Document:

Ex-10.7 Equitable Charge of Shares dated August 4,

 

 

 

EXHIBIT 10.7

The
4th day of August, 2006

EQUITABLE CHARGE OF SHARES

(Collateral to a Debenture of even date and

entered into between the Borrower and the Trustee)

between

CONSOLIDATED WATER CO. LTD.

as Borrower

and

DEXTRA BANK & TRUST CO. LTD.

as Trustee

with respect to the shares in

CAYMAN WATER COMPANY LIMITED

(the “Company”)

 

 

 

 

THIS COLLATERAL CHARGE (“CHARGE”) is made on the ___day of July, 2006 between the following
parties:

	(1)	 	CONSOLIDATED WATER CO. LTD., a company incorporated in the Cayman Islands, with its
registered office located at P.O. Box 1114 GT, Trafalgar Place, George Town, Grand Cayman,
Cayman Islands, (the “Borrower”); and

	(2)	 	DEXTRA BANK & TRUST CO. LTD. of Sagicor House, 198 North Church Street, George Town,
Grand Cayman, Cayman Islands (the “Trustee”).

RECITALS

	 	A.	 	The Borrower has entered into a trust deed of even date herewith (the “Trust Deed”)
with the Trustee pursuant to which, inter alia, the Borrower agreed to secure the repayment
of certain bonds (the “Bonds”) issued by it by granting to the Trustee a debenture and
other security.
	 
	 	B.	 	The Company is a one hundred percent (100%) wholly owned subsidiary of the Borrower.
To better secure the repayment of the Bonds by the Borrower the Trustee requires that the
Borrower execute this Charge and to grant certain other security to the Trustee.
	 
	 	C.	 	The Borrower and the Trustee intend this Charge to take effect as a deed.
	 
	 	D.	 	This Collateral Charge is intended to be collateral to a Debenture of even date
entered into between the Borrower and the Trustee and shall be stamped as such.

1. INTERPRETATION

1.1 Definitions

	(a)	 	Capitalized terms used in this Charge without definition have the meanings specified in the
Trust Deed.

	(b)	 	In addition the following terms in this Charge have the meanings given to them in this
Clause.

“Charged Shares” means any shares from time to time forming part of the Secured Property.

“Financing Documents” collectively, the Trust Deed and any security documents issued pursuant or
collateral thereto.

“Initially Charged Shares” means all the shares in the Company of which the Borrower is the
beneficial or registered owner on the date of this Charge, as described and identified in that
Schedule.

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“Obligations” shall mean, collectively, all loans, advances, debts, liabilities, and
obligations, howsoever arising, owed by the Borrower under a Financing Document or otherwise to the
Trustee.

“Receiver” means an administrative receiver, a receiver and manager or any other receiver (whether
appointed pursuant to this Charge, pursuant to any statute, by a court or otherwise) of the Secured
Property or any part of it.

“Secured Obligations” means all present and future Obligations.

“Secured Property” means the Initially Charged Shares and any other shares in the Company of which
the Borrower is or becomes the beneficial or registered owner together with all dividends, stocks,
shares, warrants, securities, rights, monies or other property accruing on or derived from such
shares.

“Security” means the security created by this Charge.

“Security Period” means the period beginning on the date of
this Charge and ending on the date upon which all Secured
Obligations have been unconditionally and irrevocably paid
and discharged in full.
1.2 Interpretation

The principles of interpretation set forth in Section 1 of the Trust Deed shall apply to this
Charge.

1.3 Continuing Events of Default

An event which constitutes an Event of Default shall be regarded as continuing if (a) the
circumstances constituting such event continue and (b) the Trustee has not waived such of its
rights under the Financing Documents as arise as a result of the occurrence of that event.

1.4 Certificates

A certificate of the Trustee as to the amount of any Secured Obligation owed to it shall be prima
facie evidence of the existence and amount of such Secured Obligation.

1.5 Statutes

Any reference in this Charge to a statute or statutory provision shall, unless the contrary is
indicated, be construed as a reference to such statute or statutory provision as the same shall
have been or may be amended or re-enacted.

1.6 Nominees

If the Trustee causes or requires the Charged Shares to be registered in the name of a nominee for
the Trustee, any reference in this Charge to the Trustee shall, if the context so permits or
requires, be construed as a reference to the Trustee and such nominee.

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1.7 Clause and Schedule Headings

Clause and Schedule headings are for ease of reference only and shall not affect the construction
of this Charge.

2. EQUITABLE CHARGE

2.1 Charge

The Borrower hereby charges the Secured Property to the Trustee to hold the same on trust as
security for the payment and discharge of the Secured Obligations.

2.2 Further Shares

Upon its becoming the beneficial or registered owner of any Charged Shares (other than the
Initially Charged Shares) the Borrower shall ensure that such Charged Shares (unless already so
registered) are registered in the name of the Borrower and shall promptly notify the Trustee of
such circumstances.

The Borrower shall pay when due all calls or other requests for payments due in respect of any of
the Secured Property, but if the Borrower fails to make any such payment the Trustee may (but shall
not be obliged to) make such payment on behalf of the Borrower and if the Trustee does so the
Borrower shall promptly on demand of the Trustee pay to the Trustee an amount equal to such
payment.

3. DIVIDENDS, VOTING AND INFORMATION

3.1 Security not Enforceable

Unless and until the Security has become enforceable pursuant to Clause 8.1 (Security Enforceable),
the Borrower shall continue to be entitled to:

	(a)	 	receive and retain all dividends, interest and other monies arising from the Secured
Property; and
	 
	(b)	 	exercise all voting rights in relation to the Charged Shares;

provided that the Borrower shall not exercise such voting rights, or otherwise permit or agree to
(i) any variation of the rights attaching to or conferred by the Secured Property or any part of
it, (ii) any increase in the issued share capital of the Company in any manner which, in the
opinion of the Trustee, would, or would be reasonably likely to, impair the value of, or prejudice
the ability of the Trustee to realise, the Security or (iii) in violation of any provision of the
Financing Documents.

3.2 Security Enforceable

At any time after the Security has become enforceable pursuant to Clause 8.1, the Trustee shall be
entitled to cause the Charged Shares to be registered in its name and may at its discretion (in

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the name of the Borrower or otherwise and without any further consent or authority from the
Borrower):

	(a)	 	exercise or refrain from exercising any voting rights in respect of the Charged Shares and
revoke, or cause to be revoked, any proxies given pursuant to Clause 3.1 (Security not
Enforceable);

	(b)	 	apply all dividends, interest and other monies arising from the Secured Property as if they
were proceeds of sale under this Charge;

	(c)	 	exercise or refrain from exercising the rights of a legal owner of the Secured Property,
including the right, in relation to any company whose shares or other securities are included
in the Secured Property, to concur or participate in:

	 	(i)	 	the reconstruction, amalgamation, sale or other disposal of such company or any
of its assets or undertaking (including the exchange, conversion or
reissue of any shares or securities as a consequence thereof),
	 
	 	(ii)	 	the realisation, modification or variation of any rights or liabilities
attaching to any such shares or securities, and
	 
	 	(iii)	 	the exercise, renunciation or assignment of any right to subscribe for any
such shares or securities,

	 	 	 	in each case in such manner and on such terms as the Trustee may think fit, and all rights
resulting from any such action shall form part of the Secured Property.

3.3 Information

If the Borrower receives a balance sheet, profit and loss account or any notice, report, statement
or circular sent or delivered by the issuer of any Charged Share to its members, it shall promptly
deliver a copy to the Trustee.

4. CONTINUING SECURITY

4.1 Continuing and Independent Security

This Charge shall constitute and be continuing security which shall not be released or discharged
by any intermediate payment or settlement of any but not all of the Secured Obligations, shall
continue in full force and effect until the end of the Security Period and is in addition to and
independent of, and shall not prejudice or merge with, any other security (or any right of set-off)
which the Trustee may hold at any time for the Secured Obligations or any of them.

4.2 Avoidance of Payments

Where any release, discharge or other arrangement in respect of any Secured Obligation or any
Security that the Trustee may hold for such Secured Obligation is given or made in reliance on any
payment or other disposition which is avoided or must be repaid in an insolvency, liquidation

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or otherwise, and whether or not such Trustee has conceded or compromised any claim that any
such payment or other disposition will or should be avoided or repaid, this Charge and the Security
shall continue as if such release, discharge or other arrangement had not been given or made.

4.3 Immediate Recourse

The Trustee shall not be obliged before exercising any of the rights conferred on it by this Charge
or by law to seek to recover amounts due from the Borrower or to exercise or enforce any other
rights or security it may have or hold in respect of the Secured Obligations.

4.4 Waiver of Defences

Neither the obligations of the Borrower under this Charge nor the Security Documents and the
rights, powers and remedies conferred on the Trustee by this Charge or by law shall be discharged,
impaired or otherwise affected by:

	(a)	 	the winding-up, dissolution, administration or re-organisation of the Borrower, the Company
or any other person or any change in the status, function, control or ownership of the
Borrower, the Company or any such person;

	(b)	 	any of the Secured Obligations or any other security held by the Trustee in respect thereof
being or becoming illegal, invalid, unenforceable or ineffective in any respect;

	(c)	 	any time or other indulgence being granted or agreed to with the Borrower, the Company or any
other person in respect of the Secured Obligations or any of them or in respect of any other
security held by the Trustee in respect thereof;

	(d)	 	any amendment to, or any variation, waiver or release of, the Secured Obligations or any of
them or any other security held by the Trustee in respect thereof;

	(e)	 	any total or partial failure to take or perfect any security proposed to be taken in respect
of the Secured Obligations or any of them;

	(f)	 	any total or partial failure to realise the value of, or any release, discharge, exchange or
substitution of, any other security held by the Trustee in respect of the Secured Obligations
or any of them; or

	(g)	 	any other act, event or omission which might operate to discharge, impair or otherwise affect
the obligations of the Borrower or the Company hereunder, the Security or any of the rights,
powers and remedies conferred on the Trustee by this Charge or by law.

4.5 No Competition

Any right which the Borrower or the Company may have (a) by way of contribution or indemnity in
relation to the Secured Obligations or (b) otherwise to claim or prove as a creditor of the Company
or any other person or its estate in competition whether a right of subrogation or otherwise with
the Trustee, shall be exercised by the Borrower and/or the Company only if and

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to the extent that the Trustee so requires and in such manner and upon such terms as the Trustee
may specify and the Borrower and/or the Company shall hold any moneys, rights or security held or
received by it as a result of the exercise of any such rights on trust for the Trustee for
application in accordance with the terms of this Charge as if such moneys, rights or security were
held or received by the Trustee under this Charge.

4.6 Appropriation

The Trustee shall not be obliged to apply any sums held or received by it in respect of the Secured
Obligations in or towards payment of the Secured Obligations and any such sum shall be held by or
paid to the Trustee for application pursuant to the terms of this Charge.

4.7 Subrogation

The Borrower shall have no right of subrogation in respect of the performance of any of its
obligations under this Agreement and the Charge until all of the Secured Obligations have been paid
in full.

5. REPRESENTATIONS AND WARRANTIES

The Borrower makes the representations and warranties set out in Clauses 5.1 (Status and Due
Authorisation) to 5.12 (No Security from the Company) and acknowledges that the Trustee has entered
into this Charge in reliance on those representations and warranties.

5.1 Status and Due Authorisation

It is a company duly incorporated with limited liability under the laws of the Cayman Islands with
power to enter into this Charge and to exercise its rights and perform its obligations under this
Charge and all corporate and other action required to authorise its execution of this Charge and
its performance of its obligations hereunder has been duly taken.

5.2 Binding Obligations

The obligations expressed to be assumed by it in this Charge are legal and valid obligations
binding on it in accordance with the terms of this Charge which constitutes a first priority fixed
charge over the Charged Shares subject to any general principles of law limiting its obligations
which are referred to in any legal opinion delivered pursuant to the Trust Deed or any amendment
thereto.

5.3 All Actions Taken

All acts, conditions and things required to be done, fulfilled and performed in order (a) to enable
it lawfully to enter into, exercise its rights under and perform and comply with the obligations
expressed to be assumed by it in this Charge, (b) to ensure that the obligations expressed to be
assumed by it in this Charge are legal, valid and binding and (c) to make this Charge admissible in
evidence in its jurisdiction of incorporation have been done, fulfilled and performed.

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5.4 No Deductions or Withholdings

It is not required by the laws of the Cayman Islands to make any deduction or withholding from any
payment it may make under this Charge.

5.5 No Filing or Stamp Taxes

Under the laws of its jurisdiction of incorporation, it is not necessary that this Charge be filed,
recorded or enrolled with any court or other authority in the Cayman Islands or that any ad valorem
stamp, registration or similar tax be paid on or in relation to this Charge.

5.6 No Winding-up

It has not taken any corporate action nor have any other steps been taken or legal proceedings been
started or (to the best of its knowledge and belief) threatened against it for its winding-up,
dissolution, administration or re-organisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or of any or all of its assets or
revenues.

5.7 No Adverse Interests

Subject only to the Security, no person other than the Borrower has any legal or beneficial
interest (or any right to claim any such interest) in the Secured Property and the Borrower has not
received notice of any such claim.

5.8 No Disposals

Save as contemplated in this Charge and by the InterCreditor Deed (one of the Financing Documents),
it has not transferred, mortgaged, charged or otherwise disposed of (or agreed to transfer,
mortgage, charge or otherwise dispose of), whether by way of security or otherwise, the benefit of
all or any of its right, title and interest in and to the Secured Property or any part of it.

5.9 No Conflicts

Its execution of this Charge and its exercise of its rights and performance of its obligations
hereunder do not and will not (a) conflict with the provisions of (i) any agreement, mortgage, bond
or other instrument or treaty to which it is a party or which is binding upon it or any of its
assets (other than the documents referred to in the InterCreditor Deed as the “Bank Security”),
(ii) its constitutive documents or any rules and regulations made thereunder or (iii) any
applicable law, regulation or official or judicial order or (b) cause any of the foregoing
representations to be untrue.

5.10 The Charged Shares

Each Charged Share is fully paid or credited as fully paid, no calls have been made in respect
thereof and remain unpaid and no calls can be made in respect of such Charged Share in the future.

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5.11 Choice of Law

In any proceedings taken in its jurisdiction of incorporation in relation to this Charge, the
choice of Cayman law as the governing law of this Charge and any judgment obtained in the Cayman
Islands will be recognised and enforced.

5.12 No Security from the Company

It has not requested or taken any security from the Company for any obligations or liabilities of
the Company to it.

5.13 Repetition

The representations and warranties set out in Clauses 5.1 (Status and Due Authorisation) to 5.12
(No Security from the Company):

	(a)	 	shall survive the execution of each Financing Document; and
	 
	(b)	 	are made on the date hereof and, save in respect of clauses 5.4 to 5.6, are deemed to be
applicable during the Security Period with reference to the facts and circumstances then
existing.

6. UNDERTAKINGS

6.1 Authorisations

The Borrower shall obtain, comply with the terms of and do all that is necessary to maintain in
full force and effect all authorisations, approvals, licences and consents required in or by the
laws and regulations of its jurisdiction of incorporation to enable it lawfully to enter into and
perform its obligations under this Charge and to ensure the legality, validity, enforceability or
admissibility in evidence in its jurisdiction of incorporation of this Charge.

6.2 No Action

The Borrower shall not take any action which would cause any of the representations made in Clause
5 (Representations and Warranties) to be untrue at any time during the Security Period.

6.3 Notification of Misrepresentation

The Borrower shall notify the Trustee of the occurrence of any event which results in or may
reasonably be expected to result in any of the representations made in Clause 5 (Representations
and Warranties) being untrue when made or when deemed to be repeated.

6.4 No Variation or Release

The Borrower shall not, without the prior written consent of the Trustee, purport to vary or revoke
any notice or instruction relating to this Charge which it has given or may later give to any
person.

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6.5 No Action to Jeopardise Security Constituted Hereby

The Borrower shall not do or fail to do or cause or permit another person to do or omit to do
anything which is liable to jeopardise the effectiveness or priority, in relation to the Security.

7. FURTHER ASSURANCE

The Borrower shall from time to time and at its own expense give all such assurances and do all
such things as the Trustee may require in order to enable the Trustee to perfect or protect the
security created or intended to be created by this Charge or to exercise any of the rights
conferred on it by this Charge or by law and to that intent the Borrower shall execute all such
instruments, deeds and agreements and give all such notices and directions as the Trustee may
require.

8. ENFORCEMENT OF SECURITY

8.1 Security Enforceable

The Security shall become immediately enforceable if an Event of Default has occurred and is
continuing as defined above in Clause 1.3.

8.2 Enforcement

At any time after the Security has become enforceable, the Trustee may in its absolute discretion
enforce all or any part of the Security and exercise any of the rights conferred on it by this
Charge or by law at such times and in such manner as it thinks fit.

8.3 Power of Sale

At any time after the Security has become enforceable pursuant to Clause 8.1 (Security
Enforceable), the Trustee may (without notice to the Borrower) sell or otherwise dispose of the
Secured Property or any part of it and shall be entitled to apply the proceeds of such sale or
other disposal in paying the costs of such sale or disposal and thereafter in or towards the
discharge of the Secured Obligations or otherwise as provided for in this Charge.

8.4 Registration of Shares

The Trustee shall be entitled at any time after the Security has become enforceable pursuant to
Clause 8.1 (Security Enforceable) to complete any stock transfer forms then held by the Trustee
pursuant to this Charge in the name of the Trustee and thereupon the Borrower shall do whatever the
Trustee requires in order to procure:

	(a)	 	The prompt registration of such transfer or transfers and the prompt issue of a new
certificate or certificates for the relevant Charged Shares in the name of the Trustee; and

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	(b)	 	Compliance by the Company with all requirements of the Land Holding Companies Share
Transfer Tax Law (2002 Revision), as the same may be amended from time to time, or any
legislation in substitution or in addition thereto and the Borrower and the Company shall
provide all assistance as may be needed or required by the Company to enable it to meet such
compliance whether financial or otherwise.

9. APPLICATION OF PROCEEDS

Any moneys held or received by the Trustee under or pursuant to this Charge shall be applied by the
Trustee in reduction of the amounts due to the Trustee under the terms of the Trust Deed as amended
from time to time.

10. POWER OF ATTORNEY

10.1 Appointment

By way of security for the performance of its obligations hereunder, the Borrower hereby
irrevocably appoints the Trustee, any Receiver of the Secured Property or any part of it and its
delegates and sub-delegates to be its attorney acting severally (or jointly with any other such
attorney or attorneys) and on its behalf and in its name or otherwise to do any and every thing
which the Borrower is obliged to do under the terms of this Charge or which such attorney considers
necessary in order to enable the Trustee or such attorney to exercise the rights conferred on it by
this Charge or by law.

10.2 Ratification

The Borrower hereby ratifies and confirms and agrees to ratify and confirm whatever any attorney
appointed under this Charge shall do in its capacity as such.

11. RELEASE OF THE SECURITY

After the end of the Security Period, the Trustee shall, at the request and cost of the Borrower,
execute all such documents and do all such other things as may be required to release the Security,
in each case without recourse to or any representation or warranty by or from the Trustee.

12. COSTS AND EXPENSES

12.1 Transaction Costs

The Borrower agrees with the Trustee that it shall on demand of the Trustee reimburse the Trustee
on a full indemnity basis all costs and expenses (including legal fees), incurred by, or any
remuneration payable to the Trustee in connection with the preparation, negotiation, execution and
perfection of this Charge and the implementation of the arrangements contemplated herein.

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12.2 Stamp Tax

The Borrower shall pay any and all stamp, registration and other taxes to which this Charge or any
judgment given in connection herewith is or at any time may be subject and shall on demand
indemnify the Trustee against any liabilities, costs, claims and expenses (including legal fees)
resulting from any failure to pay or delay in paying any such tax.

12.3 Indemnity

The Borrower shall indemnify and hold harmless the Trustee from and against any and all costs,
claims losses, expenses (including legal fees) and liabilities, which the Trustee may incur as a
result of the occurrence of any Event of Default, the enforcement of the Security or the exercise
or enforcement by the Trustee of any of the rights conferred on it by this Charge or by law unless
incurred by the Trustee as a result of its own fraud, misconduct or negligence or the fraud,
negligence or misconduct of its delegates and sub-delegates.

13. NO WAIVER; REMEDIES CUMULATIVE

No failure or delay on the part of the Trustee in exercising any right, power or privilege
hereunder or under any other Financing Document and no course of dealing between the Borrower and
the Trustee shall operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Financing Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege hereunder or
thereunder. No notice to or demand on the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Trustee to take any other or further action in any circumstances without notice or
demand. All remedies, either under this Agreement or any other Financing Document or pursuant to
any applicable law or otherwise afforded to the Trustee shall be cumulative and not alternative.

14. ADDITIONAL PROVISIONS

14.1 Severability

Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and without affecting the validity or enforceability
of any provision in any other jurisdiction.

14.2 Currency Conversion

In order to apply any sum held or received by the Trustee in or towards payment of the Secured
Obligations, the Trustee may purchase an amount in another currency and the rate of exchange to be
used shall be that at which, at such time as it considers appropriate, the Trustee is able to
effect such purchase.

14.3 Judgment Currency

This is an international transaction in which the specification of Dollars and payment in Trinidad
and Tobago is of the essence, and the obligations of the Borrower under this Charge and under

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the other Financing Documents to make payment to (or for the account of) the Trustee in Dollars
shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed
in or converted into any other currency or in another place except to the extent that such tender
or recovery results in the effective receipt by the Trustee in Trinidad and Tobago of the full
amount of Dollars payable to the Trustee under this Charge.

	(a)	 	If any sum due from the Borrower under this Charge (a “Sum”), or any order, judgment or award
given or made in relation to a Sum, has to be converted from the currency (the “First
Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the
purpose of:

	 	(i)	 	making or filing a claim or proof against the Company or the Borrower;
	 
	 	(ii)	 	obtaining or enforcing an order, judgment or award in relation to any
litigation or arbitration proceedings,

	 	 	 	the Borrower shall as an independent obligation, within three (3) Business Days of demand,
indemnify the Trustee against any cost, loss or liability arising out of or as a result of
the conversion including any discrepancy between (A) the rate of exchange used to convert
that Sum from the First Currency into the Second Currency and (B) the rate or rates of
exchange available to the Trustee at the time of its receipt of that Sum.

	(b)	 	The Borrower waives any right it may have in any jurisdiction to pay any amount under this
Charge in a currency or currency unit other than that in which it is expressed to be payable.

14.4 Rights Cumulative

The rights and remedies provided by this Charge are cumulative and not exclusive of any rights or
remedies provided by law.

14.5 Mortgagee in Possession

Neither the Trustee nor any Receiver shall by reason of its taking any action permitted by this
Charge or its taking possession of the Secured Property or any part of it be liable to account as
mortgagee in possession or be liable for any loss on realisation or for any default or omission for
which a mortgagee in possession might be liable other than for its own fraud, negligence and
misconduct, or the fraud, negligence or misconduct of its delegates.

15. ASSIGNMENT

15.1 The Borrower’s Rights

The rights of the Borrower under this Charge are not assignable or transferable and the Borrower
agrees that it will not purport to assign all or any such rights.

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15.2 The Trustee’s Rights

The rights of the Trustee under this Charge are assignable in whole or in part and the Trustee may
assign all or any such rights without the consent of the Borrower. The Trustee shall provide
written notice to the Borrower of any such assignment.

16. NOTICES

	(a)	 	All notices, requests, approvals, consents and other communications provided for hereunder
shall be in writing (including, unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the Borrower by facsimile (i)
shall be promptly confirmed by a telephone call to the recipient at the number specified on
the applicable signature page hereof, and (ii) shall be followed promptly by a hard copy
original thereof by express courier) and faxed or delivered, to the address or facsimile
number specified for notices on the applicable signature page hereof or to such other address
as shall be designated by such party in a written notice to the other parties hereto.

	(b)	 	All such notices, requests, approvals, consents and communications (i) sent by express
courier will be effective upon delivery to or refusal to accept delivery by the addressee, and
(ii) transmitted by facsimile will be effective when sent and facsimile confirmation received.

	(c)	 	Both parties acknowledge and agree that any agreement of the one party to receive certain
notices by telephone and facsimile is solely for the convenience and at the request of the
other. The receiving party shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the sending party to give such notice and the
receiving party shall not have any liability to the sending party or other Person on account
of any action taken or not taken by the receiving party in reliance upon such telephonic or
facsimile notice.

	(d)	 	All notices, requests and other communications hereunder and under the other Financing
Documents shall be in the English language unless otherwise agreed by the parties hereto.

17. GOVERNING LAW AND JURISDICTION

THIS CHARGE IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE CAYMAN ISLANDS.

18. SUBMISSION

	(a)	 	For the exclusive benefit of the Trustee, the Borrower irrevocably agrees that the courts of
the Cayman Islands are to have jurisdiction to settle any claims or disputes arising under,
out of or in connection with this Charge (including without limitation any claim or dispute
relating to the validity, interpretation, performance, termination or enforcement of this
Charge) and that accordingly any suit, action or proceedings in that respect (together in
Clauses 19 and 20 referred to as “Proceedings”) may be brought in such courts.

	(b)	 	The Borrower irrevocably waives and agrees not to raise any objection which it may have now
or hereafter to the laying of the venue of any Proceedings in the courts of the
Cayman Islands and any claim that any such Proceedings have been brought in an inconvenient
or inappropriate forum.

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	(c)	 	The Borrower irrevocably agrees not to take Proceedings in any court of competent
jurisdiction other than the courts of the Cayman Islands, save with respect to any
counterclaim asserted by the Borrower in the course of proceedings previously commenced by the
Trustee. Nothing contained in this Clause 19 shall limit the right of the Trustee to take
Proceedings against the Borrower in any other court of competent jurisdiction, nor shall the
taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any
other jurisdiction, whether concurrently or not.

19. JUDGMENTS AND IMMUNITY

	(a)	 	The Borrower recognizes and acknowledges that this Charge constitutes a commercial
transaction and accordingly it acknowledges and agrees that it is not entitled to plead, and
pursuant to this Clause 20 hereby waives to the fullest extent permitted by law any right to
claim, sovereign immunity for any purpose whatsoever, including, but not limited to, any right
to plead sovereign immunity in respect of any Proceedings pursuant to this Charge.

	(b)	 	The Borrower consents generally, in respect of any Proceedings pursuant to this Charge for
the purpose of enforcing any order, judgment or award, to the giving of any relief or the
issuing of any process in connection with such order, judgment or award including, without
limitation, the making, enforcement or execution against any property of any order, judgment
or award and to the extent that the Borrower may be entitled in any jurisdiction to claim for
itself or its property immunity in respect of its obligations under this Charge from any suit,
execution, attachment (whether in aid of execution, before judgment or otherwise) or legal
process or to the extent that in any jurisdiction there may be attributed to itself or its
property such immunity, the Borrower agrees not to claim and hereby irrevocably waive such
immunity to the fullest extent permitted by the laws of such jurisdiction.

20. COUNTERPARTS AND EFFECTIVENESS

20.1 Counterparts

This Charge may be executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument.

20.2 Effectiveness

This Charge shall take effect and be delivered as a deed on the date on which it is stated to be
made.

-15-

 

21. AMENDMENT OR WAIVER

No provision of this Agreement may be amended, supplemented, modified or waived, except by written
instrument signed by each of the parties hereto.

IN WITNESS WHEREOF this Charge has been executed as a deed by the parties hereto and has been
delivered on date stated at the beginning of this Deed.

	 	 	 	 	 	 	 
	SIGNED by the Borrower in the

	 	 	)	 	 	CONSOLIDATED WATER CO. LTD.
	presence of

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Frederick W. McTaggart
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Donald Miller 
 

Witness

	 	 	)

)

)

)	 	 	Gerrard Pereira
 

	 
	 	 	 	 	 	 
	SIGNED by the Trustee in the

	 	 	)	 	 	DEXTRA BANK & TRUST CO. LTD.
	presence of

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Alex Wood
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Donald Miller 
 

Witness

	 	 	)

)

)

)	 	 	Alitsia Finlayson
 

By its execution of this Equitable Charge of Shares, CAYMAN WATER COMPANY LIMITED, hereby
acknowledges the terms and conditions hereof, and irrevocably undertakes that should the Trustee
exercise its rights under this Equitable Charge of Shares, Cayman Water Company Limited shall make
all reasonable efforts to ensure that Consolidated Water Co. Ltd. takes no action, or commits no
failure to take any required action, which would have the effect of frustrating the Trustee’s
ability to be recorded in the Registrar of Members as the registered legal and beneficial owner of
the Shares.

	 	 	 	 	 	 	 
	SIGNED by the Company in the

	 	 	)	 	 	CAYMAN WATER COMPANY LIMITED
	presence of

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Frederick W. McTaggart 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	Donald Miller	 	 	)	 	 	Greg McTaggart
	Witness

	 	 	)	 	 	 

-16-Ex-10.8 Intercreditor Deed dated August 4, 2006

 

EXHIBIT 10.8

INTERCREDITOR DEED

This
InterCreditor Deed is made on the 4th day of August, 2006

BETWEEN:-

	(1)	 	SCOTIABANK & TRUST (CAYMAN) LTD. (the “Bank”) incorporated under the laws of and licensed to
carry on banking business in the Cayman Islands of P.O. Box 689 GT, Grand Cayman;
	 
	(2)	 	DEXTRA BANK & TRUST CO. LTD. (the “Trustee”) incorporated under the laws of and licensed to
carry on trust business in the Cayman Islands of P.O. Box 2004 GT, Grand Cayman;
	 
	(3)	 	CONSOLIDATED WATER CO. LTD. (“CWCO”) incorporated under the laws of the Cayman Islands of
P.O. Box 1114 GT, Grand Cayman; and
	 
	(4)	 	CAYMAN WATER COMPANY LIMITED (“Cayman Water”) incorporated under the laws of the Cayman
Islands of P.O. Box 1114 GT, Grand Cayman.

WHEREAS

	A.	 	The Bank and CWCO entered into a loan agreement dated February 7, 2003 (the “Loan
Agreement”) under which the Bank agreed to make certain loan facilities available to CWCO.
	 
	B.	 	Pursuant to the Loan Agreement the Bank and CWCO entered into a Deed of Substituted
Debenture dated February 7, 2003 and other collateral security whereby CWCO granted to the
Bank a fixed and floating Charge over all the assets of CWCO.
	 
	C.	 	Under the terms of a trust deed of even date (the “Trust Deed”) made between the

 

 

	 	 	Trustee and CWCO, CWCO issued to the bondholders bonds repayable over a 10 year period and
CWCO agreed to secure the repayment to the bondholders by way of a second debenture and
other collateral security granted to the Trustee.
	 
	D.	 	Pursuant to an amendment to the Loan Agreement and as a condition to the consent of
the Bank to the transfer of certain assets from CWCO to Cayman Water, Cayman Water granted
to the Bank a collateral debenture and other security to better secure the repayment by
CWCO of its obligations under the Loan Agreement.
	 
	E.	 	It was a condition of the Trustee entering into the Trust Deed that the security
granted to the Trustee rank pari passu in all respects with the security granted to the
Bank.
	 
	F.	 	The parties have agreed to enter into this InterCreditor Deed to set out the terms
upon which they have agreed that the Trustee Security shall rank pari passu with the Bank
Security.

NOW THIS DEED WITNESSETH as follows:

“Bank
Debt” means such sums currently outstanding, or to be advanced,
on a revolving or non-revolving basis, but
subject to a maximum of US$22 million, and owing to the Bank by CWCO pursuant to the Loan
Agreement as same may be or has been amended from time to time.

“Bank Security” means any and all security granted by CWCO and/or Cayman Water to the Bank
pursuant to the Loan Agreement, including but not limited to:

	 	(a)	 	A Deed of Substituted Debenture dated February 7, 2003 between CWCO and the
Bank.
	 
	 	(b)	 	Collateral Deed of Debenture between Cayman Water and the Bank dated [date].

2

 

	 	(c)	 	Equitable Charge of Shares of Cayman Water Company Limited between CWCO and the
Bank dated [date].
	 
	 	(d)	 	Guarantee dated [date] granted by Cayman Water to the Bank.
	 
	 	(e)	 	Collateral spread charges granted by Cayman Water to the Bank over:

	 	(i)	 	West Bay Beach South, Block 12D, Parcel 79REM1/2;
	 
	 	(ii)	 	West Bay Beach North, Block 11D, Parcel 8;
	 
	 	(iii)	 	West Bay Beach North, Block 11D, Parcel 40;
	 
	 	(iv)	 	West Bay North East, Block 9A, Parcel 8; and
	 
	 	(v)	 	West Bay North East, Block 9A, Parcel 469.

“Bondholder Debt” means all sums outstanding and owing by CWCO to the bondholders pursuant to the
Trust Deed.

“Bondholders” means the registered holder of any bonds issued pursuant to the Trust Deed.

“Event of Default” means an event of default as defined in the Trust Deed or the Loan Agreement,
but does not include any default that would arise solely as a result of CWCO or Cayman Water
entering or having entered into any of the Loan Agreement, Bank Security, Trust Deed or Trustee
Security documents.

“Insurance Proceeds” means any amount paid or payable to the Trustee or the Bank pursuant to the
terms of any of the Loan Agreement, the Bank Security, the Trust Deed or the Trustee Security, and
not otherwise utilised to effect repair or reinstatement of the relevant insured property in
accordance with Clause 15.6 of the Loan Agreement.

“Secured Party” means either of the Bank or the Trustee and Secured Parties shall mean the Bank and
the Trustee.

3

 

“Trustee Security” means any and all security granted by CWCO and/or Cayman Water to the
Trustee for the benefit of the Bondholders to secure the repayment of all sums repayable pursuant
to the Trust Deed, including but not limited to the following:

	 	(a)	 	Deed of Second Debenture between CWCO and the Trustee of even
date.
	 
	 	(b)	 	Deed of Second Collateral Debenture between Cayman Water and
the Trustee of even date.
	 
	 	(c)	 	Equitable Charge of Shares of Cayman Water Company Limited
between CWCO and the Trustee of even date.
	 
	 	(d)	 	Guarantee of even date granted by Cayman Water to the
Trustee.
	 
	 	(e)	 	Collateral spread charges granted by Cayman Water to the
Trustee over:

	 	(i)	 	West Bay Beach South, Block 12D, Parcel 79REM1/2.
	 
	 	(ii)	 	West Bay Beach North, Block 11D, Parcel 8.
	 
	 	(iii)	 	West Bay Beach North, Block 11D, Parcel 40.
	 
	 	(iv)	 	West Bay North East, Block 9A, Parcel 8.
	 
	 	(v)	 	West Bay North East, Block 9A, Parcel 469.

	1.	 	The primary purpose of this Deed is to provide that the Trustee Security shall rank
equally in all respects with the Bank Security upon and in the event of enforcement by
either Secured Party of its rights under its security. For so long as the Bank Debt and
the Bondholder Debt are in existence, the terms of this Deed shall govern in all respects
in relation to the enforcement of security against CWCO or Cayman Water and the
distribution of any proceeds therefrom, notwithstanding any other regime of priority
established by any rule of law otherwise.

	2.	 	The Bank and the Trustee agree that, notwithstanding anything contained in the Loan
Agreement, the Trust Deed, any Bank Security document or any Trustee

4

 

	 	 	Security document, upon the occurrence of an Event of Default, as such term is defined or
incorporated in any such relevant document, that the following provisions will apply:

	 	2.1.	 	On either Secured Party becoming aware of an Event of Default, that Secured
Party shall forthwith notify in writing the other Secured Party and such notice shall
contain all relevant facts surrounding the occurrence of an Event of Default as are
known to the notifying Secured Party (“Notice of Event of Default”).
	 
	 	2.2.	 	Each Secured Party shall forthwith provide written advice to the other as to
the then current outstanding balance of the liabilities owed by CWCO to that Secured
Party.
	 
	 	2.3.	 	Within thirty days of the serving of a Notice of Event of Default pursuant to
Clause 2.1 hereof, each Secured Party shall advise the other as to what actions, if
any, it intends to take with respect to the enforcement of any security (“Enforcement
Notice”).
	 
	 	2.4.	 	The Secured Parties shall each use its best efforts to agree with the other
as to the appropriate action to take to enforce the security, but failing such
agreement within thirty days of the exchange of Enforcement Notices referred to in
Clause 2.3, either Secured Party shall be entitled to notify the other of its
intention to appoint a receiver under the relevant debenture or other security
instrument, and in the event that both Secured Parties have each named a different
receiver within seventy-two hours of being so entitled, then the two so named
receivers shall within a further seven days’ name a third party as receiver, who shall
thereafter act as the sole receiver under both the Bank Security and the Trustee
Security and the first 2 parties so named as receivers shall have no further
involvement. In the event that both Secured Parties do name the same receiver, that
receiver shall act as receiver under both the Bank Security and the Trustee Security.

5

 

	 	2.5.	 	Notwithstanding the provisions contained in Clause 2.4, both the Bank and the
Trustee reserve the right at any time to apply to the Grand Court of the Cayman
Islands under the Companies Law (as revised) for an order appointing an official
liquidator or liquidators of CWCO. The provisions of Clause 3 shall, as between the
Bank and Trustee, apply to all distributions made by such court appointed liquidator
or liquidators.

	3.	 	All proceeds of enforcement of any Bank Security and/or Trustee Security hereunder in
the Event of Default, and all Insurance Proceeds, shall be applied as follows:

	 	3.1.	 	First, to the payment of all costs, charges, expenses and liabilities
properly incurred by or on behalf of any receiver appointed pursuant to the Bank
Security and the Trustee Security, including such attorney or other expert fees
necessarily expended in discharge of the receiver’s duties.
	 
	 	3.2.	 	Secondly, to the discharge of the Bank Debt and the Bondholder Debt, payable
to the Bank or the Trustee, as the case may be, in proportion to the relative value of
the Bank Debt and Bondholder Debt as notified pursuant to Clause 2.2 hereof.
	 
	 	3.3.	 	Thirdly, to satisfy any Bank Debt and Bondholder Debt in excess of any amount
notified pursuant to Clause 2.2.
	 
	 	3.4.	 	Upon satisfaction in full of all amounts payable in respect of Clause 3.1,
3.2 and 3.3 hereof, the balance to CWCO, or Cayman Water, as the case may be.
	 
	 	3.5.	 	Any receiver appointed pursuant to Clause 2 shall take instructions from the
Secured Parties acting jointly. In the event that the Secured Parties are unable to
come to an agreement with respect of any action to be taken hereunder or instructions
to be given to any receiver within a reasonable time under the circumstances, then the
matter in dispute shall be decided upon by the receiver, who shall choose between the
two courses of action put forth by the Secured Parties, and the receiver’s decision
shall be final

6

 

	 	 	 	and binding on the Secured Parties, save and except for the provisions and rights
provided for in Section 2.5.
	 
	 	3.6.	 	Subject to the scheme of distribution herein, for so long as the Bank Debt
shall exist, the provisions contained in the Loan Agreement in Clause 15.6 thereof
relating to insurance matters shall apply.

	4.	 	Notwithstanding anything contained herein, if either Secured Party acting reasonably
determines that any delay in taking enforcement action is likely to diminish the value of
the security held by that party or in any other way such a delay is likely to reduce the
ability of CWCO or Cayman Water to satisfy the Bank Debt and the Bondholder Debt, then
such Secured Party shall be entitled to unilaterally take such enforcement action as it
deems necessary in the circumstances.
	 
	5.	 	In the event that either Secured Party takes action pursuant to Clause 4 hereof, then
that Secured Party shall forthwith notify the other of such action taken or to be taken.
The provisions of Clause 3 hereof with respect to the costs and division of proceeds of
any such action shall apply, provided however that the Secured Party taking action under
Clause 4 shall be solely liable for any and all costs and expenses deemed by a court of
competent jurisdiction to have been an improper exercise of such secured party’s rights
and unenforceable against and not recoverable from CWCO or Cayman Water.
	 
	6.	 	Each of CWCO and Cayman Water consent to the priority and distribution of proceeds
regime set out herein and all parties agree that, where the terms hereof conflict in any
way with the terms of the Loan Agreement, the Trust Deed, any Bank Security document or
any Trustee Security document, then the terms hereof shall supersede and govern in such
circumstance.
	 
	7.	 	Neither Secured Party shall take any further security from CWCO or Cayman Water after
the date hereof without the express written consent of the other Secured Party. Except as
expressly permitted by the Loan Agreement or the Trust Deed, CWCO shall not grant security
over any of its assets after the date hereof without the express written consent of both
the Bank and the Trustee.

7

 

	8.	 	Cayman Water shall not, and CWCO covenants that it shall take any steps within its
power to ensure that any subsidiary of it shall not, at any time be a Bondholder.
	 
	9.	 	Neither Secured Party shall transfer or assign any interest in this agreement, the
Bank Security or the Bondholder Security unless the prospective transferee or assignee
agrees to be bound by the terms hereof.
	 
	10.	 	The Deed may be executed in any number of counterparts, and all such counterparts
shall together be construed as a single Deed.
	 
	11.	 	No amendment variation or waiver of any provision of this
Deed shall be of any force or effect unless such amendment variation
or waiver shall be in writing and executed by all parties hereto or
their successors or permitted assigns.
	 
	12.	 	This Deed shall be governed by, and construed in accordance with, the laws of the
Cayman Islands.
	 
	13.	 	If at any time any one or more provisions of this Deed is or becomes invalid, illegal
or unenforceable in any respect under any applicable law, the validity, legality and
enforceability of the remaining provisions hereof and any Bank Security document or
Trustee Security document shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF the parties hereto have executed this document as a deed the day and year first
above written.

	 	 	 	 	 	 	 
	SIGNED by the Bank in the

	 	 	)	 	 	SCOTIABANK & TRUST (CAYMAN) LTD.
	presence of:

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Roy Purcell
	 

	 	 	)	 	 	 
	Donald Miller 
 

Witness

	 	 	)

)

)

)	 	 	 
 

	 
	 	 	 	 	 	 
	SIGNED by the Trustee

	 	 	)	 	 	DEXTRA BANK & TRUST CO. LTD.
	in the presence of:

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Alex Wood
	 

	 	 	)	 	 	 
	Donald Miller
	 	 	)	 	 	Alitsia Finlayson
	 
	 	 	 	 	 	 
	SIGNED by CWCO

	 	 	)

)	 	 	CONSOLIDATED WATER CO. LTD.
	in the presence of:

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Frederick W. McTaggart
	 

	 	 	)	 	 	 
	Donald Miller 
	 	 	)	 	 	Gerrard Pereira
	 
	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	SIGNED by Cayman Water

	 	 	)	 	 	CAYMAN WATER
	in the presence of:

	 	 	)	 	 	COMPANY LIMITED
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	Frederick W. McTaggart 
	 

	 	 	)	 	 	 
	Donald
Miller 
	 	 	)	 	 	Greg McTaggart

8

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