EX-10.18



 





Exhibit 10.18




CASCAL N.V.




2008 LONG TERM INCENTIVE PLAN




ARTICLE 1




ESTABLISHMENT, OBJECTIVES AND DURATION




     1.1 ESTABLISHMENT OF THE PLAN. The Cascal 2008 Long Term Incentive Plan (the “Plan”)
as set forth in this document was adopted and approved (as applicable) on January 7, 2008 by the
management board, the supervisory board and the general meeting of shareholders of Cascal B.V., a
Dutch private company with limited liability to be converted to Cascal N.V., a Dutch public limited
company (the “Company”), subject to the amendment to the Company’s articles of association
whereby a one-tier board of directors is established, and effective as of the listing of common
shares of the Company on the New York Stock Exchange (the “Effective Date”). Under the
terms of the Plan, the Board of Directors, advised by and at the recommendation or proposal of the
Nomination and Compensation Committee of the Company, will establish performance criteria for
annual awards of conditional bonuses to Employees of the Company.



     1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the profitability and
growth of the Company through incentives consistent with the Company’s targets and that link and
align the personal interests of Participants with the interests of shareholders over the longer
term. The Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of Participants who make significant contributions to
the Company’s success and to allow Participants to share in the success of the Company.



     1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as described in
Section 1.1, and shall remain in effect, subject to the right of the Board of Directors to amend or
terminate the Plan at any time pursuant to Article 9.



ARTICLE 2




DEFINITIONS




     Whenever used in the Plan, the following terms shall have the meanings set forth below, and
when the meaning is intended, the initial letter of the word or words, as the case may be, shall be
capitalized:



 









 





     “Articles” shall mean the Articles of Association of the Company, as the same may be
amended from time to time.



     “Award” means, individually or collectively, an award under this Plan.



     “Biwater” shall mean Biwater Plc and its direct and indirect subsidiaries and joint
venture investments and excludes the Group.



     “Board” or “Board of Directors” means the Board of Directors of the Company.



     “Bonus” shall mean a payment pursuant to an Award.



     “Committee” means the Nomination and Compensation Committee of the Company.



     “Company” means Cascal N.V., a Dutch public limited company, as well as any successor
to the Company as provided in Article 12.



     “Disability” shall mean that the affected Participant is incapacitated by reason of a
physical or mental illness which is long-term in nature and which prevents the Participant from
performing the substantial and material duties of his employment with the Company or any other
member of the Group, provided that such incapacity can reasonably be expected to prevent
the Participant from working at least six consecutive months in any twelve month period. The
Company may require the Participant to have an examination at any time for the purpose of
determining whether the Participant has a long-term disability as described in the preceding
sentence, and the Participant agrees to submit to such examination upon the recommendation by the
Committee and approval by the Board, provided that the Company shall pay all costs and
expenses associated with such examination.



     “Employee” shall mean any employee of the Company or any other member of the Group.



     “Effective Date” shall have the meaning ascribed to such term in Section 1.1.



     “Group” shall mean the Company and its direct and indirect subsidiaries and joint
venture investments.



     “Participant” means an Employee who has outstanding an Award granted under the Plan.



     “Performance Period” means the time period during which performance targets must be
achieved with respect to an Award, as recommended by the Committee and approved by the Board.



     “Rules” shall mean the Board Rules of the Company as the same may be amended from time
to time.



     “Shares” shall mean the common shares of the Company.



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     “Termination Event” shall mean any one of the following: Disability, Death, redundancy
(within the meaning of the Employment Rights Act of 1996 (UK) or any equivalent legislation in the
relevant jurisdiction), retirement at contractual retirement age, retirement prior to contractual
retirement age (within the consent of the Participant’s employer), the Participant’s employer
ceasing to be a member of the Group, permanent transfer (i.e. not a temporary secondment) of a
Participant from one member of the Group to Biwater, or any other reason which the Committee, in
its sole discretion, proposes and the Board approves to treat as a Termination Event.



ARTICLE 3




ADMINISTRATION




     3.1 THE BOARD AND THE COMMITTEE. The Plan shall be administered by the Board, advised by and
at the recommendation or proposal of the Committee.



     Where in this Plan reference is made to an authority of the Board to determine, set or
establish, select, amend or adjust something (or similar wording to that effect), this shall mean
the Board, advised by and at the recommendation or proposal of the Committee.



     3.2 AUTHORITY OF THE BOARD. The Board shall have power to select Employees who receive
Awards under the Plan; determine the sizes and types of Awards; determine the terms and conditions
of Awards in a manner consistent with the Plan; construe and interpret the Plan and any Award
agreement or instrument entered into under the Plan; establish, amend or waive rules and
regulations for the Plan’s administration; and (subject to the provisions of Article 9) amend the
terms and conditions of any outstanding Award to the extent such terms and conditions are within
the discretion of the Board as provided in the Plan. Further, the Board shall make all other
determinations which may be necessary or advisable for the administration of the Plan.



     3.3 DECISIONS BINDING. All determinations and decisions made by the Board pursuant to the
provisions of the Plan and all related orders and resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its stockholders, Employees,
Participants, and their estates and beneficiaries.



ARTICLE 4




ELIGIBILITY AND PARTICIPATION




     4.1 ELIGIBILITY. Persons eligible to participate in this Plan include all Employees of the
Company, as determined by the Board, but excluding non-executive directors of the Company.



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     4.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Board may, from time to
time, select from all eligible Employees those to whom Awards shall be granted and shall determine
the nature and amount of each Award.



ARTICLE 5




AWARDS




     5.1 GRANT OF AWARDS. Subject to the terms of the Plan, Awards may be granted to Participants
in such amounts and upon such terms, and at any time and from time to time, as shall be determined
by the Board. Awards will take the form of conditional bonus awards and shall be determined by
reference to a fixed percentage of an Employee’s base salary. Except as otherwise determined by
the Board in exceptional circumstances, such fixed percentage shall not exceed one hundred percent
(100%).



     5.2 PERFORMANCE TARGETS. The Board shall set performance targets in its discretion which,
depending on the extent to which they are met, will determine the amount of the Bonus that will be
paid out to the Participant. The performance targets shall be based on the appreciation in the
share price of the Company’s common shares and the growth in earnings per share. The time period
during which the performance targets must be met is referred to as the “Performance
Period.” The performance targets applicable for the initial Awards under the Plan, which are
contemplated to be made in April 2008, will be based on:



     (i) for 75% of the Award, the appreciation in the share price of the Company’s common shares
over the Performance Period, as determined annually by reference to the average closing trading
price of the Company’s common shares for the last 20 trading days preceding the commencement of the
Performance Period as compared to the average closing trading price of the Company’s shares for the
last 20 trading days preceding the end of the annual period; and



     (ii) for 25% of the Award, the growth in earnings per share under Dutch GAAP as determined
annually by reference to the earnings per share for the annual period as compared to the earnings
per share at the start of the Performance Period for the year ending March 31, 2008 on a pro forma
basis as determined by the Board.



     The initial Awards are more fully described on Exhibit A. The Performance Period for
the initial Awards will be the three-year period commencing April 1, 2008 and ending March 31,
2011. Although performance targets for an Award will be established on an annual basis, if all of
the performance targets for the Performance Period to date are fully met at the end of any fiscal
year within the Performance Period, a Participant will be entitled to payment of the maximum Bonus
for the Performance Period to date, notwithstanding the failure of the Participant to achieve the
prior annual performance targets.



     5.3 EARNING OF BONUS. Subject to the terms of this Plan, after each year in the applicable
Performance Period has ended, the Participant shall be entitled to receive payout on the amount of
such Bonus earned by the Participant over the Performance Period (or portion



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thereof that has been completed), to be determined as a function of the extent to which the
corresponding performance targets have been achieved, as established by the Board.



     5.4 FORM AND TIMING OF PAYMENT OF BONUS. Subject to the terms of this Plan, a Participant
shall be paid in cash on an annual basis the amount of the Bonus earned during each year of the
Performance Period. Following the end of each year of a Performance Period, the Board will
determine the extent to which the performance targets have been achieved and will compute the
amount of the Bonus to be paid. Bonus amounts will be paid in cash, subject to all required
withholdings, provided that the Participant shall be given the option to elect to receive a portion
of the Bonus (not to exceed 25%) in the form of Shares, which, once issued, shall be
non-forfeitable; provided however, that the number of Shares subject to Award shall not exceed
120,000 Shares, which is also the maximum number of Shares that can be awarded to members of the
Board eligible to receive an Award under the Plan. Such Bonus shall be paid to the Participant
within thirty (30) days after the determination of the satisfaction of the related performance
target. The value of the Shares elected to be received shall be the average closing trading price
of the Company’s common shares for the twenty trading days preceding the confirmation of the
attainment of the performance targets, and the Participant’s election must be made within five
business days following the Participant’s receipt of notice of the attainment of the performance
target, or such other time period established by the Board upon the recommendation or proposal of
the Committee. If the Company shall not have sufficient Shares authorized to be issued under the
Plan to satisfy all elections to receive Shares in lieu of cash, then persons electing to receive
Shares shall have their allocation of Shares reduced pro rata. Any Bonus not paid in Shares will
be paid in cash.



     5.5 TERMINATION OF EMPLOYMENT DUE TO TERMINATION EVENT. Unless otherwise designated by the
Committee, in the event the employment of a Participant with a member of the Group is terminated
due to a Termination Event during a Performance Period, the Participant shall receive a prorated
payment in respect of any Bonus that has not yet been paid (if any) for the year in which the
Termination Event occurs. The prorated payout shall be determined by the Board, shall be based upon
the length of time that has elapsed during the Performance Period, and shall further be adjusted
based on the achievement of the preestablished performance targets. Payment of the pro-rated Bonus
shall be made in the manner provided in Section 5.4 hereof, provided that the Board in its
discretion, may determine to make any such payment earlier subject to the Board’s assessment of the
extent to which the performance targets have been satisfied.



     5.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a Participant’s employment
with a member of the Group terminates for any reason other than those reasons set forth in Section
5.5, all Awards shall be forfeited by the Participant unless determined otherwise by the Board.



     5.7 NONTRANSFERABILITY. An Award may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.



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     5.8 CAPITAL RESTRUCTURE. In the event of a restructuring of the capital structure of the
Company, the Board will adjust the terms of any Award to provide, to the extent possible,
equivalent terms.



ARTICLE 6




BENEFICIARY DESIGNATION




     Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any Bonus under the Plan is to be paid in
case of his or her death. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Board, and will be effective only when filed by
the Participant in writing with the Company during the Participant’s lifetime. In the absence of
any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the
Participant’s estate.



ARTICLE 7




RIGHTS OF COMPANY AND PARTICIPANTS




     7.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way the right of the
Company or the relevant member of the Group to terminate any Participant’s employment at any time,
nor confer upon any Participant any right to continue in the employ of the Company or the relevant
member of the Group.



     7.2 PARTICIPATION. No Participant shall have the right to be selected to receive an Award
under this Plan or, having been so selected, to be selected to receive a future Award.



ARTICLE 8




CHANGE OF CONTROL




     If an offer is made to acquire all or a majority of the issued share capital of the Company,
and as a result of such offer, the offeror in fact acquires more than fifty percent (50%) of the
issued share capital of the Company, the Committee may determine that any unpaid Bonus relating to
an Award previously granted shall be calculated (on a pro-rata basis) effective as of the date of
the change of control of the Company. Any such pro-rata Bonus shall be paid to a Participant as
soon as practical after the date of the change of control, and in no event later than thirty (30)
days after such date.



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ARTICLE 9




AMENDMENT AND TERMINATION




     9.1 AMENDMENTS.



     The Board may at any time and from time to time amend this Plan in whole or in part;
provided, however, that if an amendment to this Plan (i) would materially increase
the benefits accruing to Participants under this Plan, (ii) would materially modify the
requirements for participation in this Plan or (iii) must otherwise be approved by the general
meeting of shareholders of the Company in order to comply with applicable law or the rules of the
principal securities exchange upon which the Shares are traded or quoted, then such amendment will
be subject to the approval of the general meeting of shareholders and will not be effective unless
and until such approval has been obtained.



     9.2 TERMINATION. The Board may, in its discretion, terminate this Plan at any time.



     9.3 AWARDS PREVIOUSLY GRANTED. No termination or amendment of the Plan shall adversely affect
in any material way any Award previously granted under the Plan, without the written consent of the
Participant holding such Award.



ARTICLE 10




WITHHOLDING




     The Company or the relevant member of the Group shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company or the relevant member of the Group,
an amount sufficient to satisfy any federal, state, and local income, employment, social security
or other taxes, domestic or foreign, required by law or regulation to be withheld with respect to
any taxable event arising as a result of this Plan.



ARTICLE 11




INDEMNIFICATION




     Each person who is or shall have been a member of the Board, shall be indemnified by the
Company against and from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from the defense of any claim,
action, suit or proceeding to which he or she may be a party or in which he or she may be involved
by reason of any action taken or failure to act under the Plan. Such person shall be indemnified by
the Company for all amounts paid by him or her in settlement thereof, with the Company’s approval,
or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding
against him or her, provided he or she shall give the Company an opportunity,



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at its own expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled under the Company’s
Articles or Rules, as a matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.



ARTICLE 12




SUCCESSORS




     Subject to the provisions of Article 8, all obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the Company arising as a
result of merger, consolidation, or otherwise.



ARTICLE 13




LEGAL CONSTRUCTION




     13.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term
used herein shall also include the feminine, the plural shall include the singular, and the
singular shall include the plural.



     13.2 SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.



     13.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.



     13.4 GOVERNING LAW. The Plan, and all Awards and agreements hereunder, shall be construed in
accordance with and governed by the laws of the United Kingdom, without giving effect to the
conflict of laws principles thereof.



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EXHIBIT A




TERMS OF PROPOSED 2008 AWARDS




     1. Two performance conditions will apply. The first condition will be the appreciation in the
Company’s share price over the Performance Period, measured as described in the Plan, which will
apply to 75% of the Award. The second condition will be the growth in earnings per share over the
Performance Period, which will apply to 25% of the Award. Earnings per share will be defined as
adjusted earnings per share, calculated by reference to Dutch GAAP, as determined by the Committee.



     2. With respect to the conditions, the Bonus will be earned on a linear basis between
threshold and maximum performance for each year during the Performance Period. At the end of each
year, the cumulative amount of the Bonus that has been earned will be calculated by pro-rating for
performance the cumulative maximum amount of the portion of the Bonus attributable to each of the
conditions that could have been earned by the end of such year. The cumulative maximum amount of
the portion of the Bonus attributable to each condition that can be earned on an annual basis is as
follows:



	 	 	 	 	 
	End of Year 1
	 	 	25	%
	End of Year 2
	 	 	50	%
	End of Year 3
	 	 	100	%






     3. The maximum Awards shall be:



	 	 	 	 	 
	Chief Executive Officer

	 	–
	 	100% of base salary
	Senior Executives

	 	–
	 	60% of base salary
	Other Participants

	 	–
	 	30% of base salary







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