in the Registration Statement, the
Disclosure Package or the Prospectus, there are no claims, actions,
suits, protests, proceedings, arbitrations, investigations or
inquiries pending before, or, to the knowledge of CWCO, threatened
or contemplated by, any governmental agency, instrumentality, court
or tribunal, domestic or foreign, or before any private arbitration
tribunal to which any member of the CWCO Group is or may be made a
party that could reasonably be expected to affect the validity of
any of the outstanding Ordinary Shares, or that, if determined
adversely to any member of the CWCO Group would, in any case or in
the aggregate, result in any material adverse change in the
Business Conditions of the CWCO Group, nor, to the knowledge of
CWCO, is there any reasonable basis for any such claim, action,
suit, protest, proceeding, arbitration, investigation or inquiry.
There are no outstanding orders, judgments or decrees of any court,
governmental agency, instrumentality or other tribunal enjoining
any member of the CWCO Group from, or requiring any member of the
CWCO Group to take or refrain from taking, any action, or to which
any member of the CWCO Group or their properties, assets or
businesses are bound or subject, except for such orders, judgments
or decrees which would not have a material adverse effect on the
Business Conditions of the CWCO Group.
(cc) Each
member of the CWCO Group owns, or possesses adequate rights to use,
or can acquire on reasonable terms, all patents, patent
applications, trademarks, trademark registrations, applications for
trademark registration, trade names, service marks, licenses,
inventions, copyrights, know-how (including any unpatented and/or
unpatentable proprietary or confidential technology, information,
systems, design methodologies and devices or procedures developed
or derived from or for each member of the CWCO Groups’s
business), trade secrets, confidential information, processes and
formulations and other proprietary information necessary for, used
in, or proposed to be used in, the conduct of the business of the
CWCO Group as described in the Registration Statement, the
Disclosure Package or the Prospectus (collectively, the
“Intellectual Property”), except where the failure to
own or possess or otherwise be able to acquire such Intellectual
Property would not have a material adverse effect on the
Business
11
Conditions of
the CWCO Group. To the knowledge of CWCO, no member of the CWCO
Group has infringed, is infringing or has received any notice of
conflict with, the asserted rights of others with respect to the
Intellectual Property that, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, could
materially adversely affect the Business Conditions of the CWCO
Group, and CWCO knows of no reasonable basis therefor. To the
knowledge of CWCO, no other parties have infringed upon or are in
conflict with any Intellectual Property. Except for the Agreement
for Testing Prototype Desalination Equipment dated March 23,
2006 between CWCO and Industrial Services, Inc., no member of the
CWCO Group is a party to, or bound by, any agreement pursuant to
which royalties, honorariums or fees are payable by any member of
the CWCO Group to any person by reason of the ownership or use of
any Intellectual Property.
(dd) Each
member of the CWCO Group has good and marketable title to all
property described in the Registration Statement, the Disclosure
Package or the Prospectus as being owned by it, free and clear of
all liens, security interests, charges or encumbrances and the
like, except such as are expressly described or referred to in the
Registration Statement, the Disclosure Package or the Prospectus or
such as do not materially adversely affect the Business Conditions
or the conduct of the business of the CWCO Group, as described in
the Registration Statement, the Disclosure Package or the
Prospectus. Each member of the CWCO Group has insured its property
against loss or damage by fire, hurricane or other casualty, in
amounts reasonably believed by CWCO to be adequate, and maintains
insurance against such other risks as management of CWCO deems
appropriate. All real and personal property leased by each member
of the CWCO Group, as described or referred to in the Registration
Statement, the Disclosure Package or the Prospectus, is held by the
respective member of the CWCO Group under valid and enforceable
leases, except where the invalidity or unenforceability of any
lease would not have a material adverse effect on the Business
Conditions of the CWCO Group. The executive offices and facilities
of the CWCO Group (the “Premises”), and all operations
presently or formerly conducted thereon by the CWCO Group or any
predecessors thereof, are now and, since the CWCO Group began to
use such Premises, always have been and, to the knowledge of CWCO
prior to when the CWCO Group began to use such Premises, always had
been, in compliance with all statutes, ordinances, regulations,
rules, standards and requirements of common law applicable to the
areas in which the CWCO Group provide service concerning or
relating to industrial hygiene and the protection of health and the
environment (collectively, the “Environmental Laws”),
except to the extent that any failure in such compliance would not
materially adversely affect the Business Conditions of the CWCO
Group. To the knowledge of CWCO, the CWCO Group facilities produce
water, and contemplated expanded facilities will produce water, in
accordance with the applicable customer and license agreements, and
are not subject to any restriction on water processing under any
law, regulation, rule, order or permit, except as expressly
described in the Registration Statement, the Disclosure Package or
the Prospectus and such as do not materially adversely affect the
Business Conditions or the conduct of the business of the CWCO
Group. To the knowledge of CWCO, there are no conditions on, about,
beneath or arising from the Premises, in close proximity to the
Premises or at any other location that might give rise to liability
or the imposition of a statutory lien under any of the
Environmental Laws, or affect the quality of the water processed by
the CWCO Group, and that would materially adversely affect the
Business Conditions of the CWCO Group, except as described in the
Registration Statement, the Disclosure Package or the Prospectus.
Except as expressly disclosed in the Registration Statement, the
Disclosure Package or the Prospectus, or
12
which will not
materially adversely affect the Business Conditions of the CWCO
Group (i) no member of the CWCO Group has received notice or
has knowledge of any claim, demand, investigation, regulatory
action, suit or other action instituted or threatened against the
CWCO Group or any portion of the Premises or any parcel in close
proximity to the Premises relating to any of the Environmental Laws
and (ii) no member of the CWCO Group has received any notice
of material violation, citation, complaint, order, directive,
request for information or response thereto, notice letter, demand
letter or compliance schedule to or from any governmental or
regulatory agency arising out of or in connection with
“hazardous substances” (as defined by applicable
Environmental Laws) on, about, beneath, arising from or generated
at the Premises, near the Premises or at any other
location.
(ee) Each
member of the CWCO Group maintains a system of internal accounting
controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(ff) CWCO
is in compliance in all material respects with all currently
effective provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated thereunder that are applicable,
or will be applicable as of the Closing Date, to CWCO.
(gg) Each
member of the CWCO Group and their respective affiliates (the
“Employers”) have established, maintain, contribute to,
are required to contribute to, are a party to, or are bound by
contractual commitments as required by applicable laws and
regulations, with respect to, certain pension, retirement, or
profit-sharing plans, deferred compensation, bonus, or other
incentive plans, or medical, vision, dental, or other health and
welfare benefit plans, or life insurance or disability plans, or
any other employee benefit plans, programs, arrangements,
agreements, or understandings (the “Plans”).
With
respect to each of the Plans:
(i) The
terms of each of the Plans are in writing, and each of the Plans
has been maintained and administered in accordance with its terms
and any applicable collective bargaining agreements.
(ii)
Each of the Plans has been maintained and administered in
compliance with all regulations, rules, standards and requirements
of the common law and the laws concerning the establishment,
funding, taxation and administration of such Plans of the Cayman
Islands, The Bahamas, Belize, Barbados and the British Virgin
Islands, including without limitation any such laws governing the
conduct of the trustees, fiduciaries or administrators of such
Plans (collectively, the “Employee Benefits Laws”)
except to the extent any failure in such compliance would not
adversely affect the Business Conditions of the CWCO Group. None of
the Plans are subject to the Employee Retirement Income Security
Act of 1974 as amended (“ERISA”).
13
(iii) None
of the Plans is a defined benefit pension plan, under which the
Employer is obligated to fund, or contribute to the funding of, the
payment of a defined retirement benefit based on an
employee’s accumulated compensation, service or other
factors.
(iv) None
of the Plans provides retiree life or retiree health insurance,
except as may be required by applicable Employee Benefits
laws.
(v) There
are no actions, suits or claims (other than routine claims for
benefits in the ordinary course) pending or, to the knowledge of
CWCO, threatened, and to CWCO’s best knowledge, there are no
facts which could give rise to any such actions, suits or claims
(other than routine claims for benefits in the ordinary course)
related to the Plans.
(vi) All
contributions and/or insurance premiums required to be paid as of
the Closing Date by the Employers with respect to such Plans have
been paid.
(vii) The
Employers have made all disclosures to participants and
governmental authorities, including tax filings as applicable, with
respect to such Plans as may be required by applicable Employee
Benefits law.
(hh) No
labor dispute exists with the Employer’s employees, and to
the knowledge of CWCO, no such labor dispute is threatened. CWCO
has no knowledge of any existing or threatened labor disturbance by
the employees of any of the principal suppliers, contractors or
customers of the CWCO Group that would materially adversely affect
the Business Conditions of the CWCO Group. None of the
Employer’s employees is covered by a collective bargaining
agreement and no union organizing activity exists with respect to
any of such employees.
(ii) There
are no contracts, agreements or understandings between any member
of the CWCO Group and/or any person that would give rise to a valid
claim against any member of the CWCO Group and/or any of the
Underwriters for a brokerage commission, finder’s fee or
other like payment in connection with the transactions contemplated
herein, the Registration Statement, the Disclosure Package and the
Prospectus or in any contracts, agreements, understandings,
payments, arrangements or issuances with respect to the CWCO Group
or, to the knowledge of the CWCO Group, any of its officers,
directors, stockholders, employees or affiliates that may affect
the Underwriters’ compensation as determined by the
NASD.
(jj) CWCO
is not, and after giving effect to the offering and sale of the
Shares and the application of the proceeds therefor described in
the Registration Statement, Disclosure Package or the Prospectus
will not be, an “investment company,” as defined in the
Investment Company Act of 1940, as amended. None of the CWCO
Subsidiaries is an “investment company” as defined in
the Investment Company Act of 1940, as amended. No holder of
Ordinary Shares, or “group” of holders of Ordinary
Shares, within the meaning of Section 13(d)(3) of the Exchange
Act, holds more than twenty-five percent (25%) of CWCO’s
outstanding Ordinary Shares.
(kk) The
Company is not a “passive foreign investment company”
(“PFIC”) as defined in Section 1297 of the United
States Internal Revenue Code and based on current
14
operating plans
and financial projections the Company is not likely to become a
PFIC as a result of the offer and sale of the Shares or
otherwise.
(ll) Each
member of the CWCO Group has received all permits, licenses,
franchises, authorizations, registrations, qualifications and
approvals (collectively, “Permits”) of governmental or
regulatory authorities as may be required of them to own their
properties and conduct their businesses in the manner described in
the Registration Statement, the Disclosure Package or the
Prospectus, subject to such qualifications as may be set forth in
the Prospectus, except to the extent that failure to receive such
Permits would not have a material adverse effect on the Business
Conditions of the CWCO Group; and each member of the CWCO Group has
fulfilled and performed all of their material obligations with
respect to such Permits, and except as disclosed in the Risk
Factor, no event has occurred which allows or, after notice or
lapse of time or both, would allow revocation or termination
thereof or result in any other material impairment of the rights of
the holder of any such Permit, subject in each case to such
qualifications as may be set forth in the Registration Statement,
the Disclosure Package and the Prospectus; and, except as described
in the Registration Statement, the Disclosure Package or the
Prospectus, such Permits contain no restrictions that materially
affect the ability of any member of the CWCO Group to conduct their
businesses.
(mm) No
statement, representation, warranty or covenant made by CWCO in
this Agreement or in any certificate or document required by this
Agreement to be delivered to the Representatives is, or as of the
Closing Date or any Option Closing Date will be, inaccurate, untrue
or incorrect in any material respect. No transaction has occurred
or is proposed between or among CWCO and any of its officers,
directors or shareholders or any affiliate of the foregoing, or any
affiliate of the foregoing that is required to be described in and
is not described in the Registration Statement, the Disclosure
Package or the Prospectus.
(nn) No
member of the CWCO Group or any officer, director, employee,
partner, agent or other person acting on behalf of any member of
the CWCO Group has, directly or indirectly, given or agreed to give
any money, property or similar benefit or consideration to any
customer or supplier (including any employee or agent of any
customer or supplier) or official or employee of any agency or
instrumentality of any government (foreign or domestic) or
political party or candidate for office (foreign or domestic) or
any other person who was, is or in the future may be in a position
to affect the Business Conditions of the CWCO Group, or any actual
or proposed business transaction of any member of the CWCO Group,
as the case may be that (i) could subject any member of the
CWCO Group to any liability (including, but not limited to, the
payment of monetary damages) or penalty in any civil, criminal or
governmental action or proceeding that would have a material
adverse effect on the Business Conditions of the CWCO Group, or
(ii) with respect to any member of the CWCO Group or any
officer or director thereof, violates any law, rule or regulation
to which any member of the CWCO Group is subject. With respect to
OCBVI, the representations and warranties set forth in this
subsection (nn) are limited and qualified to the knowledge of
CWCO.
(oo) CWCO’s
board of directors has validly appointed an audit committee whose
composition satisfies the requirements of the Exchange Act, the
rules and regulations of the SEC adopted thereunder and
Rules 4200 and 4350 of the NASD that are applicable as of the
Closing Date. CWCO’s audit committee has adopted a charter
that satisfies the Exchange Act,
15
the rules and
regulations of the SEC adopted thereunder and Rules 4200 and
4350 of the NASD that are applicable as of the Closing
Date.
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