EX-10.5

q Revolver

q Acceptance

q Guarantee/Letter of Credit

q Other (specify)

TABLE OF CONTENTS


	Page
SECTION 1 INTERPRETATION

1. DEFINITIONS AND INTERPRETATION		2

SECTION 2 THE FACILITIES

2. THE FACILITIES		10
3. PURPOSE		10
4. CONDITIONS OF UTILISATION		11

SECTION 3 UTILISATION

5. UTILISATION		19

SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION

6. REPAYMENT		20
7. PREPAYMENT AND CANCELLATION		20

SECTION 5 COSTS OF UTILISATION

8. INTEREST		23
9. INTEREST PERIODS		24
10. CHANGES TO THE CALCULATION OF INTEREST		25
11. FEES		26

SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS

12. TAX GROSS-UP AND INDEMNITIES		27
13. INCREASED COSTS		31
14. OTHER INDEMNITIES		33
15. MITIGATION BY THE LENDERS		34
16. COSTS AND EXPENSES		34

SECTION 7 SUBORDINATION AND SECURITY

17. SUBORDINATION AND SECURITY		36

-i-

TABLE OF CONTENTS
(continued)


	Page
SECTION 8 REPRESENTATIONS, UNDERTAKINGS, TRIGGER EVENTS AND ACCELERATION EVENTS

18. REPRESENTATIONS AND WARRANTIES		37
19. GENERAL COVENANTS		37
20. ACCELERATION EVENTS		38

SECTION 9 CHANGES TO PARTIES

21. CHANGES TO THE LENDERS		39
22. CHANGES TO THE BORROWER		42

SECTION 10 THE FACILITY PARTIES

23. ROLE OF THE AGENT AND THE ARRANGER		43
24. CONDUCT OF BUSINESS BY THE FACILITY PARTIES		48
25. SHARING AMONG THE FACILITY PARTIES		48

SECTION 11 ADMINISTRATION

26. PAYMENT MECHANICS		51
27. NOTICES		53
28. CALCULATIONS AND CERTIFICATES		55
29. PARTIAL INVALIDITY		55
30. REMEDIES AND WAIVERS		55
31. AMENDMENTS AND WAIVERS		56
32. COUNTERPARTS		56

SECTION 12 GOVERNING LAW AND ENFORCEMENT

33. GOVERNING LAW		57
34. DISPUTES		57

-ii-

THIS AGREEMENT is dated 21 June 2006 and made between:

(1)		BOURNEMOUTH & WEST HAMPSHIRE WATER PLC, registration number 02924312 (“Borrower”);

(2)		THE ROYAL BANK OF SCOTLAND PLC as arranger (“Arranger”);

(3)		THE FINANCIAL INSTITUTION listed in Schedule 1 as lender (“Original Lender”);

(4)		THE ROYAL BANK OF SCOTLAND PLC as issuing bank (“Issuing Bank”) and

(5)		THE ROYAL BANK OF SCOTLAND PLC as agent of the other Facility Parties (“Agent”).

(6)		CASCAL B.V. a company incorporated in The Netherlands, having its corporate seat In Amsterdam and with file reference 34112761 of the Trade Register of the Chamber of Commerce of Amersfoort (“Cascal BV”).

IT IS AGREED as follows:

SECTION 1
INTERPRETATION

1.		DEFINITIONS AND INTERPRETATION

1.1		Definitions

		Unless otherwise defined in this Clause 1.1 or the context requires otherwise, words and expressions used in this Agreement have the meanings and constructions ascribed to them in the Borrower STID (as defined below):

		“Acceleration Event” means:

	(a)		any of the events identified as such in Clause 11 (Acceleration Events, their Consequences and Remedies) of the Borrower STID; or

	(b)		the Borrower fails to pay principal or interest or any other sum due and payable from it under this Agreement in the currency and in the manner specified therein unless:

	(i)		its failure to pay is caused by administrative or technical error; and

	(ii)		such failure continues unremedied for a period of three Business Days after the due date for payment of such sum.

“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost Formulae).

“Available Commitment” means, in relation to a Facility, a Lender’s Commitment under that Facility minus:

	(a)		the amount of its participation in any outstanding Utilisations under that Facility; and

	(b)		in relation to any proposed Utilisation, the amount of its participation in any Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date;

		“Available Facility” means, in respect of each Facility, the aggregate for the time being of each Lender’s Available Commitment in respect of that Facility.

		“Availability Period” means:

	(a)		in respect of the Term Facility, the period from the date of this Agreement to and including the date that is six months from the date of this Agreement; and

	(b)		in respect of the Letter of Credit Facility, the period from the date of this Agreement to and including 1 April 2010.

		“Borrower STID” means the Borrower Security Trust and Intercreditor Deed dated 20 April 2005 between, inter alios, the Borrower, the Parent and RBS, to which the Lenders will accede in respect of this Agreement.

		“Break Costs” means the amount (if any) by which:

(a)

the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount of that Loan or Unpaid Sum received been paid on the last day of that Interest Period

exceeds:

(b)

the amount which that Lender would be able to obtain by placing an amount equal to the principal amount of that Loan or Unpaid Sum received by it on deposit with a bank in the London interbank market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

		“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in London.

		“Commitment” means the Term Facility Commitment or the Letter of Credit Facility Commitment.

		“Compliance Certificate” means a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate).

		“Covenants” means the covenants set out in Clauses 6 (Financial Covenants), 7 (Financial Information Covenants), 8 (Positive Covenants) and 9 (Negative Covenants) of the Borrower STID.

		“EMU” means Economic and Monetary Union as contemplated in the Treaty on European Union.

		“euro” means the single currency that was introduced at the start of the third stage of EMU pursuant to the Treaty on European Union.

		“Facility” means the Term Facility or the Letter of Credit Facility and “Facilities” shall be construed accordingly.

		“Facility Documents” means this Agreement, the Borrower STID, the Borrower Security Documents and any other document designated as such by the Agent and the Borrower.

		“Facility Office” means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.

		“Facility Party” means the Agent, the Arranger or a Lender.

		“Interest Payment Date” means the last day of each Interest Period.

		“Interest Period” means (i) in relation to each Loan, each period determined in accordance with Clause 9.1 (Selection of Interest Periods) and (ii) in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

		“Lender” means:

	(a)		any Original Lender; and

	(b)		any bank, financial institution, trust fund or other entity which has become a Party in accordance with Clause 21 (Changes to the Lenders),

		which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

		“Letter of Credit” means a letter of credit, substantially in the form set out in Schedule 8 (Form of Letter of Credit) or in any other form requested by the Borrower and agreed by the Agent (with the prior consent of the Majority Lenders) and the Issuing Bank.

		“Letter of Credit Facility” means the letter of credit facility made available to the Borrower under this Agreement as described in Clause 2 (The Facilities).

“Letter of Credit Facility Commitment” means:

	(a)		in relation to the Original Lender, the amount set opposite its name under the heading “Letter of Credit Facility Commitment” in Schedule 1 (The Original Lender) and the amount of any other Letter of Credit Facility Commitment transferred to it under this Agreement; and

	(b)		in relation to any other Lender, the amount of any Letter of Credit Facility Commitment transferred to it under this Agreement,

		to the extent not previously cancelled, reduced or transferred by it under this Agreement.

		“Letter of Credit Final Repayment Date” means 31 March 2011.

		“LIBOR” means, in relation to a Loan, the rate (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Bank to leading banks in the London interbank market as of the Specified Time on the Quotation Day for the offering of deposits in sterling and for a period comparable to the Interest Period for the Loan.

		“Loan” means a loan made or to be made under the Term Facility or the principal amount outstanding for the time being of that loan.

		“Majority Lenders” means:

	(a)		if there are no Utilisations then outstanding, a Lender or Lenders whose Commitments aggregate more than 66 ²/₃% of the Total Commitments (or, if the Total Commitments have been reduced to zero and no Utilisation is outstanding, aggregated more than 66 ²/₃% of the Total Commitments immediately prior to the reduction); or

	(b)		at any other time, a Lender or Lenders whose participations in the Utilisations then outstanding aggregate more than 66 ²/₃% of all Utilisations then outstanding.

		“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost Formulae).

		“Margin” means:

	(a)		from and including the date of this Agreement to but excluding the first anniversary of the date of this Agreement, 1.5 per cent per annum;

	(b)		from and including the first anniversary of the date of this Agreement to but excluding the second anniversary of the date of this Agreement, 2.0 per cent per annum; and

	(c)		from and including the second anniversary of the date of this Agreement to but excluding the Final Repayment Date, 2.5 per cent per annum.

“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

	(a)		if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and

	(b)		if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

		The above rules will only apply to the last Month of any period. “Monthly” shall be construed accordingly.

		“Participating Member State” means, at any time, each state participating in EMU at such time.

		“Party” means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees.

		“Quotation Day” means, in relation to any period for which an interest rate is to be determined, the first day of that period unless market practice differs in the London interbank market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days).

		“Rate of Interest” has the meaning given in Clause 8.1 (Rate of Interest).

		“Reference Bank” means the principal office in London of The Royal Bank of Scotland plc or such other banks as may be appointed by the Agent with the consent of the Borrower.

		“Repeating Representations and Warranties” means each of the representations and warranties set out in Clauses 5.2 (Status), 5.5 (Non-violation), 5.6 (Compliance with law, etc.), 5.7.2 (Ownership), 5.8 (Subsidiaries), 5.9 (Consents), 5.10 (No default), 5.11 (Profits and Options), 5.12 (Litigation), 5.13.1 (Tax), 5.14 (Security and Ranking), 5.16 (No Winding-up or Special Administration), 5.17 (except for Clauses 5.17.3 and 5.17.4) (Full Disclosure), 5.18 (Financial Information).

		“Representations and Warranties” means the representations and warranties set out in Clause 5 (Representations and Warranties) (except for Clauses 5.17.3, 5.17.4, 5.19 and 5.20.1) of the Borrower STID.

		“Selection Notice” means a notice substantially in the form set out in Part II of Schedule 3 (Utilisation Requests) given in accordance with Clause 10 (Interest Periods).

		“Specified Time” means a time determined in accordance with (in relation to a Loan) Part I of Schedule 6 (Timetables) and (in relation to a Letter of Credit) Part II of Schedule 6 (Timetables).

		“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).

		“Taxes Act” means the Income and Corporation Taxes Act 1988.

		“Term Facility” means the term loan facility made available to the Borrower under this Agreement as described in Clause 2 (The Facilities).

		“Term Facility Commitment” means:

	(a)		in relation to the Original Lender, the amount set opposite its name under the heading “Term Facility Commitment” in Schedule 1 (The Original Lender) and the amount of any other Term Facility Commitment transferred to it under this Agreement; and

	(b)		in relation to any other Lender, the amount of any Term Facility Commitment transferred to it under this Agreement,

		to the extent not previously cancelled, reduced or transferred by it under this Agreement.

		“Term Facility Final Repayment Date” means the date falling three years after the date of this Agreement.

		“Total Commitments” means the aggregate of the Total Term Facility Commitment and the Total Letter of Credit Facility Commitment, being £32,690,000 at the date of this Agreement.

		“Total Letter of Credit Facility Commitment” means the aggregate of the Letter of Credit Facility Commitments, being £4,690,000 at the date of this Agreement.

		“Total Term Facility Commitment” means the aggregate of the Term Facility Commitments, being at the date of this Agreement, £28,000,000.

		“Transfer Certificate” means a certificate substantially in the form set out in Part I of Schedule 5 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower.

		“Transfer Date” means, in relation to a transfer, the later of:

	(a)		the proposed Transfer Date specified in the Transfer Certificate; and

	(b)		the date on which the Agent executes the Transfer Certificate.

		“Unpaid Sum” means any sum due and payable but unpaid by the Borrower under the Facility Documents.

		“Utilisation” means a Loan or a Letter of Credit.

		“Utilisation Date” means the date on which the relevant Utilisation is to be made.

		“Utilisation Request” means a notice substantially in the form set out in Part IA of Schedule 3 (Utilisation Request).

		“VAT” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.

1.2		Interpretation

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

	(i)		the “Agent”, the “Arranger”, the “Issuing Bank”, any “Facility Party”, any “Lender” or any “Party” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

	(ii)		“assets” includes present and future properties, revenues and rights of every description;

	(iii)		a “Facility Document” or any other agreement or instrument is a reference to that Facility Document or other agreement or instrument as amended or novated;

	(iv)		“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;

	(v)		a “person” includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing;

	(vi)		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;

	(vii)		“£” and “sterling” denote the lawful currency from time to time of the United Kingdom;

	(viii)		a provision of law is a reference to that provision as amended or re-enacted; and

	(ix)		a time of day is a reference to London time.

(b)

Section, Clause and Schedule headings are for ease of reference only.

(c)		Unless a contrary indication appears, a term used in any other Facility Document or in any notice given under or in connection with any Facility Document has the same meaning in that Facility Document or notice as in this Agreement.

(d)		A Potential Trigger Event or a Potential Acceleration Event is “continuing” if it has not been remedied or waived and a Trigger Event (other than a Potential Acceleration Event) or an Acceleration Event is “continuing” if it has not been waived.

1.3		Double Counting

		For the avoidance of doubt, any payment to be made by the Borrower in respect of any indemnity, fee or cost and expense under this Agreement or the other Facility Documents shall be made without double counting, taking into account any payment made by the Borrower under the other provisions of this Agreement or any of the other Facility Documents.

1.4		Third Party Rights

		A person who is not a Party (other than the Borrower Security Trustee) 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.

SECTION 2
THE FACILITIES

2.		THE FACILITIES

2.1		The Facilities

		Subject to the terms of this Agreement, the Lenders make available to the Borrower:

	(a)		a subordinated secured sterling term loan in an aggregate amount equal to the Total Term Facility Commitment; and

	(b)		a letter of credit facility in sterling in an aggregate amount equal to the Total Letter of Credit Facility Commitment.

2.2		Lenders’ rights and obligations

(a)		The obligations of each Facility Party under the Facility Documents are several. Failure by a Facility Party to perform its obligations under the Facility Documents does not affect the obligations of any other Party under the Facility Documents. No Facility Party is responsible for the obligations of any other Facility Party under the Facility Documents.

(b)		The rights of each Facility Party under or in connection with the Facility Documents are separate and independent rights.

(c)		A Facility Party may, except as otherwise stated in the Facility Documents, separately enforce its rights under the Facility Documents.

3.		PURPOSE

3.1		Purpose

(a)		The Borrower shall apply amounts borrowed by it under the Term Facility in or towards:

	(i)		the provision of an inter-company loan by the Borrower to Cascal BV;

	(ii)		the payment of costs and expenses incurred in connection with the provision of that inter-company loan and/or the negotiation, preparation, printing, execution and syndication of this Agreement; and

	(iii)		general corporate purposes.

(b)

No amount borrowed under the Term Facility or Letter of Credit issued under the Letter of Credit Facility shall be applied in any manner that may be illegal or contravene the provisions of section 151 of the Companies Act 1985.

3.2		Monitoring

		No Facility Party is bound to monitor or verify the application of any amount borrowed or Letter of Credit issued pursuant to this Agreement.

4.		CONDITIONS OF UTILISATION

4.1		Initial conditions precedent

		The Borrower may not deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent. To the extent that any such conditions precedent are delivered after the date of this Agreement, such conditions precedent shall be dated or certified as at the date of their delivery to the Agent, as the case may be. The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied.

4.2		Further conditions precedent

		The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on the date of the Utilisation Request and on the proposed Utilisation Date:

	(a)		no Trigger Event, Potential Trigger Event, Acceleration Event or Potential Acceleration Event is continuing or would result from the proposed Loan; and

	(b)		the Repeating Representations and Warranties are true in all material respects.

B. CLAUSES AND SCHEDULES - LETTER OF CREDIT OPTION

5A.		UTILISATION - LETTERS OF CREDIT

5A.1		General

(a)		In this Clause 5A and Clause 5B (Letters of Credit):

	(i)		“Expiry Date” means, for a Letter of Credit, the last day of its Term;

	(ii)		“L/C Proportion” means, in relation to a Lender in respect of any Letter of Credit, the proportion (expressed as a percentage) borne by that Lender’s Available Commitment to the Available Facility immediately prior to the issue of that Letter of Credit, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender;

	(iii)		“Renewal Request” means a written notice delivered to the Agent in accordance with Clause 5A.7 (Renewal of a Letter of Credit); and

	(iv)		“Term” means each period determined under this Agreement for which the Issuing Bank is under a liability under a Letter of Credit.

(b)

Any reference in this Agreement to:

	(i)		a “Facility Party” includes the Issuing Bank;

	(ii)		the Interest Period of a Letter of Credit will be construed as a reference to the Term of that Letter of Credit;

	(iii)		an amount borrowed includes any amount utilised by way of Letter of Credit;

	(iv)		a Utilisation made or to be made to the Borrower includes a Letter of Credit issued on its behalf;

	(v)		a Lender funding its participation in a Utilisation includes a Lender participating in a Letter of Credit;

	(vi)		amounts outstanding under this Agreement include amounts outstanding under or in respect of any Letter of Credit;

	(vii)		an outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable by the Borrower in respect of that Letter of Credit at that time; and

	(viii)		a claim being made under a Letter of Credit, or such a claim being paid by the Issuing Bank, shall include a reference to the inclusion of any amount due (actually or contingently) from the Issuing Bank under that Letter of Credit in any account taken for the purposes of Rule 4.90 or Rule 2.85 of the Insolvency Rules

1986 in the insolvency proceedings of the beneficiary of that Letter of Credit or any other person.

(c)		Clause 5 (Utilisation) does not apply to a Utilisation by way of Letter of Credit.

(d)		In determining the amount of the Available Facility and a Lender’s L/C Proportion of a proposed Letter of Credit for the purposes of this Agreement the Available Commitment of a Lender will be calculated ignoring any cash cover provided for outstanding Letters of Credit.

5A.2		Letter of Credit Facility

		The Letter of Credit Facility may only be utilised by way of Letters of Credit.

5A.3		Delivery of a Utilisation Request for Letters of Credit

		The Borrower may request a Letter of Credit to be issued by delivery to the Agent of a duly completed Utilisation Request substantially in the form of Part 1B of Schedule 3 (Utilisation Request — Letters of Credit) not later than the Specified Time.

5A.4		Completion of a Utilisation Request for Letters of Credit

		Each Utilisation Request for a Letter of Credit is irrevocable and will not be regarded as having been duly completed unless:

	(a)		it specifies that it is for a Letter of Credit;

	(b)		the proposed Utilisation Date is a Business Day within the Availability Period;

	(c)		the currency and amount of the Letter of Credit comply with Clause 5A.5 (Currency and amount);

	(d)		the form of Letter of Credit is attached (which form shall be substantially as set out in Schedule 8 (Form of Letter of Credit);

	(e)		the Expiry Date of the Letter of Credit falls on or before the earlier of (i) a date which is no later than 12 months after the date of issue of the Letter of Credit and (ii) the Letter of Credit Final Repayment Date;

	(f)		the delivery instructions for the Letter of Credit are specified; and

	(g)		the identity of the beneficiary of the Letter of Credit is the Beneficiary or Beneficiaries (as that term is defined in Schedule 8 (Form of Letter of Credit) or any other beneficiary approved by the Majority Lenders).

5A.5		Currency and amount

(a)		The currency specified in a Utilisation Request must be sterling.

(b)		The amount of the proposed Letter of Credit must be an amount which is not more than the Available Facility.

5A.6		Issue of Letters of Credit

(a)		If the conditions set out in this Agreement have been met, the Issuing Bank shall issue the Letter of Credit on the Utilisation Date.

(b)		The Issuing Bank will only be obliged to comply with paragraph (a) above if on the date of the Utilisation Request or Renewal Request and on the proposed Utilisation Date:

	(i)		in the case of a Letter of Credit renewed in accordance with Clause 5A.7 (Renewal of a Letter of Credit), no Trigger Event or Acceleration Event is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Trigger Event, Potential Trigger Event, Acceleration Event or Potential Acceleration Event is continuing or would result from the proposed Utilisation; and

	(ii)		the Repeating Representations and Warranties are true in all material respects.

(c)		The amount of each Lender’s participation in each Letter of Credit will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to the issue of the Letter of Credit.

(d)		The Agent shall notify the Issuing Bank and each Lender of the details of the requested Letter of Credit and its participation in that Letter of Credit by the Specified Time.

5A.7		Renewal of a Letter of Credit

(a)		The Borrower may request any Letter of Credit issued on its behalf be renewed by delivery to the Agent of a Renewal Request by the Specified Time.

(b)		The Facility Parties shall treat any Renewal Request in the same way as a Utilisation Request for a Letter of Credit.

(c)		The terms of each renewed Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal, except that:

	(i)		its amount may be less than the amount of the Letter of Credit immediately prior to its renewal; and

	(ii)		its Term shall start on the date which was the Expiry Date of the Letter of Credit immediately prior to its renewal, and shall end on the proposed Expiry Date specified in the Renewal Request.

(d)

If the conditions set out in this Agreement have been met, the Issuing Bank shall amend and re-issue any Letter of Credit pursuant to a Renewal Request.

5B.		LETTERS OF CREDIT

5B.1		Assignments and transfers

(a)		Notwithstanding any other provision of this Agreement, the consent of the Issuing Bank is required for any assignment or transfer of any Lender’s rights and/or obligations in respect of any outstanding Letter of Credit.

(b)		If paragraph (a) and the conditions and procedure for transfer specified in Clause 21 (Changes to the Lenders) are satisfied, then on the Transfer Date the Issuing Bank and the New Lender shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Issuing Bank and the Existing Lender shall each be released from further obligations to each other under this Agreement.

5B.2		Fee payable in respect of Letters of Credit

(a)		The Borrower shall pay to the Agent (for the account of each Lender) a letter of credit fee in sterling computed at the rate of 1.5 per cent per annum on the outstanding amount of each Letter of Credit requested by it for the period from the issue of that Letter of Credit until its Expiry Date. This fee shall be distributed according to each Lender’s L/C Proportion of that Letter of Credit.

(b)		The accrued letter of credit fee on a Letter of Credit shall be payable on the first day of each successive period of three months (or such shorter period as shall end on the Expiry Date for that Letter of Credit) starting on the date of issue of that Letter of Credit.

5B.3		Claims under a Letter of Credit

(a)		The Borrower irrevocably and unconditionally authorises the Issuing Bank to make payment under any Demand (as that term is defined in the relevant Letter of Credit) made or purported to be made under a Letter of Credit and which appears on its face to be in order (a “claim”).

(b)		The Borrower shall immediately on demand pay to the Agent for the Issuing Bank an amount equal to the amount of any claim under that Letter of Credit.

(c)		The Borrower acknowledges that the Issuing Bank:

	(i)		is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and

	(ii)		deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

(d)

The obligations of the Borrower under this Clause will not be affected by:

	(i)		the sufficiency, accuracy or genuineness of any claim or any other document; or

	(ii)		any incapacity of, or limitation on the powers of, any person signing a claim or other document.

5B.4		Indemnities

(a)		The Borrower shall immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit requested by that Borrower.

(b)		Each Lender shall (according to its L/C Proportion) immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit (unless the Issuing Bank has been reimbursed by the Borrower pursuant to a Finance Document).

(c)		The Borrower shall immediately on demand reimburse any Lender for any payment it makes to the Issuing Bank under this Clause 58.4 (Indemnities) in respect of that Letter of Credit.

(d)		obligations of each Lender under this Clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.

(e)		The obligations of any Lender under this Clause will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause (without limitation and whether or not known to it or any other person) including:

	(i)		any time, waiver or consent granted to, or composition with, the Borrower, any beneficiary under a Letter of Credit or other person;

	(ii)		the release of the Borrower or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

	(iii)		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 Obligor, any beneficiary under a Letter of Credit or other 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;

	(iv)		any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Borrower, any beneficiary under a Letter of Credit or any other person;

	(v)		any amendment (however fundamental) or replacement of a Facility Document, any Letter of Credit or any other document or security;

	(vi)		any unenforceability, illegality or invalidity of any obligation of any person under any Facility Document, any Letter of Credit or any other document or security; or

	(vii)		any insolvency or similar proceedings.

5B.5		Rights of contribution

		No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause 5B.5.

5B.6		Role of the Issuing Bank

(a)		Nothing in this Agreement constitutes the Issuing Bank as a trustee or fiduciary of any other person.

(b)		The Issuing Bank shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

(c)		The Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

(d)		The Issuing Bank may rely on:

	(i)		any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

	(ii)		any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(e)		The Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(f)		The Issuing Bank may act in relation to the Facility Documents through its personnel and agents.

(g)		The Issuing Bank is not responsible for:

	(i)		the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Issuing Bank, the Agent, the Arranger, the Borrower or any other person given in or in connection with any Facility Document; or

	(ii)		the legality, validity, effectiveness, adequacy or enforceability of any Facility Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Facility Document.

5B.7		Exclusion of liability

(a)		Without limiting paragraph (b) below, the Issuing Bank will not be liable for any action taken by it under or in connection with any Facility Document, unless directly caused by its gross negligence or wilful misconduct.

(b)		No Party (other than the Issuing Bank) may take any proceedings against any officer, employee or agent of the Issuing Bank in respect of any claim it might have against the Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Facility Document and any officer, employee or agent of the Issuing Bank may rely on this Clause subject to Clause 1.4 (Third party rights) and the provisions of the Third Parties Act.

5B.8		Credit appraisal by the Lenders

		Without affecting the responsibility of the Borrower for information supplied by it or on its behalf in connection with any Facility Document, each Lender confirms to the Issuing Bank that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Facility Document, including but not limited to, those listed in paragraphs (a) to (d) of Clause 23.14 (Credit appraisal by the Lenders).

5B.9		Address for notices

		The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of the Issuing Bank for any communication or document to be made or delivered under or in connection with the Facility Documents is that notified in writing to the Agent prior to the date of this Agreement or any substitute address, fax number or department or officer as the Issuing Bank may notify to the Agent by not less than five Business Days’ notice.

5B.10		Amendments and Waivers

		Notwithstanding any other provision of this Agreement, an amendment or waiver which relates to the rights or obligations of the Issuing Bank may not be effected without the consent of the Issuing Bank.

SECTION 3
UTILISATION

5.		UTILISATION

5.1		Delivery of a Utilisation Request

		The Borrower may, subject to Clauses 4.1 (Initial conditions precedent) and 4.2 (Further conditions precedent) utilise the Term Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.

5.2		Completion of a Utilisation Request

(a)		Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

	(i)		the proposed Utilisation Date is a Business Day within the Availability Period;

	(ii)		the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);

	(iii)		the proposed Interest Period complies with Clause 9 (Interest Periods); and

	(iv)		it specifies the account and bank (both of which must be located in London) to which the proceeds of the Utilisation are to be credited.

(b)		Only one Loan may be requested in each Utilisation Request.

5.3		Currency and amount

(a)		The currency specified in a Utilisation Request must be sterling.

(b)		The amount of a proposed Loan must be a minimum of £5,000,000 (or an integral multiple of £250,000 thereafter) or if less, the Available Facility, provided that the proposed Loan shall not cause the principal amount outstanding of all outstanding Loans to exceed the Total Term Facility Commitment.

5.4		Lenders’ participation

(a)		If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.

(b)		The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.

SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION

6.		REPAYMENT

		The Borrower shall repay each Loan on the Term Facility Final Repayment Date.

7.		PREPAYMENT AND CANCELLATION

7.1		Illegality

		If, at any time, it is or will become unlawful in any jurisdiction for a Lender or the Issuing Bank to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Utilisation:

	(a)		that Lender or the Issuing Bank shall promptly notify the Agent upon becoming aware of that event;

	(b)		upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and

	(c)		the Borrower shall repay that Lender’s participation in the Utilisations made to the Borrower on the last day of the Interest Period for each Utilisation occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law); and

	(d)		upon the Agent notifying the Borrower, the Letter of Credit Facility shall cease to be available for the issue of Letters of Credit.

7.2		Right of repayment and cancellation in relation to a single Lender

(a)		If:

	(i)		any sum payable to any Lender by the Borrower is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up); or

	(ii)		any Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs),

		the Borrower may, whilst the circumstance giving rise to the requirement or indemnification continues, give the Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Utilisations.

(b)		On receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.

(c)		On the last day of each Interest Period which ends after the Borrower has given notice under paragraph (a) above (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender’s participation in the Utilisations together with interest accrued but unpaid up to and including the date of repayment of that Lender’s participation in the Utilisations.

7.3		Voluntary cancellation

(a)		The Borrower may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part of the Facilities (but, if in part, being an amount that reduces the amount of the Facilities by a minimum amount of £5,000,000).

(b)		Any cancellation under this Clause 7.3 shall reduce the Commitments of the Lenders rateably.

(c)		The Borrower may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of any Loan (but, if in part, being an amount that reduces the amount of the relevant Loan(s) by a minimum amount of £5,000,000).

7.4		Mandatory prepayment — Specified Refinancing

(a)		The Borrower shall notify the Agent as soon as reasonably practicable if it enters into any principal transaction document in respect of a Specified Refinancing and in any case no later than 30 days before it completes a Specified Refinancing.

(b)		Subject to the provisions of the Borrower STID, the Net Proceeds of any Specified Refinancing shall be used in or towards prepayment of the Term Facility.

(c)		On receipt of such notification, subject to the provisions of the Borrower STID, the Agent shall, by notice to the Borrower:

	(i)		cancel an amount of the Total Term Facility Commitment equal to the amount of such Net Proceeds with effect from the due date of the prepayment or, if no amount is outstanding under this Agreement at such time, the date on which the prepayment would have occurred if amounts had been outstanding under this Agreement at such time; and

	(ii)		declare an amount of the outstanding Loans equal to the amount of such Net Proceeds together with accrued interest thereon and all other amounts owing in connection with that sum under the Facility Documents to be payable, and the Borrower shall repay such amounts within 10 days of receipt of the relevant Net Proceeds.

(d)

For these purposes, “Specified Refinancing” means the issuance by the Borrower in the domestic or international capital markets of any equity or other equity linked instruments or any bonds, notes, debentures, loan stock or similar debt instruments and “Net

Proceeds” means the proceeds of any Specified Refinancing after deducting reasonable fees, costs, commissions and expenses.

7.5		Restrictions

(a)		Any notice of cancellation or prepayment given by any Party under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

(b)		prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

(c)		The Borrower may not reborrow any part of the Term Facility which is prepaid.

(d)		The Borrower shall not repay or prepay all or any part of the Loans or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

(e)		No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

(f)		If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to either the Borrower or the affected Lender, as appropriate.

SECTION 5
COSTS OF UTILISATION

8.		INTEREST

8.1		Rate of interest

		The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

	(a)		Margin;

	(b)		LIBOR; and

	(c)		Mandatory Cost, if any,

		(the “Rate of Interest”).

8.2		Payment of interest

(a)		Interest will (subject to Clause 12 (Tax gross up and indemnities)) accrue from day to day on each Loan commencing from the Utilisation Date and will be payable by the Borrower on each Interest Payment Date. Interest will cease to accrue from the due date for redemption of the Loan unless the Borrower fails to pay any amount payable by it under a Facility Document, in which case default interest will be payable as described in Clause 8.3 (Default interest) (“Default Interest”).

(b)		The Borrower shall pay accrued interest on each Loan on the last day of each Interest Period (and, if the Interest Period is longer than six months, on the date falling at six monthly intervals after the first day of the Interest Period).

8.3		Default interest

(a)		If the Borrower fails to pay any amount payable by it under the Facilities on its due date, Default Interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is the sum of 1 per cent and the Rate of Interest which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in sterling for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 shall be immediately payable by the Borrower on demand by the Agent.

(b)		If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(i)

the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

(ii)

the rate of interest applying to the overdue amount during that first Interest Period shall be the sum of 1 per cent and the Rate of Interest which would have applied if the overdue amount had not become due.

(c)		Default Interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

8.4		Notification of rates of interest

		The Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.

9.		INTEREST PERIODS

9.1		Selection of Interest Periods

(a)		The Borrower may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice.

(b)		Each Selection Notice for a Loan is irrevocable and must be delivered to the Agent by the Borrower not later than the Specified Time.

(c)		the Borrower fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will be one Month.

(d)		Subject to this Clause 9, the Borrower may select an Interest Period of one, two, three or six Months or any other period agreed between the Borrower and the Agent (acting on the instructions of all the Lenders).

(e)		An Interest Period for a Loan shall not extend beyond the Final Repayment Date.

(f)		Each Interest Period for a Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.

9.2		Non-Business Days

		If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

9.3		Consolidation and division of Loans

(a)		Subject to paragraph (b) below, if two or more Interest Periods end on the same date, those Loans will, unless the Borrower specifies to the contrary in the Selection Notice for the next Interest Period, be consolidated into, and treated as, a single Loan on the last day of the Interest Period.

(b)		Subject to Clause 5.3 (Currency and amount), if the Borrower requests in a Selection Notice that a Loan be divided into two or more Loans, that Loan will, on the last day of its Interest Period, be so divided into the amounts specified in that Selection Notice, being an aggregate amount equal to the amount of the Loan immediately before its division.

10.		CHANGES TO THE CALCULATION OF INTEREST

10.1		Absence of quotations

		Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

10.2		Market disruption

(a)		If a Market Disruption Event (as defined below) occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

	(i)		the Margin;

	(ii)		the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and

	(iii)		the Mandatory Cost, if any, applicable to that Lender’s participation in the Loan.

(b)

In this Agreement “Market Disruption Event” means:

	(i)		at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for sterling and the relevant Interest Period; or

	(ii)		before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 50 per cent of that Loan) that the cost to it of obtaining matching deposits in the London interbank market would be in excess of LIBOR.

10.3		Alternative basis of interest or funding

(a)		If a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.

(b)		Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.

10.4		Notification of amount of interest

		The Agent shall no later than the fifteenth Business Day prior to each Interest Payment Date calculate the amount of interest due on a Loan on that Interest Payment Date and notify the Borrower and the Lender accordingly.

10.5		Break Costs

(a)		The Borrower shall, within three Business Days of demand by a Facility Party, pay to that Facility Party its Break Costs attributable to all or any part of a Loan or an Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for that Loan or an Unpaid Sum.

(b)		Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

11.		FEES

11.1		Commitment fee

(a)		The Borrower shall pay to the Agent (for the account of each Lender) a fee in sterling computed at the rate of 0.50 per cent per annum on each Lender’s Available Commitment in respect of the Term Facility for the Availability Period (the “Commitment Fee”).

(b)		The accrued Commitment Fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period and, if cancelled in full, on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.

11.2		Arrangement fee

		The Borrower shall pay to the Arranger an arrangement fee of:

(a)		0.65 per cent of the Total Commitments, payable within 14 days after the date of this Agreement; and

(b)		0.35 per cent of the outstanding Loans on the date falling fifteen Months after the date of this Agreement, payable on such date.

SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS

12.		TAX GROSS-UP AND INDEMNITIES

12.1		Definitions

(a)		In this Clause 12:

		“Exemption” means the disapplication pursuant to Section 349A of the Taxes Act of an obligation to deduct Tax.

		“Protected Party” means a Facility Party which is or will be, for or on account of Tax, subject to any liability or required to make any payment in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Facility Document.

		“Qualifying Lender” means a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Facility Document and is:

(i)

a Lender:

	(A)		which is a bank (as defined for the purpose of section 349 of the Taxes Act) making an advance under a Facility Document; or

	(B)		in respect of an advance made under a Facility Document by a person that was a bank (as defined for the purpose of section 349 of the Taxes Act) at the time that that advance was made,

and which is within the charge to United Kingdom corporation tax as respects any payments made in respect of that advance; or

(ii)

a Lender which is:

	(A)		a company resident in the United Kingdom for United Kingdom tax purposes;

	(B)		a partnership, each member of which is a company resident in the United Kingdom for United Kingdom tax purposes; or

	(C)		a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a branch or agency and which brings into account interest payable in respect of that advance in computing its chargeable profits (within the meaning given by section 11(2) of the Taxes Act); or

(iii)

a Treaty Lender.

“Tax Confirmation” means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Facility Document is either:

	(i)		a company resident in the United Kingdom, or a partnership each member of which is a company resident in the United Kingdom, for United Kingdom tax purposes; or

	(ii)		a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a branch or agency and that interest payable in respect of that advance falls to be brought into account in computing the chargeable profits of that company for the purposes of section 11(2) of the Taxes Act.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Facility Document.

“Tax Payment” means an increased payment made by the Borrower to a Facility Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).

“Treaty Lender” means a Lender which:

	(i)		is treated as a resident of a Treaty State for the purposes of the Treaty; and

	(ii)		does not carry on a business in the United Kingdom through a permanent establishment with which that Lender’s participation in the Loans is effectively connected.

“Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.

“UK Non-Bank Lender” means a Lender which gives a Tax Confirmation in the Transfer Certificate which it executes on becoming a Party to this Agreement.

	(b)		Unless a contrary indication appears, in this Clause 12 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

	12.2		Tax gross-up

	(a)		The Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

	(b)		The Borrower shall promptly upon becoming aware that the Borrower must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware

in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender, it shall notify the Borrower.

(c)		If a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

(d)		The Borrower is not required to make an increased payment to a Lender under paragraph (c) above for a Tax Deduction in respect of tax imposed by the United Kingdom from a payment of interest on a Loan, if on the date on which the payment falls due:

	(i)		the payment could have been made to the relevant Lender without a Tax Deduction if it was a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; or

	(ii)

	(A)		the relevant Lender is a UK Non-Bank Lender, or would have been a UK Non-Bank Lender were it not for any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; and

	(B)		the Board of the Inland Revenue has given (and not revoked) a direction under section 349C of the Taxes Act (as that provision has effect on the date on which the relevant Lender became a party to this Agreement) which relates to that payment and the Borrower has notified that UK Non-Bank Lender of the precise terms of that notice; or

(iii)

the relevant Lender is a Treaty Lender and the Borrower making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under paragraph (g) below.

(e)		If the Borrower is required to make a Tax Deduction, the Borrower shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

(f)		Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower making that Tax Deduction shall deliver to the Agent for the Facility Party entitled to the payment evidence reasonably satisfactory to that Facility Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

(g)		A Treaty Lender and the Borrower which makes a payment to which that Treaty Lender is entitled shall co-operate in completing any procedural formalities necessary for the Borrower to obtain authorisation to make that payment without a Tax Deduction.

(h)		A UK Non-Bank Lender which becomes a Party on the day on which this Agreement is entered into gives a Tax Confirmation to the Borrower by entering into this Agreement.

(i)		A UK Non-Bank Lender shall promptly notify the Borrower and the Agent if there is any change in the position from that set out in the Tax Confirmation. For the avoidance of doubt, the liability of any such Lender to the Borrower for a failure to comply with this Clause 12.2(i) shall be limited to what the Borrower could recover from that Lender under Clause 12.2(j).

12.3		Tax indemnity

(a)		The Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Facility Document.

(b)		Paragraph (a) above shall not apply:

(i)

with respect to any Tax assessed on a Facility Party:

	(A)		under the law of the jurisdiction in which that Facility Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Facility Party is treated as resident for tax purposes; or

	(B)		under the law of the jurisdiction in which that Facility Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Facility Party; or

(ii)

to the extent a loss, liability or cost:

	(A)		is compensated for by an increased payment under Clause 12.2 (Tax gross-up); or

	(B)		would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (d) of Clause 12.2 (Tax gross-up) applied.

(c)

A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower.

(d)		A Protected Party shall, on receiving a payment from the Borrower under this Clause 12.3, notify the Agent.

12.4		Tax Credit

		If the Borrower makes a Tax Payment and the relevant Facility Party determines that:

(a)		a Tax Credit is attributable to that Tax Payment; and

(b)		that Facility Party has obtained, utilised and retained that Tax Credit,

		the Facility Party shall pay an amount to the Borrower which that Facility Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Borrower.

12.5		Stamp taxes

		The Borrower shall pay and, within three Business Days of demand, indemnify each Facility Party against any cost, loss or liability that Facility Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Facility Document.

12.6		Value added tax

(a)		All consideration expressed to be payable under a Facility Document by any Party to a Facility Party shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply made by any Facility Party to any Party in connection with a Facility Document, that Party shall pay to the Facility Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT.

(b)		Where a Facility Document requires any Party to reimburse a Facility Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Facility Party against all VAT incurred by the Facility Party in respect of the costs or expenses.

13.		INCREASED COSTS

13.1		Increased Costs

(a)		Subject to Clause 13.3 (Exceptions) the Borrower shall, within three Business Days of a demand by the Agent, pay for the account of a Facility Party the amount of any Increased Costs incurred by that Facility Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

(b)		In this Agreement “Increased Costs” means:

	(i)		a reduction in the rate of return from the Facilities or on a Facility Party’s (or its Affiliate’s) overall capital;

	(ii)		an additional or increased cost; or

	(iii)		a reduction of any amount due and payable under any Facility Document,

which is incurred or suffered by a Facility Party or any of its Affiliates to the extent that it is attributable to that Facility Party having entered into its Commitment or funding or performing its obligations under any Facility Document.

13.2		Increased cost claims

(a)		A Facility Party intending to make a claim pursuant to Clause 13.1 (Increased Costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower.

(b)		Each Facility Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

13.3		Exceptions

(a)		Clause 13.1 (Increased Costs) does not apply to the extent any Increased Cost is:

	(i)		attributable to a Tax Deduction required by law to be made by the Borrower;

	(ii)		compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because one of the exclusions in paragraph (b) of Clause 12.3 (Tax indemnity) applied);

	(iii)		compensated for by the payment of the Mandatory Cost;

	(iv)		attributable to the wilful breach by the relevant Facility Party or its Affiliates of any law or regulation; or

	(v)		attributable to the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (“Basel ll”) or any other law or regulation which implements Basel ll (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

(b)

In this Clause 13.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 12.1 (Definitions).

14.		OTHER INDEMNITIES

14.1		Currency indemnity

(a)		If any sum due from the Borrower under the Facility Documents (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 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 Business Days of demand, indemnify each Facility Party to whom that Sum is due 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 that person 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 the Facility Documents in a currency or currency unit other than that in which it is expressed to be payable.

14.2		Other indemnities

		The Borrower shall, within three Business Days of demand, indemnify each Facility Party against any cost, loss or liability incurred by that Facility Party as a result of:

	(a)		the occurrence of any Trigger Event or Acceleration Event;

	(b)		a failure by the Borrower to pay any amount due under a Facility Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 25 (Sharing among the Facility Parties);

	(c)		funding, or making arrangements to fund, its participation in a Utilisation requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Facility Party alone); or

	(d)		a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by the Borrower.

14.3		Indemnity to the Agent

		The Borrower shall promptly indemnify the Agent against any reasonable cost, loss or liability properly incurred by the Agent (acting reasonably) as a result of:

	(a)		investigating any event which it reasonably believes is a Trigger Event, a Potential Trigger Event, an Acceleration Event or a Potential Acceleration Event; or

	(b)		acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

15.		MITIGATION BY THE LENDERS

15.1		Mitigation

(a)		Each Facility Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax gross-up and indemnities) or Clause 13 (Increased costs) including (but not limited to) transferring its rights and obligations under the Facility Documents to another Affiliate or Facility Office.

(b)		Paragraph (a) above does not in any way limit the obligations of the Borrower under the Facility Documents.

15.2		Limitation of liability

(a)		The Borrower shall indemnify each Facility Party for all costs and expenses reasonably incurred by that Facility Party as a result of steps taken by it under Clause 15.1 (Mitigation).

(b)		A Facility Party is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of that Facility Party (acting reasonably), to do so might be prejudicial to it.

16.		COSTS AND EXPENSES

16.1		Transaction expenses

		The Borrower shall promptly on demand pay the Agent and the Arranger the amount of all costs and expenses (including reasonable legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution and syndication of:

	(a)		this Agreement and any other documents referred to in this Agreement; and

	(b)		any other Facility Documents executed after the date of this Agreement.

16.2		Amendment costs

		If (a) the Borrower requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 26.9 (Change of currency), the Borrower shall, within three Business Days of demand, reimburse the Agent for the amount of all costs and expenses

SECTION 7
SUBORDINATION AND SECURITY

17.		SUBORDINATION AND SECURITY

17.1		Borrower STID

		The provisions of this Agreement shall take effect subject to the terms and conditions of the Borrower STID. If there is any conflict between the provisions of the Borrower STID and the provisions of this Agreement, the provisions of the Borrower STID shall prevail.

17.2		Subordinated Liabilities

		It is agreed by the parties that the liabilities of the Borrower under this Agreement constitute Subordinated Liabilities and that the Lenders are Non-Group Subordinated Creditors for the purposes of the Borrower STID and the Borrower and the Lenders are accordingly bound by the relevant provisions of the Borrower STID.

17.3		Secured obligations

		The Borrower agrees that its obligations to the Facility Parties under the Facility Documents shall at all times be secured in accordance with the Borrower Debenture.

17.4		Borrower Security

		Each Facility Party acknowledges that its rights under the Facility Documents are subject in all respects to the Borrower STID and that the Borrower Security Trustee holds the benefit of the Borrower Security on trust for the Borrower Beneficiaries in accordance with the Borrower STID.

SECTION 8
REPRESENTATIONS, UNDERTAKINGS, TRIGGER EVENTS
AND ACCELERATION EVENTS

18.		REPRESENTATIONS AND WARRANTIES

18.1		Representations and Warranties

		The Borrower represents and warrants to the Facility Parties and the Borrower Security Trustee on the terms of the Representations and Warranties (by reference to the facts and circumstances then existing) and acknowledge that the Facility Parties have entered into this Agreement in reliance on the Representations and Warranties.

18.2		Repetition

		The Repeating Representations and Warranties are deemed to be made by the Borrower (by reference to the facts and circumstances then existing) on the date of the Utilisation Request and the first day of each Interest Period.

19.		GENERAL COVENANTS

19.1		Covenants

		The Borrower covenants with the Facility Parties on the terms of the Covenants.

19.2		Breach of Covenants

		For the avoidance of doubt, a breach by the Borrower of any Covenant or Clause 19.4(a) shall only entitle a Facility Party or the Agent on its behalf to terminate this Agreement or declare any amounts owed under the Facility Documents to be due and payable in accordance with the provisions of the Borrower STID.

19.3		Effectiveness of the Covenants

		The Covenants and the undertakings in Clause 19.4(a) shall remain in force from the date of this Agreement for so long as (i) any amount is outstanding under this Agreement or any other Facility Document entered into in relation to this Agreement or (ii) any Commitment is in force. For the avoidance of doubt, this Clause 19.3 relates only to the Covenants to the extent that they apply to this Agreement and the relevant Facility Documents and not to any other Borrower Finance Document.

19.4		Relevant Payments

(a)		The Borrower shall not make any Relevant Payments other than payments in respect of any Non-Group Subordinated Liabilities unless (i) the provisions of Clause 9.12 (Relevant Payments) of the Borrower STID have been satisfied (or waived in accordance with the Borrower STID) and (ii) as at the Calculation Date immediately following the applicable Relevant Payment assuming that the proposed Relevant Payment had been

made, the Regulated Asset Ratio would be less than or equal to 85% as at that Calculation Date and any Calculation Date up to and including the earlier of the Final Forecast Date and the Letter of Credit Final Repayment Date. For the purposes of calculating the Regulated Asset Ratio, “Total Net Indebtedness” means, as at the relevant date, Total Net Indebtedness as defined in the Borrower STID except that any Indebtedness for Borrowed Money shall include all Non-Group Subordinated Liabilities (including any amount payable by the Borrower under paragraph (b) of Clause 5B.3 (Claims under Letter of Credit)).

(b)		The Borrower shall supply to the Agent with each set of financial statements delivered pursuant to Clause 7.2.1 (i) or (ii) of the Borrower STID, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with this Clause 19.4 as at the date as at which those financial statements were drawn up.

(c)		Cascal BV shall promptly, upon demand by the relevant Lender, indemnify that Lender for all costs, claims, losses or expenses (including legal and other third party fees) or liabilities (excluding any future loss of profit) which that Lender incurs as a result of any breach of Clause 19.4 (Relevant Payments) by the Borrower.

20.		ACCELERATION EVENTS

20.1		Consequences of Acceleration Events

		If an Acceleration Event has occurred and is continuing, then subject to the terms of the Borrower STID, the Borrower Security Trustee or the Qualifying Debt Representative in relation to a Loan shall, if so directed by the Controlling Finance Party, and the Agent shall, if so directed by the Majority Lenders, by notice to the Borrower:

(a)		cancel the Total Commitments whereupon they shall immediately be cancelled;

(b)		declare that all or any part of the Loans, shall become immediately due and payable together with accrued interest, and all other amounts accrued or outstanding under the Facility Documents, whereupon they shall become immediately due and payable; and/or

(c)		declare that all or any part of the Loans be payable on demand together with accrued interest (as applicable), and all other amounts accrued or outstanding under the Facility Documents, whereupon they shall immediately become payable on demand by the Borrower Security Trustee or the Qualifying Debt Representative in relation to the Utilisation on the instructions of the Controlling Finance Party or the Agent on the instruction of the Majority Lenders.

SECTION 9
CHANGES TO PARTIES

21.		CHANGES TO THE LENDERS

21.1		Assignments and transfers by the Lenders

		Subject to this Clause 21, a Lender (the “Existing Lender”) may:

(a)		assign any of its rights; or

(b)		transfer by novation any of its rights and obligations,

		to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (each a “New Lender”).

21.2		Conditions of assignment or transfer

(a)		The consent of the Borrower is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is to another Lender or an Affiliate of a Lender or a Trigger Event or Acceleration Event is continuing.

(b)		The consent of the Borrower to an assignment or transfer must not be unreasonably withheld or delayed. The Borrower will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused by the Borrower within that time.

(c)		The consent of the Borrower to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Cost.

(d)		An assignment will only be effective on receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Facility Parties as it would have been under if it was an Original Lender.

(e)		A transfer will only be effective if the procedure set out in Clause 21.5 (Procedure for transfer) is complied with.

(f)		If:

	(i)		a Lender assigns or transfers any of its rights or obligations under the Facility Documents or changes its Facility Office; and

	(ii)		as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 (Tax gross-up and indemnities) or Clause 13 (Increased Costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

21.3		Assignment or transfer fee

		The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of £1,000, save that no such fee shall be payable where the New Lender is The Royal Bank of Scotland plc or its Affiliate.

21.4		Limitation of responsibility of Existing Lenders

(a)		Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

	(i)		the legality, validity, effectiveness, adequacy or enforceability of the Facility Documents or any other documents;

	(ii)		the financial condition of the Borrower;

	(iii)		the performance and observance by the Borrower of its obligations under the Facility Documents or any other documents; or

	(iv)		the accuracy of any statements (whether written or oral) made in or in connection with any Facility Document or any other document,

and any representations or warranties implied by law are excluded.

(b)

Each New Lender confirms to the Existing Lender and the other Facility Parties that it:

	(i)		has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of the Borrower and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Facility Document; and

	(ii)		will continue to make its own independent appraisal of the creditworthiness of the Borrower and its related entities whilst any amount is or may be outstanding under the Facility Documents or any Commitment is in force.

(c)

Nothing in any Facility Document obliges an Existing Lender to:

(i)

accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 21; or

(ii)

support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by the Borrower of its obligations under the Facility Documents or otherwise.

21.5		Procedure for transfer

(a)		Subject to the conditions set out in Clause 21.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (b) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

(b)		On the Transfer Date:

	(i)		to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Facility Documents each of the Borrower and the Existing Lender shall be released from further obligations towards one another under the Facility Documents and their respective rights against one another shall be cancelled (being the “Discharged Rights and Obligations”);

	(ii)		each of the Borrower and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Existing Lender;

	(iii)		the Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under this Agreement; and

	(iv)		the New Lender shall become a Party as a “Lender”.

21.6

Disclosure of information

Any Lender may disclose to any of its Affiliates and any other person:

	(i)		to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement;

	(ii)		with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or the Borrower; or

(iii)

to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

any information about the Group and the Facility Documents as that Lender shall consider appropriate if, in relation to (i) or (ii), the person to whom the information is given has entered into a confidentiality agreement with the Borrower. This Clause supplements any previous agreement relating to the confidentiality of this information.

21.7		Borrower STID and Security

(a)		Each New Lender shall accede to the Borrower STID by entry into an accession agreement in the form set out in Schedule 4 (Form of Deed of Accession) to the Borrower STID.

(b)		Both the New Lender and the Existing Lender shall take all steps necessary to ensure the transfer of the benefit of any security relating to the transfer or assignment and shall share (in a proportion to be agreed) any costs attributable to the transfer of such security.

22.		CHANGES TO THE BORROWER

		The Borrower may not assign any of its rights or transfer any of its rights or obligations under the Facility Documents.

SECTION 10
THE FACILITY PARTIES

23.		ROLE OF THE AGENT AND THE ARRANGER

23.1		Appointment of the Agent

(a)		Each other Facility Party appoints the Agent to act as its agent under and in connection with the Facility Documents.

(b)		Each other Facility Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Facility Documents together with any other incidental rights, powers, authorities and discretions.

23.2		Duties of the Agent

(a)		The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

(b)		Except where a Facility Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

(c)		If the Agent receives notice from a Party referring to this Agreement, describing a Potential Trigger Event, a Potential Acceleration Event, a Trigger Event or an Acceleration Event and stating that the circumstance described is a Potential Trigger Event, a Potential Acceleration Event, a Trigger Event or an Acceleration Event, it shall promptly notify the Lenders.

(d)		If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Facility Party (other than the Arranger) under this Agreement it shall promptly notify the other Facility Parties.

(e)		The duties of the Agent under the Facility Documents are solely mechanical and administrative in nature.

23.3		Role of the Arranger

		Except as specifically provided in the Facility Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Facility Document.

23.4		No fiduciary duties

(a)		Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.

(b)		Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

23.5		Business with the Group

		The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group and its Affiliates.

23.6		Rights and discretions of the Agent

(a)		The Agent may rely on:

	(i)		any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

	(ii)		any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(b)

The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

	(i)		no Potential Trigger Event, Trigger Event, Potential Acceleration Event or Acceleration Event has occurred (unless it has actual knowledge of a Potential Trigger Event, Trigger Event, Potential Acceleration Event or Acceleration Event arising under paragraph (b) of the definition of “Acceleration Event”); and

	(ii)		any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.

(c)		The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(d)		The Agent may act in relation to the Facility Documents through its personnel and agents.

(e)		The Agent may disclose to any other Party any information it believes it has received as agent under this Agreement.

(f)		Notwithstanding any other provision of any Facility Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.

23.7		Majority Lenders’ instructions

(a)		Unless a contrary indication appears in a Facility Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any

instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from acting or exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with such an instruction of the Majority Lenders.

(b)		Unless a contrary indication appears in a Facility Document, any instructions given by the Majority Lenders will be binding on all the Facility Parties.

(c)		The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

(d)		In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

(e)		The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Facility Document.

23.8		Responsibility for documentation

		Neither the Agent nor the Arranger:

	(a)		is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, the Borrower or any other person given in or in connection with any Facility Document; or

	(b)		is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Facility Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Facility Document.

23.9		Exclusion of liability

(a)		Without limiting paragraph (b) below, the Agent will not be liable for any action taken by it under or in connection with any Facility Document, unless directly caused by its or its officers’, employees’, servants’ or agents’ gross negligence or wilful misconduct.

(b)		No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Facility Document and any officer, employee or agent of the Agent may rely on this Clause.

(c)		The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Facility Documents to be paid by the Agent if

the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

23.10		Lenders’ indemnity to the Agent

		Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) in acting as Agent under the Facility Documents (unless the Agent has been reimbursed by the Borrower pursuant to a Facility Document).

23.11		Resignation of the Agent

(a)		The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Facility Parties and the Borrower.

(b)		Alternatively the Agent may resign by giving notice to the other Facility Parties and the Borrower, in which case the Majority Lenders (after consultation with the Borrower) may appoint a successor Agent.

(c)		If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent (after consultation with the Borrower) may appoint a successor Agent (acting through an office in the United Kingdom).

(d)		The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Facility Documents.

(e)		The Agent’s resignation notice shall only take effect upon the appointment of a successor.

(f)		Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Facility Documents but shall remain entitled to the benefit of this Clause 23. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

(g)		After consultation with the Borrower, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above. In this event, the Agent shall resign in accordance with paragraph (b) above.

23.12		Confidentiality

(a)		In acting as agent for the Facility Parties the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

(b)		If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

(c)		Notwithstanding any other provision of any Facility Document to the contrary, neither the Agent nor the Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.

23.13		Relationship with the Lenders

(a)		The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

(b)		Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4 (Mandatory Cost Formulae).

23.14		Credit appraisal by the Lenders

		Without affecting the responsibility of the Borrower for information supplied by it or on its behalf in connection with any Facility Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Facility Document including but not limited to:

	(a)		the financial condition, status and nature of each member of the Group;

	(b)		the legality, validity, effectiveness, adequacy or enforceability of any Facility Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Facility Document;

	(c)		whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Facility Document, the transactions contemplated by the Facility Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Facility Document; and

	(d)		the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by any other person under or in connection with any Facility

Document, the transactions contemplated by the Facility Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Facility Document.

23.15		Agent’s Management Time

		Any amount payable to the Agent under Clause 14.3 (Indemnity to the Agent), Clause 16 (Costs and expenses) and Clause 23.10 (Lenders’ indemnity to the Agent) shall include the cost of utilising the Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to the Borrower and the Lenders, and is in addition to any fee paid or payable to the Agent under Clause 11 (Fees).

23.16		Deduction from amounts payable by the Agent

		If any Party owes an amount to the Agent under the Facility Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Facility Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Facility Documents that Party shall be regarded as having received any amount so deducted.

24.		CONDUCT OF BUSINESS BY THE FACILITY PARTIES

		No provision of this Agreement will:

	(a)		interfere with the right of any Facility Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

	(b)		oblige any Facility Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

	(c)		oblige any Facility Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

25.		SHARING AMONG THE FACILITY PARTIES

25.1		Payments to Facility Parties

		If a Facility Party (a “Recovering Facility Party”) receives or recovers any amount from the Borrower other than in accordance with Clause 26 (Payment Mechanics) and applies that amount to a payment due under the Facility Documents then:

	(a)		the Recovering Facility Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;

	(b)		the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Facility Party would have been paid, had the receipt or

recovery been received or made by the Agent and distributed in accordance with Clause 26 (Payment Mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

(c)

the Recovering Facility Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Facility Party as its share of any payment to be made, in accordance with Clause 26.5 (Partial payments).

25.2		Redistribution of payments

		The Agent shall treat the Sharing Payment as if it had been paid by the Borrower and distribute it between the Facility Parties (other than the Recovering Facility Party) in accordance with Clause 26.5 (Partial payments).

25.3		Recovering Lender’s rights

(a)		On a distribution by the Agent under Clause 25.2 (Redistribution of payments), the Recovering Facility Party will be subrogated to the rights of the Facility Parties which have shared in the redistribution.

(b)		If and to the extent that the Recovering Facility Party is not able to rely on its rights under paragraph (a) above, the Borrower shall be liable to the Recovering Facility Party for a debt equal to the Sharing Payment which is immediately due and payable.

25.4		Reversal of redistribution

		If any part of the Sharing Payment received or recovered by a Recovering Facility Party becomes repayable and is repaid by that Recovering Facility Party, then:

	(a)		each Facility Party which has received a share of the relevant Sharing Payment pursuant to Clause 25.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Facility Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Facility Party for its proportion of any interest on the Sharing Payment which that Recovering Facility Party is required to pay); and

	(b)		that Recovering Facility Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the Borrower will be liable to the reimbursing Facility Party for the amount so reimbursed.

25.5		Exceptions

(a)		This Clause 25 shall not apply to the extent that the Recovering Facility Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the Borrower.

(b)

A Recovering Facility Party is not obliged to share with any other Facility Party any amount which the Recovering Facility Party has received or recovered as a result of taking legal or arbitration proceedings, if:

	(i)		it notified the other Facility Parties of the legal or arbitration proceedings; and

	(ii)		the other Facility Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice or did not take separate legal or arbitration proceedings.

SECTION 11
ADMINISTRATION

26.		PAYMENT MECHANICS

26.1		Payments to the Agent

(a)		On each date on which a Lender is required to make a payment under a Facility Document, the Lender shall make the same available to the Agent (unless a contrary indication appears in a Facility Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

(b)		Payment shall be made to such account in the principal financial centre of the country of that currency (or in relation to euro, in the principal financial centre in a Participating Member State or London) with such bank as the Agent specifies.

26.2		Distributions by the Agent

		Each payment received by the Agent under the Facility Documents for another Party shall, subject to Clause 26.3 (Distributions to the Borrower) and Clause 26.4 (Clawback), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency (or in relation to euro, in the principal financial centre in a Participating Member State or London).

26.3		Distributions to the Borrower

		The Agent may (with the consent of the Borrower) apply any amount received by it for the Borrower in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrower under the Facility Documents or in or towards purchase of any amount of any currency to be so applied.

26.4		Clawback

(a)		Where a sum is to be paid to the Agent under the Facility Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

(b)		If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent calculated by the Agent to reflect its cost of funds.

26.5		Partial payments

(a)		If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by the Borrower under the Facility Documents, the Agent shall apply that payment towards the obligations of the Borrower under the Facility Documents in the following order:

	(i)		first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Issuing Bank or the Arranger under the Facility Documents;

	(ii)		secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

	(iii)		thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement including any amount due but unpaid under Clauses 5B.3 (Claims under a Letter of Credit) and 5B.4 (Indemnities); and

	(iv)		fourthly, in or towards payment pro rata of any other sum due but unpaid under the Facility Documents.

(b)		The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

(c)		Paragraphs (a) and (b) above will override any appropriation made by the Borrower.

26.6		No set-off by the Borrower

		All payments to be made by the Borrower under the Facility Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

26.7		Business Days

(a)		Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b)		During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

26.8		Currency of account

(a)		Subject to paragraphs (b) to (e) below, sterling is the currency of account and payment for any sum due from the Borrower under any Facility Document.

(b)		A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated on its due date.

(c)		Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

(d)		Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

(e)		Any amount expressed to be payable in a currency other than sterling shall be paid in that other currency.

26.9		Change of currency

(a)		Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

	(i)		any reference in the Facility Documents to, and any obligations arising under the Facility Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Borrower); and

	(ii)		any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

(b)		If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the London interbank market and otherwise to reflect the change in currency.

27.		NOTICES

27.1		Communications

		Any communication to be made under or in connection with the Facility Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

27.2		Address for notices

		In addition to the provisions of Clause 27.1, the address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Lender for any communication or document to be made or delivered under or in connection with the Facility Documents is that notified in writing to the Agent on or prior to the date on which it becomes a Party.

27.3		Delivery

(a)		Any communication or document made or delivered by one person to another under or in connection with the Facility Documents 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 27.2 (Address for notices), if addressed to that department or officer.

(b)		Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s signature below (or any substitute department or officer as the Agent shall specify for this purpose).

(c)		All notices from or to the Borrower shall be sent through the Agent.

27.4		Notification of address and fax number

		Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 27.2 (Address for notices) or changing its own address or fax number, the Agent shall notify the other Parties.

27.5		Electronic communication

(a)		Any communication to be made between the Agent and a Lender under or in connection with the Facility Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender:

	(i)		agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

	(ii)		notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

	(iii)		notify each other of any change to their address or any other such information supplied by them.

(b)

Any electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.

27.6		English language

		Any notice given or other document provided under or in connection with any Facility Document must be in English.

28.		CALCULATIONS AND CERTIFICATES

28.1		Accounts

		In any litigation or arbitration proceedings arising out of or in connection with a Facility Document, the entries made in the accounts maintained by a Facility Party are prima facie evidence of the matters to which they relate.

28.2		Certificates and Determinations

		Any certification or determination by a Facility Party of a rate or amount under any Facility Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

28.3		Day count convention

		Any interest, commission or fee accruing under a Facility Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 365 days (or, if any portion of the relevant period falls in a leap year, the sum of: (a) the actual number of days of the relevant period falling in the leap year divided by 366; and (b) the actual number of days of the relevant period falling in a non-leap year divided by 365).

29.		PARTIAL INVALIDITY

		If, at any time, any provision of the Facility Documents 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.

30.		REMEDIES AND WAIVERS

		No failure to exercise, nor any delay in exercising, on the part of any Facility Party, any right or remedy under the Facility Documents 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.

31.		AMENDMENTS AND WAIVERS

31.1		Required consents

(a)		Subject to Clause 31.2 (Exceptions) any term of the Facility Documents may be amended or waived only with the consent of the Majority Lenders and the Borrower and any such amendment or waiver will be binding on all Parties.

(b)		The Agent may effect, on behalf of any Facility Party, any amendment or waiver permitted by this Clause.

31.2		Exceptions

(a)		An amendment or waiver that has the effect of changing or which relates to:

	(i)		the definition of “Majority Lenders” in Clause 1.1 (Definitions);

	(ii)		an extension to the due date of payment of any amount under the Facility Documents;

	(iii)		a reduction in the Interest Rate or a reduction in the amount of any payment of principal, interest, fees or commission payable;

	(iv)		an increase in or any extension of any Commitment;

	(v)		a change to the Borrower;

	(vi)		any provision which expressly requires the consent of all the Lenders; or

	(vii)		Clause 2.2 (Lender’s rights and obligations), Clause 21 (Changes to the Lenders), Clause 25 (Sharing among the Facility Parties) or this Clause 31,

shall not be made without the prior consent of all the Lenders.

(b)		An amendment or waiver which relates to the rights or obligations of the Agent or the Arranger may not be effected without the consent of the Agent or the Arranger.

32.		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.

SECTION 12
GOVERNING LAW AND ENFORCEMENT

33.		GOVERNING LAW

		This Agreement is governed by English law.

34.		DISPUTES

34.1		Jurisdiction

		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”).

34.2		Courts of England

		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.

34.3		Other Courts

		This Clause 34.3 is for the benefit of the Facility Parties only. As a result, no Facility Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Facility Parties may take concurrent proceedings in any number of jurisdictions.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

SCHEDULE 2
CONDITIONS PRECEDENT TO INITIAL UTILISATION

1.		The Borrower

(a)		A copy, certified as at the date of this Agreement as a true and up-to-date copy by an authorised signatory of the Borrower, of its constitutional documents.

(b)		A copy, certified as at the date of this Agreement as a true and up-to-date copy by an authorised signatory of the Borrower, of a board resolution of the Borrower approving the execution, delivery and performance of this Agreement and the terms and conditions thereof and authorising a named person or persons to sign this Agreement and any documents to be delivered by the Borrower pursuant thereto.

(c)		A certificate of an authorised signatory of the Borrower setting out the names and signatures of the persons authorised to sign, on behalf of the Borrower, this Agreement and any documents to be delivered by the Borrower pursuant thereto.

(d)		A certificate of an authorised signatory of the Borrower confirming that borrowing the Total Commitments would not breach any restriction on its borrowing powers together with a copy of the resolutions of the shareholders adopting such changes to its constitutional documents as are required to allow the Borrower to give such certification (if any).

(e)		A copy, certified as at the date of this Agreement as a true and up-to-date copy by an authorised signatory of the Borrower, of the Latest Financial Statements.

(f)		A copy, certified as at the date of this Agreement as a true and up-to-date copy by an authorised signatory of the Borrower, of all OFWAT approvals required, if any, in respect of the Borrower’s entry into and performance of this Agreement and the transactions contemplated herein.

(g)		A certificate of an authorised signatory of the Borrower satisfactory to the Lenders that since the date of the Latest Financial Statements there has been no material adverse change in the business, assets, condition (financial or otherwise) of the Borrower which would materially and adversely affect the performance of the Borrower’s obligations under the Borrower STID and this Agreement.

(h)		A copy, certified as at the date of this Agreement as a true and up-to-date copy by an authorised signatory of the Borrower, of its Instrument of Appointment.

(i)		A solvency certificate in the agreed form, from two Directors of the Borrower.

(j)		A certificate of an authorised signatory of the Borrower confirming that no Trigger Event, Potential Trigger Event, Acceleration Event or Potential Acceleration Event has occurred and is continuing.

(k)		A copy, certified as at the date of this Agreement as a true and up-to-date copy by an authorised signatory of the Borrower, of a clearance statement from the Pensions Regulator dated 8 June 2006 in the agreed form.

2.		Structure Chart

		A copy, certified as at the date of this Agreement a true and up-to-date copy by an authorised signatory of the Borrower, of a structure chart indicating Parent, HoldCo and all its Subsidiaries and their ownership.

3.		Facility Documents

		The Agent has received original or certified copies of this Agreement and the Deed of Accession to the Borrower STID.

4.		Legal opinions

		A legal opinion of Linklaters, legal advisers to the Arranger, the Agent and the Original Lender in England, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

		A legal opinion of Allen & Overy LLP, legal advisers to the Borrower in relation to the due incorporation of and corporate authority of the Borrower in a form acceptable to the Agent.

5.		Litigation

		A certificate of an authorised director of the Borrower confirming that there is no litigation which is material and adverse in the context of the Facilities.

SCHEDULE 3
PART IA
UTILISATION REQUEST
LOANS


From:		Bournemouth & West Hampshire Water plc

To:		[Agent]

Dated:

Dear Sirs

Bournemouth & West Hampshire Water plc — £32,690,000 Facility Agreement
dated [•] June 2006 (the “Agreement”)

1.		We refer to the Agreement. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

2.		We wish to borrow a Loan on the following terms:


Proposed Utilisation Date:		[ ] (or, if that is not a Business Day, the next Business Day)

Amount:		[ ]

Interest Periods:		[ ]

3.		We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.

4.		The proceeds of the Loan should be credited to [account].

5.		This Utilisation Request is irrevocable.

Yours faithfully

authorised signatory for

Boumemouth & West Hampshire Water plc

PART IB
UTILISATION REQUEST
LETTERS OF CREDIT


From:		[Borrower]

To:		[Agent]

Dated:

Dear Sirs

Bournemouth & West Hampshire Water plc — £32,690,000 Facility Agreement
dated [•] June 2006 (the “Agreement”)

We wish to arrange for a Letter of Credit to be issued by the Issuing Bank on the following terms:


Proposed Utilisation Date:		[ ] (or, if that is not a Business Day, the next Business Day)

Facility to be utilised: Amount:		Letter of Credit Facility

Amount:		[ ] or, if less, the Available Facility

Beneficiary:		[ ]

Term or Expiry Date:		[ ]

7.		We confirm that each condition specified in Clause 5A.6(b) (Issue of Letters of Credit) is satisfied on the date of this Utilisation Request.

8.		We attach a copy of the proposed Letter of Credit.

9.		This Utilisation Request is irrevocable.

Delivery Instructions:

[specify delivery instructions]

Yours faithfully

authorised signatory for

Boumemouth & West Hampshire Water plc

PART II
SELECTION NOTICE


From:		[Bournemouth & West Hampshire Water Plc]

To:		[The Royal Bank of Scotland plc]

Dated:

Dear Sirs

Bournemouth & West Hampshire Water Plc — £32,690,000 Facility Agreement
dated [ ] June 2006 (the “Agreement”)

1.		We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.

2.		We refer to the following Loan with an Interest Period ending on [ ].*

3.		We request that the above Loan be divided into [ ] Loans with the following £[amounts] and Interest Periods:**

		or

		We request that the next Interest Period for the above Loan[s] is [ ].***

4.		This Selection Notice is irrevocable.

Yours faithfully

authorised signatory for

Bournemouth & West Hampshire Water plc


*		Insert details of all Loans which have an Interest Period ending on the same date.

**		Use this option if division of Loans is requested.

***		Use this option if sub-division is not required.

SCHEDULE 4
MANDATORY COST FORMULAE

1.		The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

2.		On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.

3.		The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.

4.		The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows:


AB + C(B D) + E x 0.01 100 - (A + C)		per cent per annum

Where:


A		is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.

B		is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate of interest specified in paragraph (a) of Clause 9.3 (Default interest)) payable for the relevant Interest Period on the Loan.

C		is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.


D		is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing Special Deposits.

E		is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.

5.		For the purposes of this Schedule:

(a)		“Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

(b)		“Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force fro time to time in respect of the payment of fees for the acceptance of deposits.

(c)		“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and

(d)		“Tariff Base” has the meaning given to it in, and will be calculated in accordance with the Fees Rules.

6.		In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.

7.		If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.

8.		Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender:

	(a)		the jurisdiction of its Facility Office; and

	(b)		any other information that the Agent may reasonably require for such purpose.

Each Lender shall promptly notify the Agent in writing of any change to the information provided by it pursuant to this paragraph.

9.		The percentages of each Lender for the purpose of A and C above and the rates of charge for each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraph 7 and 8 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.

10.		The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.

11.		The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender pursuant to paragraphs 3, 7 and 8 above.

12.		Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties.

13.		The Agent may from time to time, after consultation with the Borrower and the Lenders, determine and notify to all Parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties.

SCHEDULE 5
FORM OF TRANSFER CERTIFICATE
PART I


To:		[ ] as Agent

From:		[The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)

Dated:

Bournemouth & West Hampshire Water plc — £32,690,000 Facility Agreement
dated [•] June 2006 (the “Agreement”)

1.		We refer to the Agreement. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

2.		We refer to Clause 21.5 (Procedure for transfer):

	(a)		The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender’s Commitment, rights and obligations referred to in the Schedule in accordance with Clause 21.5 (Procedure for transfer).

	(b)		The proposed Transfer Date is [ ].

	(c)		The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 27.2 (Address for notices) are set out in the Schedule.

3.		The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 21.4 (Limitation of responsibility of Existing Lenders).

4.		[The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Facility Document is either:

	(a)		a company resident in the United Kingdom, or a partnership each member of which is a company resident in the United Kingdom, for United Kingdom tax purposes; or

	(b)		a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a branch or agency and interest payable in respect of an advance under a Facility Document falls to be brought into account in computing

the chargeable profits of that company for the purposes of section 11(2) of the Taxes Act.]¹

5.		This Transfer Certificate 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 Transfer Certificate.

6.		This Transfer Certificate is governed by English law.

THE SCHEDULE

COMMITMENT/RIGHTS AND OBLIGATIONS TO BE TRANSFERRED

[insert relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments.]


[Existing Lender]		[New Lender]

By:		By:

This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as.

[ ]

[Agent]

By:


¹		Include if New Lender comes within paragraph (ii) of the definition of Qualifying Lender in Clause 12.1 (Definitions)

PART II
TRANSFER CERTIFICATE (PAR)


BANK:		Date:

TRANSFEREE:

This Transfer Certificate is entered into pursuant to (i) the agreement (the “Sale Agreement”) evidenced by the Confirmation dated [ ] between the Bank and the Transferee (acting directly or through their respective agents) and (ii) the Credit Agreement.

On the Transfer Date, the transfer by way of novation from the Bank to the Transferee on the terms set out herein and in the Credit Agreement shall become effective subject to:

	(i)		the Sale Agreement and the terms and conditions incorporated in the Sale Agreement;

	(ii)		the terms and conditions annexed hereto; and

	(iii)		the schedule annexed hereto,

all of which are incorporated herein by reference.


The Bank				The Transferee
[ ]				[ ]

By:				By:

THE SCHEDULE


Credit Agreement Details:
Appointee(s):

Credit Agreement Dated:

Guarantor(s):

Agent Bank:

Total Facility Amount:

Governing Law:

Additional Information:

Transfer Details:

Name of Tranche Facility:


Nature (Revolving, Term, Acceptances

Guarantee/Letter of Credit, Other):

Final Maturity:

Participation Transferred

Commitment transferred²

Drawn Amount (details below):¹

Undrawn Amount:¹

Settlement Date:

Details of outstanding Credits¹
Specify in respect of each Credit:
Transferred Portion (amount):

Tranche/Facility:

q Details of other Credits are set out on the attached sheet


²		As at the date of the Transfer Certificate

TERMS AND CONDITIONS

These are the Terms and Conditions applicable to the transfer certificate including the Schedule thereto (the “Transfer Certificate”) to which they are annexed.

1.		Interpretation

		In these Terms and Conditions words and expressions shall (unless otherwise expressly defined herein) bear the meaning given to them in the Transfer Certificate, the Facility Agreement or the Sale Agreement.

2.		Transfer

		The Bank requests the Transferee to accept and procure the transfer by novation of all or a part (as applicable) of such participation of the Bank under the Credit Agreement as is set out in the relevant part of the Transfer Certificate under the heading “Participation Transferred” (the “Purchased Assets”) by counter-signing and delivering the Transfer Certificate to the Agent at its address for the service of notice specified in the Credit Agreement. On the Transfer Date the Transferee shall pay to the Bank the Settlement Amount as specified in the pricing letter between the Bank and the Transferee dated the date of the Transfer Certificate (adjusted, if applicable, in accordance with the Sale Agreement) and completion of the transfer will take place.

3.		Effectiveness of Transfer

		The Transferee hereby requests the Agent to accept the Transfer Certificate as being delivered to the Agent pursuant to and for the purposes of the Credit Agreement so as to take effect in accordance with the terms of the Credit Agreement on the Transfer Date or on such later date as may be determined in accordance with the terms thereof.

4.		Transferee’s Undertaking

		The Transferee hereby undertakes with the Agent and the Bank and each of the other parties to the Credit Documentation that it will perform in accordance with its terms all those obligations which by the terms thereof will be assumed by it after delivery of the Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which the Transfer Certificate is to take effect.

5.		Payments

5.1		Place

		All payments by either party to the other under the Transfer Certificate shall be made to the Receiving Account of that other party. Each party may designate a different account as its Receiving Account for payment by giving the other not less than five Business Days’ notice before the due date for payment.

5.2		Funds

		Payments under the Transfer Certificate shall be made in the currency in which the amount is denominated for value on the due date at such times and in such funds as are customary at the time for settlement of transactions in that currency.

6.		Transferee’s Tax Confirmation

		The Transferee confirms that the person beneficially entitled to interest payable to the Transferee in its capacity as Lender in respect of an advance under a Facility Document is either:

	(a)		a company resident in the United Kingdom, or a partnership each member of which is a company resident in the United Kingdom, for United Kingdom tax purposes; or

	(b)		a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a branch or agency and interest payable in respect of an advance under a Facility Document falls to be brought into account in computing the chargeable profits of that company for the purposes of section 11(2) of the Taxes Act.

7.		The Agent

		The Agent shall not be required to concern itself with the Sale Agreement and may rely on the Transfer Certificate without taking account of the provisions of such agreement.

8.		Assignment of Rights

		The Transfer Certificate shall be binding upon and enure to the benefit of each party and its successors and permitted assigns provided that neither party may assign or transfer its rights thereunder without the prior written consent of the other party.

9.		Governing Law and Jurisdiction

		The Transfer Certificate (including, without limitation, these Terms and Conditions) shall be governed by and construed in accordance with the laws of England, and the parties submit to the exclusive jurisdiction of the English courts.

		Each party irrevocably appoints the person described as process agent (if any) specified in the Sale Agreement to receive on its behalf service of any action, suit or other proceedings in connection with the Transfer Certificate. If any person appointed as process agent ceases to act for any reason the appointing party shall notify the other party and shall promptly appoint another person incorporated within England and Wales to act as its process agent.

PART II
LETTERS OF CREDIT


Delivery of a duly completed Utilisation Request (Clause 5A.3 (Delivery of a Utilisation Request for Letters of Credit))		U-3 Business Days 2.30 p.m.

Agent notifies the Issuing Bank and the Lenders of the Letter of Credit in accordance with 5A.6 (Issue of Letters of Credit)		U-2 Business Days 2.30 p.m.

Delivery of a duly completed Renewal Request (Clause 5A.7 (Renewal of a Letter of Credit))		10:00a.m. on the third Business Day before the Expiry Date (as defined in Clause 5A.1(a))

“U” = date of utilisation

SCHEDULE 7
FORM OF COMPLIANCE CERTIFICATE


To:		[ ] as Agent

From:		Bournemouth & West Hampshire Water plc

Dated:

Dear Sirs

Bournemouth & West Hampshire Water plc — £32,690,000 Facility Agreement
dated [•] June 2006 (the “Agreement”)

1.		We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

2.		We confirm that: [Insert details of covenants to be certified]

3.		[We confirm that no Potential Trigger Event, Potential Acceleration Event, Trigger Event or Acceleration Event is continuing.]^*


Signed:
	Director of Bournemouth & West Hampshire Water plc	Director of Bournemouth & West Hampshire Water plc


^*		If this statement cannot be made, the certificate should identify any Potential Trigger Event or Potential Acceleration Event that is continuing and the steps, if any, being taken to remedy it.

SCHEDULE 8
FORM OF LETTER OF CREDIT


To:		[•] as trustees of the Water Company Sub-Fund section of the Biwater Retirement and Security Scheme (each a Beneficiary and together the Beneficiaries); and

		The companies listed in Schedule 1 (Companies) [(each a Company and together the Companies)]/[(the Company)]

[DATE]

Dear Sirs,

Irrevocable Standby Letter of Credit no. [•]

[ISSUING BANK] (the Issuing Bank) at the request of [instructing party] issues this irrevocable standby letter of credit (Letter of Credit) in favour of the Beneficiaries on the following terms:

1.		Definitions

		In this Letter of Credit:

		Business Day means a day (other than a Saturday or a Sunday) on which banks are open for general business in London.

		Demand means a demand for a payment under this Letter of Credit in the form of Schedule 2 (Form of Demand).

		Eligible Valuation means a valuation of the assets and liabilities of the Scheme carried out [in accordance with the requirements of FRS17 as adopted for the purpose of inclusion in the Compan[y’s][ies’] accounts for the year ended 31 March [•]].

		Expiry Date means 31 March 2007.

		Fitch means Fitch Ratings Limited or any successor to its ratings business.

		Insolvency Event means an ‘insolvency event’ as defined in section 121 of the Pensions Act 2004 or regulations made from time to time thereunder.

		Minimum Replacement Amount means an amount equal to the lower of:

(a)		the Total L/C Amount; and

(b)		the amount calculated in accordance with the following formula:

		[L — S — C

		where:

C = the amount of any Special Contributions made to the Scheme since the date of the most recent Eligible Valuation;

L = the total liabilities of the Scheme as set out in the most recent Eligible Valuation;

S = the assets of the Scheme as set out in the most recent Eligible Valuation.]

Moody’s means Moody’s Investors Service Limited or any successor to its ratings business.

Requisite Rating means, in respect of a person, that the person has long term unsecured debt instruments in issue which are neither subordinated nor guaranteed, which have a rating of at least one of the following:

(a)		AA- or better by Fitch;

(b)		Aa3 or better by Moody’s; or

(c)		AA- or better by S&P.

S&P means Standard and Poor’s Rating Services, a Division of the McGraw Hill Companies, Inc. or any successor to its ratings business.

Scheme means the Water Company Sub-Fund section of the Biwater Retirement and Security Scheme.

Special Contributions means the total contributions paid and due to be paid by the employers and employees into the Scheme since the previous Eligible Valuation less:

(a)		(the cost of accrual of Scheme benefits;

(b)		scheme expenses incurred since the previous Eligible Valuation; and

(c)		the cost of augmentations granted since the previous Eligible Valuation

[as adjusted for investment returns].

Total L/C Amount means £4,690,000.

Ultimate Expiry Date means 31 March 2011.

2.		Issuing Bank’s agreement

(a)		The Beneficiaries may request a drawing under this Letter of Credit by giving to the Issuing Bank a duly completed Demand by 5 p.m. on any day falling on or before the Expiry Date. Subject to the provisions of this Letter of Credit, any number of Demands may be given.

(b)		A Demand may only be given:

	(i)		upon the occurrence of an Insolvency Event in respect of [the]/[a] Company which occurs on or before the Expiry Date; or

	(ii)		in the circumstances set out in paragraph 3(a) (Expiry and renewal);

The Issuing Bank is not required to investigate or confirm whether any of the events set out above have occurred.

(c)		Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and irrevocably undertakes to the Beneficiaries that, within [5] Business Days of receipt by it of a Demand validly presented under this Letter of Credit, it must pay to the Beneficiaries the amount which is demanded for payment in that Demand.

(d)		The Issuing Bank will not be obliged to make a payment under this Letter of Credit to the extent that the aggregate of all payments made by it under this Letter of Credit would exceed the Total UC Amount.

(e)		In circumstances where:

	(i)		a Demand may be given in accordance with paragraph (b) above; and

	(ii)		the liability of the Compan[y]/[ies] to the Beneficiaries is not finally determined, the Beneficiaries:

	(iii)		may make a Demand for the Total L/C Amount; and

	(iv)		shall place any monies received by them from the Issuing Bank under this Letter of Credit in an interest-bearing suspense account to be applied against the Compan[y’s]/[ies] liability to the Beneficiaries, once finally determined.

(f)

If at any time:

	(i)		monies in a suspense account have been applied against the finally determined liability to the Beneficiaries of [the/[every] Company in respect of which an Insolvency Event has occurred prior to that time; and

	(ii)		no event has occurred prior to that time which would entitle the Beneficiaries to make a demand under subparagraphs (b)(ii) above;

then the Beneficiaries shall pay any amount remaining to the credit of such suspense account at the direction of Issuing Bank.

3.		Expiry and renewal

(a)		Subject to (d) below, the [Company]/[Companies] must:

(i)

not less than 30 days prior to the Expiry Date, procure that a person with a Requisite Rating enters into a replacement letter or letters of credit with the Beneficiaries which is/are:

	(i)		on materially the same terms as set out in this Letter of Credit; and

	(ii)		in an amount which is equal to or greater than the Minimum Replacement Amount; and

	(iii)		for a term of at least 12 months to 31 March in the next calendar year following the Expiry Date; or

(ii)

if [it]/[they] fail[s] to procure a replacement letter or letters of credit in accordance with subparagraph (i) above, pay, or procure the payment of, to the Beneficiaries (for application in accordance with the rules of the Scheme) the Minimum Replacement Amount on the date falling not less than [5] Business Days prior to the Expiry Date,

provided that, if the [Company]/[Companies] fail[s] to take any of the steps referred to in subparagraphs (i) and (ii) above the Beneficiaries may submit a Demand on the Expiry Date for the Total UC Amount.

(b)

At 5 p.m. (London time) on the Expiry Date the obligations of the Issuing Bank under this Letter of Credit will cease with no further liability on the part of the Issuing Bank except for any Demand validly presented under this Letter of Credit that remains unpaid. The Issuing Bank will only be released from its obligations under this Letter of Credit prior to the Expiry Date if:

	(i)		the Compan[y]/[ies] pay[s] to the Beneficiaries the Minimum Replacement Amount in accordance with subparagraph (a)(ii) above; or

	(ii)		the Beneficiaries notify the Issuing Bank that such obligations are so released.

(c)		When the Issuing Bank is no longer under any obligation under this Letter of Credit, the Beneficiaries must return the original of this Letter of Credit to the Issuing Bank.

(d)		The [Company]/[Companies] shall not procure any replacement letter or letters of credit in accordance with sub-paragraph (a)(i) above with an expiry date later than the Ultimate Expiry Date. [5] Business Days prior to the Ultimate Expiry Date the [Company]/[Companies] shall pay or procure the payment to the Beneficiaries (for application in accordance with the rules of the Scheme) of any Minimum Replacement Amount provided that if the [Company]/[Companies] fail[s] to pay or procure such a payment the Beneficiaries may submit a Demand on the Ultimate Expiry Date for the Minimum Replacement Amount.

4.		Payments

		All payments under this Letter of Credit must be made in sterling and for value on the due date to the account of the Beneficiaries specified in the Demand.

5.		Delivery of Demand

		Each Demand must be in writing, and may be given in person, by post, fax, e mail, telex or any other electronic communication and must be received in legible form by the Issuing Bank at its address as follows:

		[•]

		For the purpose of this Letter of Credit, electronic communication will be treated as being in writing.

6.		Assignment

		The Beneficiaries’ rights under this Letter of Credit may not be assigned or transferred.

7.		ISP

		Except to the extent it is inconsistent with the express terms of this Letter of Credit, this Letter of Credit is subject to the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590).

8.		Governing Law

		This Letter of Credit is governed by English law.

9.		Jurisdiction

		The courts of England have exclusive jurisdiction to settle any dispute in connection this Letter of Credit.

Yours faithfully,

[ISSUING BANK]

By:

We agree to the above

Beneficiaries

[•] as trustee of the Biwater Retirement and Security Scheme

By:

SCHEDULE 2
FORM OF DEMAND

To: [ISSUING BANK]

[DATE]

Dear Sirs,

Irrevocable Standby Letter of Credit no. [•] issued in favour of [•] as trustees of the Water Company Sub-Fund section of the Biwater Retirement and Security Scheme (the Letter of Credit)

We refer to the Letter of Credit. Terms defined in the Letter of Credit have the same meaning when used in this Demand.

1.		We certify that:

		[an Insolvency Event has occurred in relation to [name of Company].]

		OR

		[the Compan[y]/[ies [has]/[have] not complied with [its]/[their] obligations in respect of paragraphs 3(a)(i) and 3(a)(ii) (Expiry and renewal) of the Letter of Credit.]

		We therefore demand payment of the sum of [•].

		OR

		[the [Company]/[Companies] [has]/[have] not complied with [its]/[their] obligations in respect of paragraph 3(d) (Expiry and renewal) of the Letter of Credit.]

2.		Payment should be made to the following account:

		Name: [•]

		Account Number: [•]

		Bank: [•]

3.		The date of this Demand is not later than the Expiry Date.

Yours faithfully,

(Authorised Signatory)

For

[BENEFICIARY]


The Borrower

BOURNEMOUTH & WEST HAMPSHIRE WATER PLC

Address:		George Jessel House Francis Avenue Boumemouth BH11 8NB

Fax No:		+44 (0)1202 597 022

Attention:		Finance Director/Company Secretary

By:		ANTHONY FERRAR

By:

The Arranger

THE ROYAL BANK OF SCOTLAND plc

Address:		PO Box 39952 2¹/2 Devonshire Square London EC2M 4XJ

Fax No.:		+44 (0)20 7615 0135

Telephone No.:		+44 (0)20 7672 6299

Attention:		Alison Withers/Carly Fitzgerald, Loans Administration Unit

With a copy to:

Address:		135 Bishopsgate London EC2M 3UR

Fax No:		020 7085 8282


Telephone No.:		+44 (0)20 7085 8492/ 8495

Attention:		Peter J Stringer/ Mike Dando

By:		PETER J. STRINGER

The Issuing Bank

Address:		PO Box 39952 2¹/2 Devonshire Square London EC2M 4XJ

Fax No.:		+44 (0)20 7615 0135

Telephone No.:		+44 (0)20 7672 6299

Attention:		Alison Withers/Carly Fitzgerald, Loans Administration Unit

With a copy to:

Address:		135 Bishopsgate London EC2M 3UR

Fax No:		020 7085 8282

Telephone No.:		+44 (0)20 7085 8492/ 8495

Attention:		Peter J Stringer/ Mike Dando

By:		PETER J. STRINGER

The Original Lender

THE ROYAL BANK OF SCOTLAND plc

Address:		PO Box 39952 2¹/2 Devonshire Square


		London EC2M 4XJ

Fax No.:		+44 (0)20 7615 0135

Telephone No.:		+44 (0)20 7672 6299

Attention:		Alison Withers/Carly Fitzgerald, Loans Administration Unit

With a copy to:

Address:		135 Bishopsgate London EC2M 3UR

Fax No:		020 7085 8282

Telephone No.:		+44 (0)20 7085 8492/ 8495

Attention:		Peter J Stringer/ Mike Dando

By:		PETER J. STRINGER

The Agent

THE ROYAL BANK OF SCOTLAND plc

Address:		PO Box 39952 2¹/2 Devonshire Square London EC2M 4XJ

Fax No.:		+44 (0)20 7615 0135

Telephone No.:		+44 (0)20 7672 6299

Attention:		Alison Withers/Carly Fitzgerald, Loans Administration Unit

With a copy to:

Address:		135 Bishopsgate


	Page
SCHEDULE 1 COMPANIES SCHEDULE 2 FORM OF DEMAND

SCHEDULES

SCHEDULE 1 The Original Lender		58
SCHEDULE 2 Conditions Precedent to initial utilisation		59
SCHEDULE 3 Part IA		61
Part IB Utilisation Request Letters of Credit		62
SCHEDULE 4 Mandatory Cost Formulae		64
SCHEDULE 5 Form of Transfer Certificate		67
SCHEDULE 6 Timetables Part I Loan		74
SCHEDULE 7 Form of Compliance Certificate		76
SCHEDULE 8 Form of Letter of Credit		77

16.3		Enforcement costs

		The Borrower shall, within three Business Days of demand, pay to each Facility Party the amount of all costs and expenses (including legal fees) incurred by that Facility Party in connection with the enforcement of, or the preservation of any rights under, any Facility Document.


Name of Original Lender		Term Facility Commitment

THE ROYAL BANK OF SCOTLAND plc		£28,000,000

Name of Original Lender		Letter of Credit Commitment

THE ROYAL BANK OF SCOTLAND plc		£4,690,000 in the period on and from the date of this Agreement to 31 March 2007

		the Minimum Replacement Amount (as defined in Schedule 8 (Form of Letter of Credit)) thereafter


Administration Details

Bank’s Receiving Account:

Transferee’s Receiving Account:
Addresses
Bank		Transferee
[ ]		[ ]
Address:		Address:
Telephone:		Telephone:
Facsimile:		Facsimile:
Telex:		Telex:
Attn/Ref:		Attn/Ref:


		Loans in domestic sterling

Delivery of a duly completed Utilisation Request (Clause		U-3 Business Days

5.1 (Delivery of a Utilisation Request))		2:30 pm

Agent notifies the Lenders of a Loan in accordance with		U-1 Business Days

Clause 5.4 (Lenders’ participation))		3:00 pm

LIBOR is fixed		Quotation Day as of 11:00 a.m.

“U” = date of utilisation


Company Name	Registration Number	Address
Bournemouth & West	2924312	George Jessel House
Hampshire Water plc		Francis Avenue
		Boumemouth
		Dorset BH11 8NB


Company name	Registration number	Address
Cascal Services Ltd	3757398	Biwater House
		Station Approach
		Dorking
		Surrey RH4 1TZ


Fax No:		London EC2M 3UR 020 7085 8282

Telephone No.:		+44 (0)20 7085 8492/ 8495

Attention:		Peter J Stringer/ Mike Dando

By:		PETER J. STRINGER

CASCAL B.V.

CASCAL B.V.

Address:		BiWater House Station Approach Dorking Surrey RH4 1TZ

Fax No:		+44(0)1306 746031

Attention:		David Sayers

By:		DG SAYERS