EX-10.4.3



 





Exhibit 10.4.3



SUBORDINATION AGREEMENT


Dated 29 June 2007


CASCAL SERVICES LIMITED


as Borrower


THE ROYAL BANK OF SCOTLAND


as the Senior Creditor


and


BIWATER CAPITAL PLC


as the Junior Creditor


Linklaters


Ref: ASLH/AVS


Linklaters LLP




 









 








CONTENTS




	 	 	 	 	 	 	 
	1.

	 	Definitions and interpretation
	 	 	1	 
	2.

	 	Undertakings of the Borrowers
	 	 	4	 
	3.

	 	Undertakings of the Junior Creditor
	 	 	5	 
	4.

	 	Representations by the junior creditor
	 	 	6	 
	5.

	 	Turnover of Payments
	 	 	7	 
	6.

	 	Subordination on insolvency
	 	 	7	 
	7.

	 	Treatment of Junior Debt Recoveries
	 	 	9	 
	8.

	 	Enforcement by Junior Creditor
	 	 	10	 
	9.

	 	Consents
	 	 	11	 
	10.

	 	Information
	 	 	11	 
	11.

	 	Protection of subordination
	 	 	12	 
	12.

	 	No rights in favour of Junior Creditor or Borrower
	 	 	13	 
	13.

	 	Power of attorney
	 	 	14	 
	14.

	 	Changes to the Parties
	 	 	15	 
	15.

	 	Costs and expenses
	 	 	15	 
	16.

	 	Rights, amendments, waivers and determinations
	 	 	16	 
	17.

	 	Notices
	 	 	16	 
	18.

	 	Partial invalidity
	 	 	17	 
	19.

	 	Remedies and waivers
	 	 	18	 
	20.

	 	Counterparts
	 	 	18	 
	21.

	 	Perpetuity period
	 	 	18	 
	22.

	 	Governing law
	 	 	18	 
	23.

	 	Enforcement
	 	 	18	 
	SCHEDULE 1 Form of Accession Deed	 	 	19	 







 









 








THIS AGREEMENT is made on 29 June 2007 between:





	(1)	 	CASCAL SERVICES LIMITED in its capacity as borrower under the Senior Facility Agreement (the
“Borrower”);
	 
	(2)	 	THE ROYAL BANK OF SCOTLAND as the Senior Creditor (the “Senior Creditor”); and
	 
	(3)	 	BIWATER CAPITAL PLC as the junior creditor (the “Junior Creditor”, which term shall include
any Proposed New Junior Creditor (as such term is defined below) which accedes to this
Agreement in accordance with Clause 14 (Changes to the Parties) below).





Background





	(A)	 	The Junior Creditor agrees that, subject to the terms and conditions of this Agreement, the
Junior Debt shall be subordinated in right of payment to the Senior Debt.






	(B)	 	The parties to this Subordination Agreement intend that it shall take effect as a deed (even
though the Senior Creditor only executes it under hand).




It is agreed as follows:





	1.	 	DEFINITIONS AND INTERPRETATION






	1.1	 	Definitions






In this Agreement:




“Accession Deed” means a deed substantially in the form set out in Schedule 2 (Form of
Accession Deed).




“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption,
filing, notarisation or registration.




“Debt” means any Senior Debt or Junior Debt.




“Discharge” means, in relation to the Senior Debt, the Senior Creditor being satisfied that
all Senior Debt has been fully and irrevocably paid or discharged and all commitments of
the Senior Creditor in respect of the Senior Debt have expired or been cancelled.




“Finance Documents” means the Junior Finance Documents and the Senior Finance Documents.




“Group” means the Borrower, its holding companies, its Subsidiaries and the Subsidiaries of
its holding companies for the time being.




“Junior Debt” means all present and future moneys, indebtedness due, owing or incurred by
the Borrower to the Junior Creditor (in each case, whether alone or jointly, or jointly or
severally, with any other person, whether actually or contingently, and whether as
principal, surety or otherwise).




“Junior Debt Recoveries” means the aggregate of all moneys and other assets received or
recovered (whether by way of payment, repayment, prepayment, distribution, redemption,
purchase or defeasance, in cash or in kind or the exercise of any set-off or



 









 







otherwise) from time to time by the Junior Creditor under or in connection with the Junior
Debt.




“Junior Finance Documents” means all documents, agreements and instruments evidencing any
Junior Debt.




“Party” means a party to this Agreement.




“Security” means a mortgage, charge, pledge, lien or other security interest securing any
obligation of any person or any other agreement or arrangement having a similar effect.




“Senior
Debt” means all present and future moneys, debts and liabilities due,
owing or incurred by the Borrower to the Senior Creditor under or in connection with any
Senior Finance Document, (in each case, whether alone or jointly, or jointly and severally,
with any other person, whether actually or contingently, and whether as principal, surety
or otherwise).




“Senior Facility Agreement” means the £10,110,000 Term and Letter of Credit Facility
Agreement dated 21 June 2006 between, among others, the Borrower and the Senior Creditor,
as amended from time to time.




“Senior Finance Documents” means the Facility Documents as defined in the Senior Facility
Agreement.




“Subsidiary” means in relation to any company, corporation or other legal entity, (a
“holding company”), a company, corporation or other legal entity:




	 	(a)	 	which is controlled, directly or indirectly, by the holding company;
	 
	 	(b)	 	more than half the issued share capital of which is beneficially owned,
directly or indirectly, by the holding company; or
	 
	 	(c)	 	which is a subsidiary of another Subsidiary of the holding company,






and, for this purpose, a company or corporation shall be treated as being controlled by
another if that other company or corporation is able to determine the composition of the
majority of its board of directors or equivalent body.




“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same).




	1.2	 	Construction






	(a)	 	Unless a contrary indication appears, any reference in this Agreement to:






	 	(i)	 	the “Junior Creditor” or the “Senior Creditor” shall be construed so as to
include its successors in title, assigns and transferees permitted under this
Agreement;
	 
	 	(ii)	 	“assets” includes present and future properties, revenues and rights of every
description;





					
	 	 	 	 	 
	 
	A08005565
	 	2
	 	 






 









 







	 	(iii)	 	a “Finance Document”, “Junior Finance Document” or “Senior Finance Document”
or any other agreement or instrument, other than a reference to a document or other
agreement or instrument in its original form, is a reference to that document or other
agreement or instrument as amended, novated, supplemented, extended, restated (however
fundamentally and whether or not more onerously) or replaced and includes any change
in the purpose of, any extension of or any increase in any facility or the addition of
any new facility under that document or other agreement or instrument;
	 
	 	(iv)	 	“guarantee” means any guarantee, letter of credit, bond, indemnity or similar
assurance against loss, or any obligation, direct or indirect, actual or contingent,
to purchase or assume any indebtedness of any person or to make an investment in or
loan to any person or to purchase assets of any person where, in each case, such
obligation is assumed in order to maintain or assist the ability of such person to
meet its indebtedness;
	 
	 	(v)	 	“indebtedness” includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual or
contingent;
	 
	 	(vi)	 	a “person” includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium or
partnership (whether or not having separate legal personality);
	 
	 	(vii)	 	a “regulation” includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law) of any governmental,
intergovernmental or supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
	 
	 	(viii)	 	“shares” or “share capital” include equivalent ownership interests (and
“shareholder” and similar expressions shall be construed accordingly);
	 
	 	(ix)	 	“set-off” includes combining accounts and payment netting;
	 
	 	(x)	 	a provision of law or regulation is a reference to that provision as amended
or reenacted;
	 
	 	(xi)	 	the “original form” of a document, agreement or instrument means that
document, agreement or instrument as originally entered into; and
	 
	 	(xii)	 	a time of day is a reference to London time.






	(b)	 	Section, Clause and Schedule headings are for ease of reference only.
	 
	(c)	 	An event of default or potential event of default, however described, is “continuing” if it
has not been remedied or waived in accordance with the terms of the relevant agreement.
	 
	(d)	 	In determining whether any Senior Debt has been irrevocably paid or discharged, the Senior
Creditor will disregard contingent liabilities (such as the risk of clawback from a





					
	 	 	 	 	 
	 
	A08005565
	 	3
	 	 






 









 







preference claim) except to the extent that it believes there is a reasonable likelihood
that those contingent liabilities will become actual liabilities.




	1.3	 	Third party rights






A person who is not a Party has no right under the Contracts (Rights
of Third Parties) Act 1999 to enforce or to enjoy the benefit of any
term of this Agreement.




	2.	 	UNDERTAKINGS OF THE BORROWERS






Until the Senior Debt is Discharged, except with the prior consent of the Senior Creditor:




	2.1	 	No payments






The Borrower shall not make any payment, repayment or prepayment of
any principal, interest or other amount, or any distribution, on or in
respect of, or redeem, purchase or defease, any Junior Debt in cash or
in kind.




	2.2	 	No set-off






The Borrower shall not exercise any set-off against any Junior Debt.




	2.3	 	No Security or guarantees






The Borrower shall not create or permit to subsist any Security over
any of its assets, or give or permit to subsist any guarantee for, or
in respect of, any Junior Debt.




	2.4	 	No amendment






The Borrower shall not amend, terminate or give any waiver or consent
under any provision of any Junior Finance Document which would result
in:




	 	(a)	 	the interests of the Senior Creditor, or the ranking and/or subordination
contemplated by this Agreement, being adversely affected;
	 
	 	(b)	 	the principal amount of Junior Debt being increased above the amount
specified in the original form of the Junior Finance Documents;
	 
	 	(c)	 	the rate of interest payable under any Junior Finance Document being
increased;
	 
	 	(d)	 	any change to the basis on which interest or other amounts (including fees)
accrue, are calculated or are payable under any Junior Finance Document or the
Borrower becoming liable to make an additional payment (or increase an existing
payment) under any Junior Finance Document;
	 
	 	(e)	 	any change to the amount to be repaid, any scheduled repayment date or any
mandatory prepayment provision under any Junior Finance Document; or
	 
	 	(f)	 	the Borrower being subject to more onerous obligations as a whole than those
contained in the original form of the Junior Finance Documents at the date of this





					
	 	 	 	 	 
	 
	A08005565
	 	4
	 	 






 









 







     Agreement or obligations which would conflict with any provision of this Agreement,




     other than any amendment, waiver or consent which is minor, technical or administrative
or corrects a manifest error.




	2.5	 	No negotiable instrument






The Borrower shall not permit any Junior Debt to be evidenced by a negotiable instrument.




	2.6	 	No conversion






The Borrower shall not convert any Junior Debt into shares in itself.




	2.7	 	Subsidiaries






The Borrower shall ensure that none of its Subsidiaries purchases or acquires any Junior Debt.




	2.8	 	No other action






The Borrower shall not take or omit to take any action whereby the ranking and/or subordination contemplated by this
Agreement may be impaired.




	3.	 	UNDERTAKINGS OF THE JUNIOR CREDITOR






Until the Senior Debt is Discharged, except with the prior consent of the Senior
Creditor:




	3.1	 	No payments






The Junior Creditor shall not:




	 	(a)	 	demand or receive any payment, repayment or prepayment of any principal,
interest or other amount, or any distribution, in cash or in kind, on or in respect
of;
	 
	 	(b)	 	demand or agree to any redemption, purchase or defeasance, in cash or in
kind, of; or
	 
	 	(c)	 	apply any-money or property in or-towards-discharge-of,






in each case, any Junior Debt.




	3.2	 	No set-off






The Junior Creditor shall not exercise any set-off against any Junior Debt.




	3.3	 	No Security or guarantees






The Junior Creditor shall not permit to subsist or receive any Security or any guarantee for, or in respect of, any Junior
Debt.



					
	 	 	 	 	 
	 
	A08005565
	 	5
	 	 






 









 







	3.4	 	No amendment






The Junior Creditor shall not amend, terminate or give any waiver or consent under any Junior Finance Document, except to
the extent permitted by Clause 2.4 (No amendment).




	3.5	 	No negotiable instrument






The Junior Creditor shall not permit any Junior Debt to be evidenced by a negotiable instrument.




	3.6	 	No conversion






The Junior Creditor shall not convert any Junior Debt into shares of the Borrower.




	3.7	 	No cancellation






The Junior Creditor shall not cancel any Junior Debt or any commitment to provide any Junior Debt.




	3.8	 	No refusal






The Junior Creditor shall not refuse any request for utilisation or drawing of the Junior Debt.




	3.9	 	No other action






The Junior Creditor shall not take or omit to take any action whereby the ranking and/or subordination contemplated by this
Agreement may be impaired.




	4.	 	REPRESENTATIONS BY THE JUNIOR CREDITOR






The Junior Creditor makes the representations and warranties set out in this Clause 4 to
the Senior Creditor on the date of this Agreement:




	 	(a)	 	it is duly incorporated (if a corporate person) or duly established (in any
other case) and validly existing under the laws of its jurisdiction of incorporation
or formation;
	 
	 	(b)	 	it has the power to own its assets and carry on its business as it is
being, and is proposed to be, conducted;
	 
	 	(c)	 	the obligations expressed to be assumed by it in this Agreement and the
Junior Finance Documents to which it is a party are, subject to any general
principles of law limiting its obligations which are specifically referred to in any
opinion delivered pursuant to Clause 4 (Conditions of Utilisation) of the Senior
Facility Agreement, legal, valid, binding and enforceable;
	 
	 	(d)	 	the entry into and performance by it of, and the transactions contemplated
by, this Agreement and the Junior Finance Documents to which it is a party do not
and will not conflict with any law or regulation applicable to it or its
constitutional documents or any agreement or instrument binding on it or any of its
assets;





					
	 	 	 	 	 
	 
	A08005565
	 	6
	 	 






 









 







	 	(e)	 	it has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery of this
Agreement and the Junior Finance Documents to which it is a party and the
transactions contemplated by this Agreement and the Junior Finance Documents to
which it is a party;
	 
	 	(f)	 	all Authorisations required or desirable for the performance by it of this
Agreement and the Junior Finance Documents to which it is a party and the
transactions contemplated by this Agreement and the Junior Finance Documents to
which it is a party and to make this Agreement and the Junior Finance Documents to
which it is a party admissible in evidence in its jurisdiction of incorporation have
been obtained or effected and are in full force and effect;
	 
	 	(g)	 	the documents to which it is a party as described in this Agreement contain
all the terms and conditions of the Junior Debt; and
	 
	 	(h)	 	it is the sole beneficial owner of the Junior Debt owed to it.






	5.	 	TURNOVER OF PAYMENTS






	5.1	 	Turnover and trust






Until the Senior Debt is Discharged, if the Junior Creditor receives
any Junior Debt Recoveries, that Junior Creditor shall:




	 	(a)	 	promptly notify the Senior Creditor of the receipt or recovery;
	 
	 	(b)	 	hold any Junior Debt Recoveries up to the aggregate of all amounts which
may be or become payable as Senior Debt, received by it on trust for the Senior
Creditor; and
	 
	 	(c)	 	on demand by the Senior Creditor pay an amount equal to any Junior Debt
Recoveries received by it (or, where the receipt or recovery is by way of discharge
by set-off, an equivalent amount) up to the aggregate of all amounts which may be or
become payable as Senior Debt, to the Senior Creditor for application in or towards
the Senior Debt in accordance with the Senior Finance Documents.






	5.2	 	Non-creation of charge






Nothing in this Clause 5 is intended to or shall create a charge or other Security.




	6.	 	SUBORDINATION ON INSOLVENCY






	6.1	 	Subordination events






Until the Senior Debt is Discharged, if:




	 	(a)	 	any order is made or resolution passed for the suspension of payments, a
moratorium of any indebtedness, winding-up, dissolution, administration or





					
	 	 	 	 	 
	 
	A08005565
	 	7
	 	 






 









 







reorganisation (by way of voluntary arrangement, scheme of arrangement or
otherwise) of the Borrower; or




	 	(b)	 	the Borrower enters into any composition, assignment or arrangement with
its creditors generally; or
	 
	 	(c)	 	any liquidator, receiver, administrator, administrative receiver,
compulsory manager or other similar officer is appointed in respect of the Borrower
or any of its assets: or
	 
	 	(d)	 	any Security over any assets of the Borrower is enforced; or
	 
	 	(e)	 	any analogous event occurs in any jurisdiction,






this Clause 6 shall apply.




	6.2	 	Filing of claims






	(a)	 	In any of the circumstances mentioned in Clause 6.1 (Subordination events), until the
Senior Debt is Discharged, the Senior Creditor may, and is hereby irrevocably authorised on
behalf of the Junior Creditor to:






	 	(i)	 	demand, claim, enforce and prove for the Junior Debt;
	 
	 	(ii)	 	file claims and proofs, give receipts and take any proceedings in respect
of filing such claims or proofs and do anything which the Senior Creditor considers
necessary or desirable to recover the Junior Debt; and
	 
	 	(iii)	 	receive all distributions of the Junior Debt for application in or towards
the Senior Debt.






	(b)	 	If and to the extent that the Senior Creditor is not entitled, or elects not, to take any
of the action mentioned in paragraph (a) above, the Junior Creditor will do so promptly on
request by the Senior Creditor.






	6.3	 	Distributions






	(a)	 	In any of the circumstances mentioned in Clause 6.1 (Subordination events), until the
Senior Debt is Discharged, the Junior Creditor will:






	 	(i)	 	hold all Junior Debt Recoveries up to the aggregate of all amounts which
may he or become payable as Senior Debt, in cash or in kind received by it in
respect of the Junior Debt on trust for the Senior Creditor;
	 
	 	(ii)	 	on demand by the Senior Creditor, pay an amount equal to any Junior Debt
Recoveries received by it (or, where the receipt or recovery is by way of discharge
by set-off, an equivalent amount), up to the aggregate of all amounts which may be
or become payable as Senior Debt, to the Senior Creditor for application in or
towards the Senior Debt in accordance with the Senior Finance Documents;





					
	 	 	 	 	 
	 
	A08005565
	 	8
	 	 






 









 







	 	(iii)	 	promptly direct the trustee in bankruptcy, liquidator, assignee or other
person distributing the assets of the Borrower or their proceeds to pay
distributions in respect of the Junior Debt directly to the Senior Creditor; and
	 
	 	(iv)	 	promptly use its reasonable efforts to undertake any action requested by
the Senior Creditor to give effect to this Clause 6.3.






	(b)	 	Nothing in this Clause 6 is intended to or shall create a charge or other Security.






	6.4	 	Voting






	(a)	 	In any of the circumstances mentioned in Clause 6.1 (Subordination events), until the
Senior Debt is Discharged:






	 	(i)	 	the Senior Creditor may, and is hereby irrevocably authorised on behalf of
the Junior Creditor to, exercise all powers of convening meetings, voting and
representation in respect of the Junior Debt; and
	 
	 	(ii)	 	the Junior Creditor shall promptly execute and/or deliver to the Senior
Creditor such forms of proxy and representation as it may require to facilitate any
such action.






	(b)	 	If and to the extent that the Senior Creditor is not entitled, or elects not, to exercise a
power under paragraph (a) above, the Junior Creditor will:






	 	(i)	 	exercise that power as the Senior Creditor directs; and
	 
	 	(ii)	 	not exercise that power so as to impair the ranking and/or subordination
contemplated by this Agreement.






	(c)	 	Nothing in this Clause 6.4 entitles the Senior Creditor to exercise or require any Junior
Creditor to exercise a power of voting or representation to waive, reduce, discharge, extend
the due date for repayment of or reschedule any Junior Debt.






	7.	 	TREATMENT OF JUNIOR DEBT RECOVERIES






	7.1	 	Realisation






If the Senior Creditor receives any Junior Debt Recoveries otherwise
than in cash from the Junior Creditor or any other source, it may deal
with and/or apply such Junior Debt Recoveries as it sees fit and in
accordance with the Senior Finance Documents. The Senior Debt shall
not be reduced by such Junior Debt Recoveries until and except to the
extent that any net realisation proceeds are applied towards the
balance of the Senior Debt.




	7.2	 	Transfer of distributions






The Junior Creditor shall, at its own expense, do all such things as
the Senior Creditor may require as being necessary or desirable to
transfer to the Senior Creditor any Junior Debt Recoveries (or where
the receipt of recovery is by way of set-off, an equivalent amount)



					
	 	 	 	 	 
	 
	A08005565
	 	9
	 	 






 









 







which must be turned over to the Senior Creditor or held on trust for
the Senior Creditor in accordance with any provision of this
Agreement, including endorsements and execution of formal transfers,
and will pay all costs and expenses (including Taxes and legal fees)
incurred by that Junior Creditor and the Senior Creditor in connection
with such transfer.




	8.	 	ENFORCEMENT BY JUNIOR CREDITOR






	 	 	Until the Senior Debt is Discharged, except with the prior written consent of the Senior
Creditor, the Junior Creditor will not, in relation to any Junior Debt, take any action
of any kind to:






	8.1	 	No acceleration






	 	 	Demand payment, declare prematurely due or payable or otherwise seek to accelerate payment of or place on demand all or any
Junior Debt.
	 
	8.2	 	No attachment
	 
	 	 	Enforce any Junior Debt by way of attachment, set-off, execution or otherwise.
	 
	8.3	 	No recovery
	 
	 	 	Recover all or any of the Junior Debt (including by exercising any set-off, save as required by law).
	 
	8.4	 	No enforcement
	 
	 	 	Exercise or enforce any right against the Borrower or any other right under any other document, agreement or instrument in
relation to (or given in support of) all or any of the Junior Debt.
	 
	8.5	 	No Insolvency Proceedings
	 
	 	 	Save as permitted by Clause 6.2 (Filing of claims), petition for (or take any other steps which may lead to):






	 	(a)	 	the suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution, administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of the Group;
	 
	 	(b)	 	a composition, compromise, assignment or arrangement with any creditor of
any member of the Group;
	 
	 	(c)	 	the appointment of a liquidator, receiver, administrative receiver,
administrator, compulsory manager or other similar officer n respect of the Group or
any of its assets; or
	 
	 	(d)	 	enforcement of any Security over any assets of the Group,






or any analogous procedure or step in any jurisdiction.



					
	 	 	 	 	 
	 
	A08005565
	 	10
	 	 






 









 







	8.6	 	No legal proceedings
	 
	 	 	Start any legal proceedings against the Borrower.
	 
	9.	 	CONSENTS
	 
	9.1	 	No objection
	 
	 	 	No Junior Creditor shall have any remedy against the Borrower or the
Senior Creditor by reason of:






	 	(a)	 	the entry by any of them into any Senior Finance Document, or any other
agreement between the Senior Creditor and the Borrower;
	 
	 	(b)	 	any waiver or consent; or
	 
	 	(c)	 	any requirement or condition imposed by or on behalf of the Senior Creditor
on the Borrower under any Senior Finance Document, or such other agreement,






which breaches or causes an event of default or potential event of default (however
described) under any Junior Finance Document. The Junior Creditor may not object to any
such matter by reason of any provision of any Junior Finance Document.




	9.2	 	Waivers
	 
	 	 	Any waiver or consent by or on behalf of the Senior Creditor under any
Senior Finance Document (including any waiver of any breach or default
or condition precedent, and any consent to any extension of
availability of the Senior Debt) will be deemed also to have been
given by the Junior Creditor (on the same terms and conditions, with
appropriate changes) if any transaction or circumstance would, in the
absence of that waiver or consent by the Junior Creditor, violate or
contravene any Junior Finance Document or constitute an event of
default or potential event of default (however described) under any
Junior Finance Document or lead to unavailability of any Junior Debt.
	 
	10.	 	INFORMATION
	 
	10.1	 	Defaults
	 
	 	 	The Junior Creditor shall, promptly upon becoming aware, notify the
Senior Creditor of the occurrence of any event of default or
potential event of default (however described) under or breach of any
Junior Finance Document to which it is party.
	 
	10.2	 	Junior Debt






	 	(a)	 	The Junior Creditor shall, on written request by the Senior Creditor from
time to time, notify the Senior Creditor in writing of details of the amount of
outstanding Junior Debt owed to it.
	 
	 	(b)	 	The Junior Creditor shall give the Senior Creditor copies of all Junior
Finance Documents to which it is party as soon as entered into.





					
	 	 	 	 	 
	 
	A08005565
	 	11
	 	 






 









 







	11.	 	PROTECTION OF SUBORDINATION
	 
	11.1	 	Continuing subordination
	 
	 	 	The subordination provisions in this Agreement shall remain in full
force and effect by way of continuing subordination and extend to the
ultimate balance of the Senior Debt, regardless of any intermediate
payment or discharge of the Senior Debt in whole or in part.
	 
	11.2	 	Waiver of defences
	 
	 	 	The subordination in this Agreement and the obligations of the Junior
Creditor will not be affected by an act, omission, matter or thing
which, but for this Clause 11, would reduce, release or prejudice the
subordination or any of its obligations in whole or in part, (without
limitation and whether or not known to the Junior Creditor or the
Borrower or any other person) including:






	 	(a)	 	any time, waiver or consent granted to, or composition with, the Borrower
or other person;
	 
	 	(b)	 	the release of the Borrower or any other person under the terms of any
composition or arrangement with any creditor of the Borrower or any other person;
	 
	 	(c)	 	the taking, variation, compromise, exchange, renewal or release of, or
refusal or neglect to perfect, take up or enforce, any rights against, or security
over assets of, any person or any non-presentation or non-observance of any
formality or other requirement in respect of any instrument or any failure to
realise the full value of any security;
	 
	 	(d)	 	any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of the Borrower or any other person;
	 
	 	(e)	 	any amendment, novation, supplement, extension, restatement (however
fundamental and whether or not more onerous) or replacement of any Finance Document
or any other document or security including any change in the purpose of, any
extension of or any increase in any facility or the addition of any new facility
under any Finance Document or other document or security;
	 
	 	(f)	 	any unenforceability, illegality or invalidity of any obligation of any
person under any Finance Document or any other document or security; or
	 
	 	(g)	 	any insolvency or similar proceedings.






	11.3	 	Immediate recourse
	 
	 	 	The Junior Creditor waives any right it may have of first requiring
the Senior Creditor (or any trustee or agent on its behalf) to
proceed against or enforce any other right or Security or claim
payment from any person before claiming the benefit of this
Agreement. This waiver applies irrespective of any law or any
provision of a Junior Finance Document to the contrary.





					
	 	 	 	 	 
	 
	A08005565
	 	12
	 	 






 









 







	11.4	 	Appropriations
	 
	 	 	Until the Senior Debt is Discharged, the Senior Creditor (or any
trustee or agent on its behalf) may:
	 
	(a)	 	refrain from applying or enforcing any Junior Debt Recoveries or other moneys, Security or
rights held or received by the Senior Creditor (or any trustee or agent on its behalf) in
respect of those amounts, or apply and enforce the same in such manner and order as it sees
fit (whether against those amounts or otherwise) and the Junior Creditor shall not be
entitled to the benefit of the same; and
	 
	(b)	 	hold in an interest-bearing suspense account any Junior Debt Recoveries or other moneys
received from the Junior Creditor or on account of the Junior Creditor’s liability under
this Agreement.
	 
	11.5	 	Deferral of Junior Creditor’s rights
	 
	 	 	Until the Senior Debt is Discharged and unless the Senior Creditor
otherwise directs, the Junior Creditor will not exercise any rights
which it may have by reason of performance by it of its obligations
under this Agreement or the Finance Documents:






	 	(a)	 	to be indemnified by the Borrower;
	 
	 	(b)	 	to claim any contribution from any guarantor of the Borrower’s obligations
under the Senior Finance Documents; and/or
	 
	 	(c)	 	to take the benefit (in whole or in part and whether by way of subrogation
or otherwise) of any rights of the Senior Creditor under the Senior Finance
Documents or of any other guarantee or security taken pursuant to, or in connection
with, the Senior Finance Documents by the Senior Creditor.






	11.6	 	Discharge
	 
	 	 	The Borrower hereby irrevocably waives any right to appropriate any
payments to, or other sum received, recovered or held by, the Senior
Creditor in or towards discharge of a particular part of the Senior
Debt and agrees that the Senior Creditor shall have the exclusive
right to appropriate any such payment or other sum in accordance with
this Agreement.
	 
	12.	 	NO RIGHTS IN FAVOUR OF JUNIOR CREDITOR OR BORROWER
	 
	12.1	 	Preservation of Junior Debt
	 
	(a)	 	Notwithstanding any term of this Agreement postponing, subordinating or preventing the
payment of all or any part of the Junior Debt, the relevant Junior Debt shall, as between
the Borrower and the Junior Creditor, be deemed to remain owing or due and payable (and
interest, default interest or indemnity payments shall continue to accrue) in accordance
with the Junior Finance Documents.





					
	 	 	 	 	 
	 
	A08005565
	 	13
	 	 






 









 







	(b)	 	If the Junior Creditor is obliged to pay any Junior Debt Recoveries to the Senior Creditor
in accordance with Clause 5 (Turnover of Payments) or Clause 6 (Subordination on
insolvency), as between the Junior Creditor and the Borrower, and subject to Clause 11.5
(Deferral of Junior Creditor’s rights):






	 	(i)	 	the Borrower shall indemnify the Junior Creditor (to the extent of its
liability for the relevant amount so paid) for any costs, liabilities and expenses
incurred by it as a result of it having to make that payment; and
	 
	 	(ii)	 	the Junior Debt will be deemed not to have been reduced or discharged in
any way or to any extent by the relevant payment, distribution, proceeds or other
discharge.






	12.2	 	No rights
	 
	 	 	Neither the Borrower nor the Junior Creditor shall have any rights
under this Agreement. None of the undertakings in this Agreement by
the Senior Creditor are given to or for the benefit of the Borrower
or the Junior Creditor.
	 
	12.3	 	No liability
	 
	 	 	The Senior Creditor will not be liable to the Junior Creditor for:






	 	(a)	 	the manner of exercise or any non-exercise of its rights, remedies, powers,
authorities or discretions under this Agreement; or
	 
	 	(b)	 	any failure to collect or preserve any Junior Debt or delay in doing so.






	13.	 	POWER OF ATTORNEY
	 
	13.1	 	Appointment
	 
	 	 	The Junior Creditor by way of security irrevocably appoints the
Senior Creditor as its attorney (with full power of substitution), on
its behalf and in its name or otherwise, at such time until the
Senior Debt is Discharged and in such manner as the attorney thinks
fit to do anything which it:






	 	(a)	 	has authorized the Senior Creditor to do under this Agreement; or
	 
	 	(b)	 	is obliged to do but has not done under this Agreement within 10 Business
Days after receiving notice from the Senior Creditor requiring it to do so.






	13.2	 	Ratification
	 
	 	 	The Junior Creditor ratifies and confirms and agrees to ratify and confirm whatever any such attorney shall do in the
exercise or purported exercise of the power of attorney granted by it in this Clause 13.
	 
	13.3	 	Delegation
	 
	 	 	The Senior Creditor may delegate the power of attorney in Clause 13.1 (Appointment).





					
	 	 	 	 	 
	 
	A08005565
	 	14
	 	 






 









 







	14.	 	CHANGES TO THE PARTIES
	 
	14.1	 	Borrower
	 
	 	 	The Borrower may not assign or transfer any or all of its rights (if
any) or obligations under this Agreement.
	 
	14.2	 	Assignments and transfers by Junior Creditor
	 
	 	 	The Junior Creditor shall at not any time before the Senior Debt is
Discharged assign any of its rights or transfer any of its rights or
obligations under, or declare or create any trust of any of its
rights, title, interest or benefits under, this Agreement or any
Junior Finance Document (including any Junior Debt Recoveries owing
to it).
	 
	14.3	 	New junior creditors
	 
	(a)	 	Notwithstanding any provision herein to the contrary, the Borrower shall not incur any
further indebtedness to any other person (a “Proposed New Junior Creditor’) unless, and the
Junior Creditor and the Borrower shall procure that:






	 	(i)	 	The Proposed New Junior Creditor accedes to this Agreement and assumes the
same rights and obligations as the Junior Creditor hereunder; and
	 
	 	(ii)	 	that person delivers to the Senior Creditor a duly completed and signed
Accession Deed.






	(b)	 	Each Party irrevocably authorises the Senior Creditor to execute on its behalf any
Accession Deed which has been duly completed and signed on behalf of that person.
	 
	14.4	 	Notification by Senior Creditor
	 
	 	 	The Senior Creditor shall notify the Parties promptly of the receipt
and execution by it on their behalf of any Accession Deed.
	 
	14.5	 	Memorandum on documents
	 
	 	 	The Junior Creditor will ensure that a memorandum of this Agreement
will be endorsed on each Junior Finance Document to which it is
party.
	 
	15.	 	COSTS AND EXPENSES
	 
	15.1	 	Transaction expenses
	 
	 	 	The Borrower shall promptly on demand pay the Senior Creditor the
amount of all costs and expenses (including legal fees) reasonably
incurred by the Senior Creditor in connection with the negotiation,
preparation, printing and execution of:






	 	(a)	 	this Agreement and any other documents referred to in this Agreement; and
	 
	 	(b)	 	any amendment of, supplement to or waiver, consent or release in relation
to, this Agreement.





					
	 	 	 	 	 
	 
	A08005565
	 	15
	 	 






 









 







	15.2	 	Enforcement costs
	 
	 	 	The Borrower and the Junior Creditor shall, within three Business
Days of demand, pay to the Senior Creditor the amount of all costs
and expenses (including Taxes and legal fees) incurred by the Senior
Creditor in connection with the enforcement, or the preservation, of
any rights against the Borrower or Junior Creditor under this
Agreement.
	 
	15.3	 	Stamp taxes
	 
	 	 	The Borrower shall pay and, within three Business Days of demand,
indemnify the Senior Creditor against any cost, loss or liability the
Senior Creditor incurs in relation to all stamp duty, registration
and other similar Taxes payable in respect of this Agreement.
	 
	15.4	 	Set-off
	 
	 	 	The Senior Creditor may set off any matured obligation due from the
Junior Creditor under this Agreement (to the extent beneficially
owned by the Senior Creditor) against any matured obligation owed by
the Senior Creditor to the Junior Creditor, regardless of the place
of payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Senior Creditor may
convert either obligation at a market rate of exchange in its usual
course of business for the purpose of the set-off.
	 
	16.	 	RIGHTS, AMENDMENTS, WAIVERS AND DETERMINATIONS
	 
	16.1	 	Amendments and waivers
	 
	 	 	Any term of this Agreement may be amended or waived only if with the
written consent of the Junior Creditor, the Senior Creditor and the
Borrower.
	 
	16.2	 	Accounts
	 
	 	 	In any litigation or arbitration proceedings arising out of or in
connection with this Agreement or any Finance Document, the entries
made in the accounts maintained by the Senior Creditor and Junior
Creditor are prima facie evidence of the matters to which they
relate.
	 
	16.3	 	Certificates and Determinations
	 
	 	 	Any certification or determination by the Senior Creditor of a rate
or amount under the Senior Finance Documents for the purposes of this
Agreement is, in the absence of manifest error, conclusive evidence
of the matters to which it relates.
	 
	17.	 	NOTICES
	 
	17.1	 	Communications in writing
	 
	 	 	Any communication or document to be made or delivered under or in
connection with this Agreement shall be made in writing and, unless
otherwise stated, may be made or delivered by fax or letter.





					
	 	 	 	 	 
	 
	A08005565
	 	16
	 	 






 









 







	17.2	 	Addresses
	 
	 	 	The address and fax number (and the department or officer, if any,
for whose attention the communication is to be made) of each Party
for any communication or document to be made or delivered under or in
connection with this Agreement is:






	 	(a)	 	in the case of the Borrower and the Senior Creditor, that identified in
accordance with the terms of the Senior Facility Agreement; and
	 
	 	(b)	 	in the case of the Junior Creditor, that notified in writing to the Senior
Creditor on or prior to the date hereof,






or any substitute address, fax number or department or officer as the Parties may notify
to each other by not less than five Business Days’ notice.




	17.3	 	Delivery
	 
	 	 	Any communication or document made or delivered by one person to
another under or in connection with this Agreement will only be
effective:






	 	(i)	 	if by way of fax, when received in legible form; or
	 
	 	(ii)	 	if by way of letter, when it has been left at the relevant address or
[five] Business Days after being deposited in the post postage prepaid in an
envelope addressed to it at that address,






and, if a particular department or officer is specified as part of its address details
provided under Clause 17.2 (Addresses), if addressed to that department or officer.




	17.4	 	English language
	 
	(a)	 	Any notice given under or in connection with this Agreement must be in English.
	 
	(b)	 	All other documents provided under or in connection with this Agreement must be:






	 	(i)	 	in English; or
	 
	 	(ii)	 	if not in English, and if so required by the Senior Creditor, accompanied
by a certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.






	18.	 	PARTIAL INVALIDITY
	 
	 	 	If, at any time, any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way
be affected or impaired.





					
	 	 	 	 	 
	 
	A08005565
	 	17
	 	 






 









 







	19.	 	REMEDIES AND WAIVERS
	 
	 	 	No failure to exercise, nor any delay in exercising, on the part of the Senior Creditor
or Junior Creditor any right or remedy under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right or remedy prevent any further or
other exercise or the exercise of any other right or remedy. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any rights or remedies
provided by law.
	 
	20.	 	COUNTERPARTS
	 
	 	 	This Agreement may be executed in any number of counterparts, and this has the same
effect as if the signatures on the counterparts were on a single copy of this Agreement.
	 
	21.	 	PERPETUITY PERIOD
	 
	 	 	The perpetuity period for the trusts created by this Agreement shall be 80 years from the
date of this Agreement.
	 
	22.	 	GOVERNING LAW
	 
	 	 	This Agreement is governed by English law.
	 
	23.	 	ENFORCEMENT
	 
	23.1	 	Jurisdiction
	 
	(a)	 	The courts of England have exclusive jurisdiction to settle any dispute arising out of or
in connection with this Agreement (including a dispute regarding the existence, validity or
termination of this Agreement) (a “Dispute”).
	 
	(b)	 	The Parties agree that the courts of England are the most appropriate and convenient courts
to settle Disputes and accordingly no Party will argue to the contrary.
	 
	(c)	 	This Clause 23.1 is for the benefit of only the Senior Creditor until the Senior Debt is
Discharged. As a result, the Senior Creditor, until the Senior Debt is Discharged, shall not
be prevented from taking proceedings relating to a Dispute in any other courts with
jurisdiction. To the extent allowed by law, the Senior Creditor, until the Senior Debt is
Discharged, may take concurrent proceedings in any number of jurisdictions.





					
	 	 	 	 	 
	 
	A08005565
	 	18
	 	 






 









 






SCHEDULE 1

Form of Accession Deed




	 	 	 
	To:

	 	[               ] as Senior Creditor
	 
	 	 
	From:

	 	[Proposed New Junior Creditor]
	 
	 	 
	Dated:
	 	 





Dear Sirs




Cascal Services Limited — Subordination Agreement

dated [•] June 2007 (the “Agreement”)





	1.	 	We refer to the Agreement. This is an Accession Deed. Terms defined in the Agreement have
the same meaning in this Accession Deed unless given a different meaning in this Accession
Deed.
	 
	2.	 	[Proposed New Junior Creditor] agrees to be bound by the terms of the Agreement.
	 
	3.	 	[Proposed New Junior Creditor] is a company duly incorporated under the law of [name of
relevant jurisdiction].
	 
	4.	 	[Proposed New Junior Creditor’s] notice and administrative details are as follows:
	 
	 	 	Address:
	 
	 	 	Fax No:
	 
	 	 	Attention:
	 
	5.	 	This Accession Deed is governed by English law.




This Accession Deed has been delivered as a deed on the date stated at the beginning of this
Accession Deed.





	 	 	By: [Proposed New Junior Creditor




This Accession Deed is accepted by the Senior Creditor.



The Royal Bank of Scotland Plc




	 	 	 
	By:

	 	Date:






					
	 	 	 	 	 
	 
	A08005565
	 	19
	 	 






 









 






	 	 	 	 	 
	The Borrower
	 	 	 	 
	 
	 	 	 	 
	SIGNED as a DEED by CASCAL 

SERVICES LIMITED acting by

	 	Signature of Director
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	David
George Sayers a Director and the

Secretary

	 	/s/ David George Sayers 

	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	Signature of Secretary	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ David George Sayers

	 	 






					
	 	 	 	 	 
	 
	A08005565
	 	20
	 	 






 









 






	 	 	 	 	 
	The Junior Creditor

	 	 	 	 
	 
	 	 	 	 
	SIGNED as a DEED by BIWATER 

CAPITAL PLC acting by

	 	Signature of Director	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Steven
John Hollinshead a Director and

David George Sayers the Secretary

	 	/s/ John Hollinshead

	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	Signature of Secretary	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ David George Sayers

	 	 






					
	 	 	 	 	 
	 
	A08005565
	 	21
	 	 






 









 






	 	 	 	 	 
	The Senior Creditor
	 	 	 	 
	 
	 	 	 	 
	SIGNED
by

for and on behalf of THE ROYAL BANK

OF SCOTLAND PLC in the presence of:

	 	Signature of authorized signaturoy
	 	 
	 
	 	 	 	 
	 

	 	/s/ signed
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	Fax No:
	 	 	 	 
	 
	 	 	 	 
	Attention:
	 	 	 	 






					
	 	 	 	 	 
	 
	A08005565
	 	22