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*5.*     *Awards under the Plan.*     *(a) Types of Awards.*The Committee may grant Options, Restricted Stock, Restricted StockUnits, Stock Equivalents and Awards of shares of Common Stock that are not subject to restrictionsor forfeiture.     *(b) Terms and Conditions of Awards.*     (i) The Committee shall select the Participants to receive Awards and determine the termsand conditions of each Award. Without limiting the foregoing but subject to the otherprovisions of the Plan and applicable law, the Committee shalldetermine (A) the number of shares of Common Stock subject to each Award or the manner in which such number shall bedetermined, (B) the price, if any, a Participant shall pay to receive or exercise an Award orthe manner in which such price shall be determined, (C) the time or times when an Award mayvest or be exercised or settled, (D) any Performance Goals, restrictions or other conditions tovesting, exercise, or settlement of an Award, (E) whether an Award may be settled in the formof cash, Common Stock or other securities of the Company, Awards or other property, and themanner of calculating the amount or value thereof, (F) the duration of any Restricted Period,(G) the effect on an Award of the disability, death, retirement or other termination of serviceof a Participant, and (H) the extent to which, and the period during which, the Participant orthe Participant’s legal representative, guardian or Designated Beneficiary may receive paymentof an Award or exercise rights thereunder.     (ii) The Committee shall determine the form of consideration and manner of payment of theexercise price of any Award. Without limiting the foregoing, the Committee may, subject toapplicable law, permit such payment to be made in whole or in part incash or by surrender of shares of Common Stock (which may be shares retained from the respective Award) valued at theirFair Market Value on the date of surrender, or such other lawful consideration, including apayment commitment of a financial or brokerage institution, as the Committee may determine. TheCompany may accept, in lieu of actual delivery of stock certificates, an attestation by theParticipant in form acceptable to the Committee that he or she owns of record the shares to betendered free and clear of claims and other encumbrances.     (iii) Any Award may be made alone, in addition to, or in relation to any other Award. Theterms of Awards of each type need not be identical, and the Committee need not treatParticipants uniformly. No Award shall be transferable except upon such terms and conditionsand to such extent as the Committee determines, provided that no Award shall be transferablefor value and Incentive Stock Options granted to U.S. citizens or U.S. resident aliens may betransferable only to the extent permitted by the Code. No Award to any Participant subject toUnited States income taxation shall provide for the deferral of compensation that does notcomply with Section 409A of the Code. The achievement or satisfaction of any Performance Goals,restrictions or other conditions to vesting, exercise, or settlement of an Award shall bedetermined by the Committee.        (c) Provisions Applicable to Certain Types of Awards.     (i) *Options and Stock Appreciation Rights.*The exercise price for any Option or StockAppreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock onthe Date of Grant or the par value of the Stock, whichever is greater. No Option or StockAppreciation Right shall have a term longer than ten years. No Incentive Stock Option may begranted more than ten years after the effective date of the Plan. The Committee shall determinethe manner of calculating the excess in value of the shares of Common Stock over the exerciseprice of a Stock Appreciation Right.     (ii) *Restricted Stock and Restricted Stock Units*.     (1) Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned,transferred, pledged or otherwise encumbered, except as permitted by the Committee, duringthe applicable Restricted Period. Restricted Stock Units may be settled in shares ofCommon Stock or cash as determined by the Committee. The Company shall delivercertificates with respect to shares of Restricted Stock and Restricted Stock Units thatare settled in shares to the Participant or, if the Participant has died, to theParticipant’s Designated Beneficiary at the expiration of the Restricted Period.
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     (2) Notwithstanding clauses (D) or (E) of Section 5(b)(i) or Section 6(i),     a. forfeiture restrictions on shares of Restricted Stock and Restricted StockUnits that lapse solely based on the length of the Participant’s service shall lapsewith respect to no more than one-third of such shares per year; and     b. forfeiture restrictions on shares of Restricted Stock and Restricted StockUnits that lapse based on the achievement of Performance Goals shall lapse based on aperformance period of at least one year;provided that the foregoing limitations shall not apply to (i) lapses of restrictions inconnection with the disability, death, retirement or other termination of service of theParticipant or in accordance with Section 6(e) or (ii) other Awards, includingmodifications of Awards, with respect to an aggregate number of shares not exceeding fivepercent of the total number of shares authorized for issuance under the Plan.*6.*     *General Provisions.*     *(a) Documentation.*Each Award under the Plan shall be evidenced by documentation in the formprescribed by the Committee and delivered to or executed and delivered by the Participantspecifying the terms and conditions of the Award and containing such other terms and conditions notinconsistent with the provisions hereof as the Committee considers necessary or advisable toachieve the purposes of the Plan or to comply with applicable law and accounting principles. Anysuch documentation may be maintained solely in electronic format.     *(b) Termination and Forfeiture.*The terms of any Award may include such continuing provisionsfor termination of the Award and/or retransfer to the Company of any shares, cash or other propertypreviously issued pursuant thereto relating to competition or other activity or circumstancesdetrimental to the Company as the Committee may determine to be in the Company’s best interests.     *(c) Dividends.*In the discretion of the Committee, any Award may provide the Participant withdividends or dividend equivalents payable (in cash, in shares of Common Stock, or in the form ofAwards under the Plan) currently or deferred and with or without interest.     *(d) Committee Discretion.*Except as otherwise provided hereby or in a particular Award, anydetermination or action with respect to an Award may be made or taken by the Committee at the timeof grant or at any time thereafter.     *(e) Change in Control.*In order to preserve a Participant’s rights under an Award in the eventof a change in control of the Company (as defined by the Committee), the Committee in itsdiscretion may, at the time an Award is made or at any time thereafter, take such actions,including without limitation one or more of the following: (i) providing for the acceleration ofany time period relating to the vesting, exercise, or settlement of the Award, (ii) providing forpayment to the Participant of cash or other property with a Fair Market Value equal to the amountthat would have been received upon the vesting, exercise, or settlement of the Award in connectionwith the change in control, (iii) adjusting the terms of the Award in a manner determined by theCommittee to reflect the change in control, (iv) causing the Award to be assumed, or new rightssubstituted therefor, by another entity, or (v) terminating the Award, as the Committee mayconsider equitable to Participants and in the best interests of the Company.     *(f) Tax Withholding.*A Participant shall pay to the Company, or make provision satisfactory tothe Committee for payment of, any taxes required by law to be withheld in respect of Awards underthe Plan no later than the date of the event creating the tax liability. The Company and itsAffiliates may, to the extent permitted by law, deduct any such tax obligations from any payment ofany kind due to the Participant under the Plan or otherwise. In the Committee’s discretion, theminimum tax obligations required by law to be withheld in respect of Awards may be paid in whole orin part by repurchase of shares of Common Stock, including shares retained from the Award creatingthe tax obligation, valued at their Fair Market Value on the date of retention or delivery.
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     *(g) Legal Compliance.*The Company shall not be required to issue any shares of Common Stock ortake any other action pursuant to the Plan unless the Company is satisfied that all requirements oflaw, or of any stock exchange on which the CommonStock is then listed, in connection therewith have been or will be complied with, and theCommittee may impose any restrictions on the rights of Participants hereunder as it shall deemnecessary or advisable to comply with any such requirements.     *(h) Foreign Nationals.*Awards may be made to Participants who are employed outside, or are notcitizens or resident aliens of, the United States or the Cayman Islands on such terms andconditions different from those specified herein as the Committee considers necessary or advisableto achieve the purposes of the Plan or to comply with applicable laws.     *(i) Amendment of Awards.*The Committee may amend, modify or terminate any outstanding Award,including without limitation changing the dates of vesting, exercise or settlement, causing theAward to be assumed by another entity, and converting an Incentive Stock Option to a NonstatutoryStock Option, provided that the Participant’s consent to such action shall be required unless theterms of the Award permit such action, the Committee determines that such action is required bylaw, or the Committee determines that the action, taking into account any related action, would notmaterially and adversely affect the Participant. The foregoing notwithstanding, without furtherapproval of the stockholders of the Company, the Committee shall not authorize the amendment of anyoutstanding Option or Stock Appreciation Right to reduce the exercise price and no Option or StockAppreciation Right shall be canceled and replaced with an Award exercisable for Common Stock at alower exercise price.*7.*     *Certain Definitions.*     “Affiliate” means any business entity in which the Company owns directly or indirectly 50% ormore of the total voting power or has a significant financial interest as determined by theCommittee.     “Award” means any award of shares of Common Stock or right with respect to shares described inSection 5(a).     “Board” means the Board of Directors of the Company.     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successorlaw.     “Committee” means one or more committees appointed by the Board to administer the Plan or aspecified portion thereof. Each such committee shall be comprised of not less than two members ofthe Board who shall meet such criteria as the Board may specify from time to time.     “Common Stock” means the Class A common stock, CI$0.50 (approx. US$0.60) par value, of theCompany.     “Company” means Consolidated Water Co. Ltd., a Cayman Islands corporation.     “Covered Employee” means a “covered employee” within the meaning of Section 162(m) of theCode.     “Date of Grant” means the date on which all requirements under applicable law and theCompany’s Memorandum and Articles of Association for the effective grant of an Award have beensatisfied.     “Designated Beneficiary” means the beneficiary designated by a Participant, in a mannerdetermined by the Committee, to receive amounts due or exercise rights of the Participant in theevent of the Participant’s death. In the absence of an effective designation by a Participant,“Designated Beneficiary” means the Participant’s legal representative.     “Fair Market Value” with respect to the Common Stock or other property means the fair marketvalue thereof determined by such methods as shall be established by the Committee from time totime. Unless otherwise determined by the Committee in good faith, the per share Fair Market Valueof the Common Stock as of any date shall mean (i) if the Common Stock is then listed or admitted totrading on a national securities exchange, the last reported sale price on such date on theprincipal national securities exchange on which the Common Stock is then listed or admitted totrading or, if no such reported sale takes place on such date, the average of the closing bid andasked prices on such exchange on such date or (ii) if the Common Stock is then traded in theover-the-counter market, the average of the closing bid and asked prices on such date, as reportedby The Wall Street Journal or other appropriate publication selected by the Committee, for theover-the-counter market.
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     “Incentive Stock Option” means an Option complying with the requirements of Section 422 of theCode or any successor provision and any regulations thereunder.     “Option” means a right to purchase shares of Common Stock and may be an Incentive Stock Optionif specified by the Committee.     “Participant” means a person selected by the Committee to receive an Award under the Plan.     “Performance Goals” means one or more objective performance goals based on one or more of thefollowing criteria established by the Committee: revenue; revenue growth; sales; expenses; margins;net income; earnings or earnings per share; cash flow; shareholder return; return on investment;return on invested capital, assets, or equity; profit before or after tax; operating profit; returnon research and development investment; market capitalization; quality improvements; market share;cycle time reductions; customer satisfaction measures; strategic positioning or marketing programs;business/information systems improvements; expense management; infrastructure support programs;human resource programs; customer programs; technology development programs; or any combination ofany of the foregoing, and may be particular to a Participant or may be based, in whole or in part,on the performance of the division, department, line of business, subsidiary, or other businessunit, whether or not legally constituted, in which the Participant works or on the performance ofthe Company generally.     “Restricted Period” means any period during which an Award of shares not yet issued or anypart thereof may be forfeited to the Company or during which shares issued pursuant to an Award maybe required to be retransferred to the Company in stated circumstances.     “Restricted Stock” means shares of Common Stock that are subject to a contractual obligationto retransfer to the Company in stated circumstances.     “Restricted Stock Unit” means the right, subject to forfeiture, to receive the value of ashare of Common Stock in the future, payable in the form of cash, Common Stock or other securitiesof the Company, Awards or other property, and is an unfunded and unsecured obligation of theCompany.     “Stock Appreciation Right” means the right to receive any excess in value of shares of CommonStock over the exercise price of such right.     “Stock Equivalent” means the right to receive payment from the Company based in whole or inpart on the value of the Common Stock, payable in the form of cash, Common Stock or othersecurities of the Company, Awards or other property, and may include without limitation phantomstock, performance units, and Stock Appreciation Rights.     “Transferable for value” means a transfer on terms that would prevent the Company from relyingon Securities and Exchange Commission Form S-8 (or any successor form) with respect to the issuanceof the Common Stock underlying the respective Award.*8.*     *Miscellaneous.*     *(a) No Rights with Respect to Service.*No person shall have any claim or right hereunder to begranted an Award. Neither the adoption, maintenance, or operation of the Plan nor any Awardhereunder shall confer upon any person any right with respect to the continuance of his or heremployment by or other service with the Company or any Affiliate nor shall they interfere with therights of the Company or any Affiliate to terminate or otherwise change the terms of such serviceat any time, including, without limitation, the right to promote, demote or otherwise re-assign anyperson from one position to another within the Company or any Affiliate. Unless the Committeeotherwise provides in any case, the service of a Participant with an Affiliate shall be deemed toterminate for purposes of the Plan when such Affiliate ceases to be an Affiliate of the Company.     *(b) No Rights as Stockholder.*Subject to the provisions of the applicable Award, noParticipant or Designated Beneficiary shall have any rights as a stockholder with respect to anyshares of Common Stock to be issued under the Plan until he or she becomes the holder thereof.     *(c) Effective Date.*The effective date of the Plan, from time to time, shall be the mostrecent date that the Plan was adopted or that it was approved by the stockholders, if earlier (assuch terms are used in the regulations under Section 422 of the Code).     *(d) Amendment of Plan.*The Board may amend, suspend or terminate the Plan or any portionthereof at any time, subject to such stockholder approval as the Board determines to be necessaryor advisable to comply with any tax or regulatory requirement.     *(e) Governing Law.*This Plan shall be construed in accordance with and governed by the lawsof the Cayman Islands, without regard to principles of conflicts of law.
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