Document:

EX-10.2

McKESSON CORPORATION

STATEMENT OF TERMS AND CONDITIONS APPLICABLE TO

OPTIONS, RESTRICTED STOCK, RESTRICTED STOCK UNITS AND PERFORMANCE SHARES GRANTED TO CHIEF EXECUTIVE

OFFICER PURSUANT TO THE 2005 STOCK PLAN

(As Amended through May 23, 2006)

	I.	 	INTRODUCTION

The following terms and conditions shall apply to each Award granted on or after May 23, 2006
under the Plan to an Employee eligible to participate in the Plan. This Statement of Terms and
Conditions is intended to meet the requirements of Code Section 409A and any rules promulgated
thereunder and is subject to the terms of the Plan and of any Award made pursuant to the Plan. In
the event of any inconsistency between this Statement of Terms and Conditions and the Plan, the
Plan shall govern. Capitalized terms not otherwise defined in this Statement of Terms and
Conditions shall have the meaning set forth in the Plan.

	II.	 	OPTIONS

1. Option Notice and Agreement. An Option granted under the Plan shall be evidenced
by an Option Agreement setting forth the terms and conditions of the Option, including whether the
Option is an Incentive Stock Option or a Nonstatutory Stock Option and the number Shares subject to
the Option. Each Option Agreement shall incorporate by reference and be subject to this Statement
of Terms and Conditions and the terms and conditions of the Plan.

2. Exercise Price. The per Share Exercise Price of an Option, as specified in the
Option Agreement, shall be equal to or greater than the per Share Fair Market Value of the Shares
underlying the Option on the Grant Date.

3. Option Period. An Option shall be exercisable only during the applicable Option
Period, and during such Option Period the exercisability of the Option shall be subject to the
vesting provisions of Section II.4 as modified by the rules set forth in Sections II.5 and V. The
Option Period shall be not more than seven years from the Grant Date.

4. Vesting of Right to Exercise Options.

(A) Except as provided in Section V, an Option shall be exercisable during the Option Period
in accordance with the following vesting schedule: (i) 25% of the Shares subject to the Option
shall vest on the first anniversary of the Grant Date; (ii) an additional 25% of the Shares shall
vest on the second anniversary of the Grant Date; (iii) an additional 25% of the Shares shall vest
on the third anniversary of the Grant Date; and (iv) the remaining 25% of the Shares subject to the
Option shall vest on the fourth anniversary of the Grant Date. Notwithstanding the foregoing, the
Administrator may specify a different vesting schedule at the time the Option is granted and as
specified in the Option Agreement.

(B) Any vested portion of an Option not exercised hereunder shall accumulate and be
exercisable at any time on or before the Termination Date, subject to the rules set forth in
Section V. No Option may be exercised for less than 5% of the total number of Shares then
available for exercise under such Option. In no event shall the Corporation be required to issue
fractional shares.

5. Limits on Option Period and Acceleration of Vesting. The Option Period may end
before the Termination Date, and in the circumstances described in Sections II.5(B), (D), (E) and
(F), the vesting schedule of an Option may be accelerated, (subject to the provisions of Section
V), as follows:

(A) If a Participant ceases to be a bona fide employee of the Corporation or of its affiliates
during the Option Period for reasons other than for Cause (as defined herein), Long-Term
Disability, Normal or Early Retirement or death, the Option Period shall end ninety days after the
date of the Participant’s termination of employment or on the Termination Date, whichever occurs
first and in all cases the Option shall be exercisable only to the extent that it was exercisable
under the provisions of the foregoing Section II.4 at the time of such termination of employment.
If a Participant is absent from work with the Corporation or an affiliate because of his or her
Short-Term Disability or because the Participant is on an approved leave of absence, the
Participant shall not be deemed during the period of any such absence, by virtue of such absence
alone, to have terminated employment with the Corporation or an affiliate except as the
Administrator may otherwise expressly determine. Notwithstanding the foregoing, if the Participant
is on a voluntarily leave of absence for the purpose of serving the government of the country of
which the Participant is a citizen or in which the Participant’s principal place of employment is
located and such leave exceeds twelve months in duration, then the Participant shall be deemed to
have terminated employment with the Corporation or an affiliate for purposes of this Section
II.5(A).

(B) If a Participant ceases to be a bona fide employee of the Corporation or of its affiliates
(for reasons other than for Cause, Long-Term Disability, Normal or Early Retirement or death)
during the Option Period, the Administrator may, in its sole and absolute discretion (and subject
to conditions deemed appropriate in the circumstances) approve the continuation of the vesting
schedule of the Participant’s Option. The Option Period for any Option that continues to vest
pursuant to this subsection (B) shall end ninety days after the last Option installment vests, or
on the Termination Date, whichever occurs first.

(C) If the Participant’s employment is terminated for Cause during the Option Period, the
Option Period shall end on the date of such termination of employment and the Option shall
thereupon not be exercisable to any extent whatsoever.

(D) If a Participant ceases to be a bona fide employee of the Corporation or of its affiliates
due to his or her Long-Term Disability during the Option Period, the vesting schedule of the
Participant’s Option shall be accelerated, the Option shall become fully exercisable and the Option
Period shall end three years after the date of the Participant’s termination of employment or on
the Termination Date, whichever occurs first.

(E) If the Participant’s employment is terminated:

(i) by reason of Normal Retirement, the vesting schedule of the Participant’s Option shall be
accelerated and the Option shall become fully exercisable as of the date of Normal Retirement; or

(ii) by reason of Early Retirement, the Option shall be exercisable only to the extent that it
was exercisable under the provisions of the foregoing Section II.4 at the time of such Early
Retirement; provided, however, that the Administrator may, in its sole discretion (and subject to
conditions deemed appropriate in the circumstances), either (A) accelerate the vesting schedule of
the Participant’s Option effective as of the date of the Participant’s Early Retirement or (B)
approve the continuation of the vesting schedule of the Participant’s Option.

(iii) With respect to an Option held by a Participant at Normal or Early Retirement, the
Option Period for that portion of the Option designated as a Nonstatutory Stock Option shall end
three years after the date of retirement or on the Termination Date, whichever occurs first;
provided, however, that in the case of an Option held by a Participant at Early Retirement as to
which the Administrator exercises its discretionary authority to approve the continuation of the
vesting schedule, the Option Period shall end on the earlier of the Termination Date or three years
after the last Option installment vests.

(F) If a Participant should die while in the employ of the Corporation or an affiliate and
during the Option Period, the vesting schedule of the Participant’s Option shall be accelerated and
the Option shall become fully exercisable, the Option Period shall end three years after the date
of death or on the Termination Date, whichever occurs first, and the Participant’s Beneficiary may
exercise the entire unexercised portion of the then exercisable Shares covered by such Option (or
any lesser amount) remaining on the date of death.

(G) If a Participant who ceases to be a bona fide employee of the Corporation or an affiliate
is subsequently rehired prior to the expiration of his or her Option, then the Option shall
continue to remain outstanding until such time as the Participant subsequently terminates
employment. Upon the Participant’s subsequent termination of employment, the post-termination
exercise period calculated pursuant to the terms and conditions of this Section II.5 shall be
reduced by the number days between the date of the Participant’s initial termination of employment
and his or her re-hire date; provided, however, that if the rehired Participant continues to be
employed by the Corporation or an affiliate for at least one year from his or her rehire date, then
the post termination exercise period for the Option shall be determined in accordance with Sections
II.5(A) through (F) and shall not be adjusted as described above.

6. Method of Exercise. A Participant may exercise an Option with respect to all or
any part of the exercisable Shares as follows:

(A) By giving the Corporation, or its authorized representative designated for this purpose,
written notice of such exercise specifying the number of Shares as to which the Option is so
exercised. Such notice shall be accompanied by an amount equal to the Exercise Price of such
Shares, in the form of any one or combination of the following: cash or a certified check, bank
draft, postal or express money order payable to the order of the Corporation in lawful money of the
United States. The Participant may pay the Exercise Price, in whole or in part, by tendering to
the Corporation or its authorized representative Shares which have been owned by the Participant
for at least six months prior to said tender, and having a fair market value, as determined by the
Corporation, equal to the Exercise Price, or in lieu of the delivery of actual Shares in such
tender, the Corporation may accept an attestation by the Participant, in a form prescribed by the
Corporation or its authorized representative, that the Participant owns sufficient Shares, which
have been owned by the Participant for at least six months prior to said tender, of record or in an
account in street name to satisfy the Exercise Price, and such attestation will be deemed a tender
of Shares for purposes of this method of exercise. In the event a Participant tenders Shares to
pay the Exercise Price, tender of Shares acquired through exercise of an Incentive Stock Option may
result in unfavorable income tax consequences unless such Shares are held for at least two years
from the Grant Date of the Incentive Stock Option and one year from the date of exercise of the
Incentive Stock Option. The Corporation or its authorized representative may accept payment of the
Exercise Price in the form of a Participant’s personal check. Payment may also be made by delivery
(including by FAX transmission) to the Corporation or its authorized representative of an executed
irrevocable option exercise form together with irrevocable instructions to an approved registered
investment broker to sell Shares in an amount sufficient to pay the Exercise Price plus any
applicable withholding taxes and to transfer the proceeds of such sale to the Corporation.

(B) If required by the Corporation, by giving satisfactory assurance in writing, signed by the
Participant, the Participant shall give his or her assurance that the Shares subject to the Option
are being purchased for investment and not with a view to the distribution thereof; provided that
such assurance shall be deemed inapplicable to (1) any sale of the Shares by such Participant made
in accordance with the terms of a registration statement covering such sale, which has heretofore
been (or may hereafter be) filed and become effective under the Securities Act of 1933, as amended
(the “Securities Act”) and with respect to which no stop order suspending the effectiveness thereof
has been issued, and (2) any other sale of the Shares with respect to which, in the opinion of
counsel for the Corporation, such assurance is not required to be given in order to comply with the
provisions of the Securities Act.

(C) As soon as practicable after receipt of the notice and the assurance described in Sections
II.6(A) and (B), the Corporation shall, without transfer or issue tax (except for withholding tax
arrangements contemplated in Section VII.6) and without other incidental expense to the
Participant, cause an appropriate book entry to be entered in the records of the Corporation’s
transfer agent recording the Participant’s unrestricted interest in the purchased Shares; provided,
however, that the time of such delivery may be postponed by the Corporation for such period as may
be required for it with reasonable diligence to comply with applicable registration requirements
under the Securities Act, the Exchange Act, any applicable listing requirements of any national
securities exchange and requirements under any other law or regulation applicable to the issuance
or transfer of the Shares.

7. Limitations on Transfer. An Option shall, during a Participant’s lifetime, be
exercisable only by the Participant. No Option or any right granted thereunder shall be
transferable by the Participant by operation of law or otherwise, other than by will or the laws of
descent and distribution. Notwithstanding the foregoing, (i) a Participant may designate a
beneficiary to succeed, after the Participant’s death, to all of the Participant’s Options
outstanding on the date of death; (ii) a Nonstatutory Stock Option may be transferable pursuant to
a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act; and (iii) any Participant, who is a senior executive officer recommended by
the Chief Executive Officer and approved by the Administrator may voluntarily transfer any
Nonstatutory Stock Option to a Family Member as a gift or through a transfer to an entity in which
more than 50% of the voting interests are owned by Family Members (or the Participant) in exchange
for an interest in that entity. In the event of any attempt by a Participant to alienate, assign,
pledge, hypothecate, or otherwise dispose of an Option or of any right thereunder, except as
provided herein, or in the event of the levy of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Corporation at its election may terminate the affected
Option by notice to the Participant and the Option shall thereupon become null and void.

8. No Shareholder Rights. Neither a Participant nor any person entitled to exercise a
Participant’s rights in the event of the Participant’s death shall have any of the rights of a
shareholder with respect to the Shares subject to an Option except to the extent that a book entry
has been entered in the records of the Corporation’s transfer agent with respect to such Shares
upon the exercise of an Option.

	III.	 	RESTRICTED STOCK

1. Restricted Stock Agreement. A Restricted Stock Award granted under the Plan shall
be evidenced by a Restricted Stock Agreement to be executed by the Participant and the Corporation
setting forth the terms and conditions of the Restricted Stock Award. Each Restricted Stock
Agreement shall incorporate by reference and be subject to this Statement of Terms and Conditions
and the terms and conditions of the Plan.

2. Rights with Respect to Shares of Restricted Stock. Upon written acceptance of a
grant of Restricted Stock Award by a Participant, including the restrictions and other terms and
conditions described in the Plan, the Restricted Stock Agreement and herein, the Corporation shall
cause an appropriate book entry to be entered in the records of the Corporation’s transfer agent
recording the Participant’s interest in the Restricted Stock. From and after the Grant Date, the
Participant shall have absolute ownership of such shares of Restricted Stock, including the right
to vote and to receive dividends thereon, subject to the terms, conditions and restrictions
described in the Plan, the Restricted Stock Agreement and this Statement of Terms and Conditions.

3. Special Restrictions. Each Restricted Stock Award made under the Plan shall
contain the following terms, conditions and restrictions and such additional terms, conditions and
restrictions as may be determined by the Administrator; provided, however, that no Restricted Stock
grant shall be subject to additional terms, conditions and restrictions which are more favorable to
a Participant than the terms, conditions and restrictions set forth elsewhere in the Plan, the
Restricted Stock Agreement or this Statement of Terms and Conditions.

(A) Restrictions. Until the restrictions imposed on any Restricted Stock grant shall
lapse, shares of Restricted Stock granted to a Participant: (i) shall not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed of, other than pursuant to a qualified
domestic relations order as defined in the Code or Title I of the Employee Retirement Income
Security Act and (ii) shall, if the Participant’s continuous employment with the Corporation or any
of its affiliates shall terminate for any reason (except as otherwise provided in the Plan or in
Section III.3(B)) be returned to the Corporation forthwith, and all the rights of the Participant
to such shares shall immediately terminate. If a Participant is absent from work with the
Corporation or an affiliate because of his or her Short-Term Disability or because the Participant
is on an approved leave of absence, the Participant shall not be deemed during the period of any
such absence, by virtue of such absence alone, to have terminated employment with the Corporation
or an affiliate except as the Administrator may otherwise expressly determine. Notwithstanding the
foregoing, if the Participant is on a voluntarily leave of absence for the purpose of serving the
government of the country of which the Participant is a citizen or in which the Participant’s
principal place of employment is located and such leave exceeds twelve months in duration, then the
Participant shall be deemed to have terminated employment with the Corporation or an affiliate for
purposes of this Section III.3(A).

(B) Termination of Employment by Reason of Death, Long-Term Disability or Normal
Retirement. Notwithstanding any provision contained herein or in the Plan or the Restricted
Stock Agreement to the contrary, if a Participant who has been in the continuous employment of the
Corporation or any of its affiliates since the Grant Date of a Restricted Stock Award ceases to be
a bona fide employee of the Corporation or an affiliate as a result of death, Long-Term Disability,
or Normal Retirement, then the restrictions imposed on any Restricted Stock Award shall lapse as to
all shares of stock granted to such Participant pursuant to such Restricted Stock Award on the date
of such termination.

(C) Termination of Employment by Reason of Early Retirement. Notwithstanding any
provision contained herein or in the Plan or the Restricted Stock Agreement to the contrary, if a
Participant who has been in the continuous employment of the Corporation or any of its affiliates
since the Grant Date of a Restricted Stock Award ceases to be a bona fide employee of the
Corporation of an affiliate by reason of Early Retirement, the Administrator may, in its sole
discretion (and subject to conditions deemed appropriate in the circumstances), accelerate the
vesting schedule of the Participant’s Restricted Stock Award effective as of the date of the
Participant’s Early Retirement.

4. Dividends. Cash dividends paid with respect to the Restricted Stock during the
Restriction Period shall be paid directly to the Participant during the Restriction Period. Stock
dividends paid with respect to Restricted Stock during the Restriction Period shall be treated as
Restricted Stock which shall be subject to the same restrictions as the original award for the
duration of the Restricted Period.

5. Election to Recognize Gross Income in the Year of Grant. If any Participant
validly elects within thirty days of the Grant Date, to include in gross income for federal income
tax purposes an amount equal to the fair market value of the shares of Restricted Stock granted on
the Grant Date, such Participant shall pay to the Corporation, or make arrangements satisfactory to
the Administrator to pay to the Corporation in the year of such grant, any federal, state or local
taxes required to be withheld with respect to such shares in accordance with Section VII.6.

6. Restrictive Legend. Each book entry in the records of the Corporation’s transfer
agent evidencing shares of stock granted pursuant to a Restricted Stock grant may bear an
appropriate legend referring to the terms, conditions and restrictions described in the Plan, the
Restricted Stock Agreement and this Statement of Terms and Conditions.

7. Expiration of Restricted Period. If and when the Restriction Period applicable to
the Restricted Stock expires without a prior forfeiture, an appropriate book entry recording the
Participant’s interest in the unrestricted Shares shall be entered on the records of the
Corporation’s transfer agent.

	IV.	 	RESTRICTED STOCK UNITS AND PERFORMANCE SHARES

1. Award Agreement.

(A) A Restricted Stock Unit Award granted under the Plan shall be evidenced by a Restricted
Stock Unit Agreement to be executed by the Participant and the Corporation setting forth the terms
and conditions of the Restricted Stock Unit Award. Each Restricted Stock Unit Agreement shall
incorporate by reference and be subject to this Statement of Terms and Conditions and the terms and
conditions of the Plan.

(B) Performance Shares granted under the Plan shall be evidenced by a Performance Share
Agreement to be executed by the Participant and the Corporation setting forth the terms and
conditions of the Performance Shares. Each Performance Share Agreement shall incorporate by
reference and be subject to this Statement of Terms and Conditions and the terms and conditions of
the Plan.

2. Special Restrictions. Restricted Stock Unit Awards and Performance Shares granted
under the Plan shall contain the following terms, conditions and restrictions and such additional
terms, conditions and restrictions as may be determined by the Administrator; provided, however,
that no such Award shall be subject to additional terms, conditions and restrictions which are more
favorable to a Participant than the terms, conditions and restrictions set forth elsewhere in the
Plan, the Restricted Stock Unit Agreement or Performance Share Agreement or this Statement of Terms
and Conditions.

(A) Restrictions. If a Participant ceases to be a bona fide employee of the
Corporation or an affiliates (except as otherwise provided in the Plan or in Section III.3(B) or
(C)) prior to the lapse of the restrictions imposed on the Award, the unvested Restricted Stock
Units or Performance Shares shall be returned to the Corporation, and all the rights of the
Participant to such Share Equivalents shall immediately terminate. If a Participant is absent from
work with the Corporation or an affiliate because of his or her Short-Term Disability or because
the Participant is on an approved leave of absence, the Participant shall not be deemed during the
period of any such absence, by virtue of such absence alone, to have terminated employment with the
Corporation or an affiliate except as the Administrator may otherwise expressly determine.
Notwithstanding the foregoing, if the Participant is on a voluntarily leave of absence for the
purpose of serving the government of the country of which the Participant is a citizen or in which
the Participant’s principal place of employment is located and such leave exceeds twelve months in
duration, then the Participant shall be deemed to have terminated employment with the Corporation
or an affiliate for purposes of this Section IV.2(A).

(B) Termination of Employment by Reason of Death, Long-Term Disability or Normal
Retirement. Notwithstanding any provision contained herein or in the Plan, the Restricted
Stock Unit Agreement or Performance Share Agreement to the contrary, if a Participant who has been
in the continuous employment of the Corporation or any of its affiliates since the Grant Date
shall, while in such employment, be terminated as a result of death, Long-Term Disability, or
Normal Retirement, then the restrictions imposed on any Restricted Stock Unit Award or Performance
Shares shall lapse as to all Share Equivalents granted to such Participant pursuant to such Award
on the date of such termination.

(C) Termination of Employment by Reason of Early Retirement. Notwithstanding any
provision contained herein or in the Plan or the Restricted Stock Unit Agreement or Performance
Share Agreement to the contrary, if a Participant who has been in continuous employment of the
Corporation or any of its affiliates since the Grant Date of a Restricted Stock Unit Award or
Performance Share Award ceases to be a bona fide employee of the Corporation of an affiliate by
reason of Early Retirement, the Administrator may, in its sole discretion (and subject to
conditions deemed appropriate in the circumstances), accelerate the vesting schedule of the
Participant’s Restricted Stock Units or Performance Shares effective as of the date of the
Participant’s Early Retirement.

3. Dividend Equivalents. Dividend equivalents shall be credited in respect of
Restricted Stock Units and Performance Shares. Cash dividends shall be credited on behalf of the
Participant to a deferred cash account (in a manner designed to comply with Code Section 409A).
Stock dividends shall be converted into additional Restricted Stock Units or Performance Shares,
which will be subject to all of the terms and conditions of the underlying Restricted Stock Unit
Award or Performance Shares, including the same vesting restrictions as the underlying award.

4. Assignability. A Participant shall not be permitted to sell, transfer, pledge,
assign or encumber such Restricted Stock Units or Performance Shares, other than pursuant to a
qualified domestic relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act.

5. No Shareholder Rights. Neither a Participant nor any person entitled to exercise a
Participant’s rights in the event of the Participant’s death shall have any of the rights of a
shareholder with respect to the Share Equivalents subject to a Restricted Stock Unit Award or
Performance Shares except to the extent that a book entry has been entered in the records of the
Corporation’s transfer agent with respect to such Shares upon the payment of any vested Restricted
Stock Unit Award of Performance Shares.

6. Time of Payment of Restricted Stock Units and Performance Shares. Upon the lapse
of the restriction imposed on Restricted Stock Unit Awards or Performance Shares, all Restricted
Stock Units and Performance Shares that were not forfeited pursuant to Sections IV.2(A) or V shall
be paid to the Participant as soon as reasonably practicable after the restrictions lapse. Payment
shall be made in Shares in the form of a an appropriate book entry entered in the records of the
Corporation’s transfer agent recording the Participant’s unrestricted interest in the number of
Shares equal to the number of vested Share Equivalents subject to the Restricted Stock Unit Award
or Performance Shares. The foregoing notwithstanding, the Participant may elect to defer payment
of the Restricted Stock Units in the manner described in Section IV.7.

7. Deferral Election. Each Participant, pursuant to rules established by the
Administrator, may be entitled to elect to defer all or a percentage of any payment in respect of a
Restricted Stock Unit Award that he or she may be entitled to receive as determined pursuant to
Section IV.6. This election shall be made by giving notice in a manner and within the time
prescribed by the Administrator and in compliance with Code Section 409A. Each Participant must
indicate the percentage (expressed in whole percentages) he or she chooses to defer of any payment
he or she may be entitled to receive. If no notice is given, the Participant shall be deemed to
have made no deferral election. Each deferral election filed with the Corporation shall become
irrevocable in accordance with the terms and conditions of the Corporation’s Deferred Compensation
Administration Plan II (DCAP II) (or any successor plan) and in compliance with Code Section 409A.

	V.	 	SPECIAL FORFEITURE AND REPAYMENT RULES

Any other provision of this Statement of Terms and Conditions to the contrary notwithstanding,
if the Administrator determines that a Participant has engaged in any of the actions described in 3
below, the consequences set forth in 1 and 2 below shall result:

1. Any outstanding Option shall immediately and automatically terminate, be forfeited
and shall cease to be exercisable, without limitation. In addition, any shares of Restricted
Stock, Restricted Stock Units or Performance Shares as to which the restrictions have not lapsed
shall immediately and automatically be forfeited and such shares or share equivalents shall be
returned to the Corporation and all of the rights of the Participant to such shares or share
equivalents shall immediately terminate.

2. If the Participant exercised an Option within twelve months prior to the date upon
which the Corporation discovered that the Participant engaged in any actions described in 3 below,
the Participant, upon written notice from the Corporation, shall immediately pay to the Corporation
the economic value realized or obtained by the exercise of such Option measured at the date of
exercise. In addition, if the restrictions imposed on any shares of Restricted Stock, Restricted
Stock Units or Performance Shares lapsed within twelve months prior to the date the Corporation
discovered that the Participant engaged in any action described in 3 below, the Participant, upon
written notice from the Corporation, shall immediately pay to the Corporation the economic value
realized or obtained with respect to such shares of Restricted Stock, the Restricted Stock Units or
the Performance Shares, measured at the date such shares or share equivalents vested.

3. The consequences described in 1 and 2 above shall apply if the Participant, either
before or after termination of employment with the Corporation or its affiliates:

(A) Discloses to others, or takes or uses for his own purpose or the purpose of
others, any trade secrets, confidential information, knowledge, data or know-how or any other
proprietary information or intellectual property belonging to the Corporation or its affiliates and
obtained by the Participant during the term of his employment, whether or not they are the
Participant’s work product. Examples of such confidential information or trade secrets include,
without limitation, customer lists, supplier lists, pricing and cost data, computer programs,
delivery routes, advertising plans, wage and salary data, financial information, research and
development plans, processes, equipment, product information and all other types and categories of
information as to which the Participant knows or has reason to know that the Corporation or its
affiliates intends or expects secrecy to be maintained;

(B) Fails to promptly return all documents and other tangible items belonging to the
Corporation or its affiliates in the Participant’s possession or control, including all complete or
partial copies, recordings, abstracts, notes or reproductions of any kind made from or about such
documents or information contained therein, upon termination of employment, whether pursuant to
retirement or otherwise;

(C) Fails to provide the Corporation with at least thirty (30) days’ written notice
prior to directly or indirectly engaging in, becoming employed by, or rendering services, advice or
assistance to any business in competition with the Corporation or its affiliates. As used herein,
“business in competition” means any person, organization or enterprise which is engaged in or is
about to become engaged in any line of business engaged in by the Corporation or its affiliates at
the time of the termination of the Participant’s employment with the Corporation or its affiliates;

(D) Fails to inform any new employer, before accepting employment, of the terms of
this paragraph and of the Participant’s continuing obligation to maintain the confidentiality of
the trade secrets and other confidential information belonging to the Corporation or its affiliates
and obtained by the Participant during the term of his employment with the Corporation or any of
its affiliates;

(E) Induces or attempts to induce, directly or indirectly, any of the customers of
the Corporation or its affiliates, employees, representatives or consultants to terminate,
discontinue or cease working with or for the Corporation or its affiliates, or to breach any
contract with the Corporation or any of its affiliates, in order to work with or for, or enter into
a contract with, the Participant or any third party; or

(F) Engages in conduct which is not in good faith and which disrupts, damages,
impairs or interferes with the business, reputation or employees of the Corporation or its
affiliates;

(G) Directly or indirectly engages in, becomes employed by, or renders services,
advice or assistance to any business in competition with the Corporation or its affiliates, at any
time during the twelve months following termination of employment with the Corporation.

The Administrator shall determine in its sole discretion whether the Participant has engaged in any
of the acts set forth in (A) through (G) above, and its determination shall be conclusive and
binding on all interested persons.

Any provision of this Section V which is determined by a court of competent jurisdiction to be
invalid or unenforceable should be construed or limited in a manner that is valid and enforceable
and that comes closest to the business objectives intended by such invalid or unenforceable
provision, without invalidating or rendering unenforceable the remaining provisions of this Section
V.

	VI.	 	CHANGE IN CONTROL

1. If as a result of a Change in Control, the Corporation’s Common Stock ceases to be listed
for trading on a national securities exchange (an “Exchange”), any Option, Restricted Stock Award,
Restricted Stock Unit Award, or Performance Shares that are unvested on the effective date of the
Change in Control shall continue to vest according to the terms and conditions of such Award,
provided that such Award is replaced with an award for voting securities of the resulting
corporation or the acquiring corporation, as the case may be, (including without limitation, the
voting securities of any corporation which as a result of the Change in Control owns the
Corporation or all or substantially all of the Corporation’s assets either directly or through one
or more subsidiaries) (the “Surviving Company”) which are traded on an Exchange (a “Replacement
Award”), which Replacement Award, (i) in the case of Options, shall consist of options with the
number of underlying shares and exercise price determined in a manner consistent with Code
Section 424(a) with vesting and any other terms continuing in the same manner as the replaced
Options; (ii) in the case of Performance Shares, shall consist of restricted stock or restricted
stock units with a value (determined using the Surviving Company’s stock price as of the effective
date of the Change in Control) equal to the value of the Performance Shares (determined using the
Corporation’s stock price and assuming attainment of target performance or actual performance
achieved, if greater, as of the effective date of the Change in Control), with any restrictions on
such restricted stock or restricted stock units lapsing at the end of the measuring period over
which performance for the replaced Performance Shares was to be measured prior to the granting of
the Replacement Award; and (iii) in the case of Restricted Stock or Restricted Stock Unit Awards,
shall consist of restricted stock or restricted stock units with a value (determined using the
Surviving Company’s stock price as of the effective date of the Change in Control) equal to the
value of the Restricted Stock or Restricted Stock Unit Awards (determined using the Corporation’s
stock price as of the effective date of the Change in Control), with any restrictions on such
restricted stock or restricted stock units lapsing at the same time and manner as the replaced
Award; provided, however, that in the event of a termination by the Corporation without Cause or by
the Participant for Good Reason during the vesting period of any Replacement Award, the Replacement
Award shall immediately vest; and provided further that upon the vesting date of each Replacement
Award, in addition to the fully vested Replacement Award, the Participant shall be entitled to
receive a lump sum cash payment equal to the decrease, if any, in the value of a share of the
Surviving Company’s stock from the effective date of the Change in Control (as increased on a
calendar quarterly basis using an annual interest rate, as of the last business day of the calendar
quarter, for zero-coupon U.S. government securities with a constant maturity closest in length to
the time period between the effective date of the Change in Control and the date of the vesting of
the Replacement Award) to the time of vesting, multiplied by the total number of shares or share
equivalents subject to the options, restricted stock, or restricted stock units in the Replacement
Award. If Options, Restricted Stock Awards, Restricted Stock Unit Awards, or Performance Shares
that are unvested at the effective time of the Change in Control are not replaced with Replacement
Awards, such Awards shall immediately vest and, in the case of Performance Shares, shall vest based
upon deemed attainment of target performance or actual performance achieved, if greater.

If as a result of a Change in Control, the Corporation’s Common Stock continues to be listed
for trading on an Exchange, any unvested Option, Restricted Stock Award, or Restricted Stock Unit
Award shall continue to vest according to the terms and conditions of such Award and any
Performance Shares shall be replaced with Restricted Stock or Restricted Stock Units where the
number of such Restricted Stock or Restricted Stock Units shall be equal to the number of
Performance Shares assuming attainment of target performance or actual performance achieved, if
greater, as of the effective date of the Change in Control with any restrictions on such Restricted
Stock or Restricted Stock Units lapsing at the end of the measuring period over which performance
for the replaced Performance Shares was to be measured prior to the granting of the replacement
Award; provided however, that, in the event of a termination by the Corporation without Cause or by
the Participant for Good Reason during the vesting period of an Award, such Award shall immediately
vest; and provided further that upon the vesting date of each Award, in addition to the fully
vested Award, the Participant shall be entitled to receive a lump sum cash payment equal to the
decrease, if any, in the value of a Share of the Corporation’s stock from the effective date of the
Change in Control (as increased on a calendar quarterly basis using an annual interest rate, as of
the last business day of the calendar quarter, for zero-coupon U.S. government securities with a
constant maturity closest in length to the time period between the effective date of the Change in
Control and the date of the vesting of the award) to the time of vesting, multiplied by the total
number of shares or share equivalents subject to the Options, Restricted Stock, or Restricted Stock
Units.

2. For purposes of this Statement of Terms and Conditions, a “Change in Control” of the
Corporation shall be deemed to have occurred if any of the events set forth in any one of the
following paragraphs shall occur:

(i) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act),
excluding the Corporation or any of its affiliates, a trustee or any fiduciary holding securities
under an employee benefit plan of the Corporation or any of its affiliates, an underwriter
temporarily holding securities pursuant to an offering of such securities or a Corporation owned,
directly or indirectly, by stockholders of the Corporation in substantially the same proportions as
their ownership of the Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Corporation representing 30%
or more of the combined voting power of the Corporation’s then outstanding securities; or

(ii) During any period of not more than two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with the Corporation to effect a
transaction described in clause (i), (iii) or (iv) of this paragraph) whose election by the Board
or nomination for election by the Corporation’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or

(iii) The shareholders of the Corporation approve a merger or consolidation of the Corporation
with any other Corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation, at least 50% of the combined voting power of the
voting securities of the Corporation or such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization
of the Corporation (or similar transaction) in which no person acquires more than 50% of the
combined voting power of the Corporation’s then outstanding securities; or

(iv) The shareholders of the Corporation approve a plan of complete liquidation of the
Corporation or an agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation’s assets.

Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if there
is consummated any transaction or series of integrated transactions immediately following which the
holders of the Stock immediately prior to such transaction or series of transactions continue to
have the same proportionate ownership in an entity which owns all or substantially all of the
assets of the Corporation immediately prior to such transaction or series of transactions.

	VII.	 	MISCELLANEOUS

1. No Effect on Terms of Employment. Subject to the terms of any employment contract
entered into by the Corporation and a Participant to the contrary, the Corporation (or its
affiliate which employs him) shall have the right to terminate or change the terms of employment of
a Participant at any time and for any reason whatsoever.

2. Grants to Participants in Foreign Countries. In making grants to Participants in
foreign countries, the Administrator has the full discretion to deviate from this Statement of
Terms and Conditions in order to adjust grants under the Plan to prevailing local conditions,
including custom and legal and tax requirements.

3. Information Notification. Any information required to be given under the terms of
a Agreement shall be addressed to the Corporation in care of its Secretary at McKesson Plaza, One
Post Street, San Francisco, California 94104, and any notice to be given to a Participant shall be
addressed to him at the address indicated beneath his or her name on the Agreement or such other
address as either party may designate in writing to the other. Any such notice shall be deemed to
have been duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified and deposited (postage or registration or certification fee prepaid) in a
post office or branch post office regularly maintained by the United States.

4. Administrator Decisions Conclusive. All decisions of the Administrator
administering the Plan upon any questions arising under the Plan, under this Statement of Terms and
Conditions, or under an Agreement, shall be conclusive.

5. No Effect on Other Benefit Plans. Nothing herein contained shall affect a
Participant’s right to participate in and receive benefits from and in accordance with the then
current provisions of any pensions, insurance or other employment welfare plan or program offered
by the Corporation.

6. Withholding. Each Participant shall agree to make appropriate arrangements with
the Corporation and his or her employer for satisfaction of any applicable federal, state or local
income tax withholding requirements or payroll tax requirements. With respect to the exercise of
an Option, such arrangements may include an election by a Participant to have the Corporation
retain some portion of the Stock acquired pursuant to exercise of the Option to satisfy such
withholding requirements. The election must be made prior to the date on which the amount to be
withheld is determined.

If a qualifying election is made, then upon exercise of an Option, in whole or in part, the
Corporation will retain the number of Shares having a value equal to the amount necessary to
satisfy any withholding requirements. Calculation of the number of Shares to be withheld shall be
made based on the closing price of the Stock on the New York Stock Exchange on the date that the
amount of tax to be withheld is determined. In no event, however, shall the Corporation be
required to issue fractional shares of Stock.

The Administrator shall be authorized to establish such rules, forms and procedures as it
deems necessary to implement the foregoing.

With respect the vesting of an Award other than an Option, if the Participant does not make an
arrangement with Corporation and his or her employer for satisfaction of the applicable income and
withholding requirements or social security requirements in advance of the vesting date, the
Corporation shall retain the number of Shares (that otherwise would have been payable to the
Participant) having a value equal to the amount necessary to satisfy any withholding requirements.
Calculation of the number of such Shares shall be as described above.

7. Successors. This Statement of Terms and Conditions and the Award Agreements shall
be binding upon and inure to the benefit of any successor or successors of the Corporation.
“Participant” as used herein shall include the Participant’s Beneficiary.

8. California Law. The interpretation, performance, and enforcement of this Statement
of Terms and Conditions and all Award Agreements shall be governed by the laws of the State of
California.

	VIII.	 	DEFINITIONS

When capitalized in this Statement of Terms and Conditions, the following terms shall have the
meaning set forth below:

1. “Beneficiary” means a person designated as such by a Participant or a Beneficiary.
If a Beneficiary has not been designated or if no designated Beneficiary survives the Participant,
distribution will be made to the Participant’s surviving spouse, or if none, to the Participant’s
children in equal shares, or if none, to the residuary beneficiary under the terms of the
Participant’s or Beneficiary’s last will and testament or, in the absence of a last will and
testament, to the Participant’s or Beneficiary’s estate as Beneficiary.

2. “Cause” means termination of the Participant’s employment with the Corporation or
an affiliate upon the Participant’s negligent or willful engagement in misconduct which, in the
sole determination of the Board of Directors of the Corporation (or its designee), is injurious to
the Corporation, its employees, or its customers.

3. “Early Retirement” means a termination of employment which occurs prior to Normal
Retirement but on or after the date on which the Participant’s age (expressed in terms of years and
completed months) plus service with the Corporation equals 65.

4. “Family Member” means any person identified as an “immediate family” member in Rule
16(a)-1(e) of the Exchange Act, as such Rule may be amended from time to time. Notwithstanding the
foregoing, the Administrator may designate any other person(s) or entity(ies) as a “family member.”

5. “Good Reason” means any of the following actions, if taken without the express
written consent of the Participant, which shall not be affected by the Participant’s incapacity due
to physical or mental illness:

(A) Any material change by the Corporation in the Participant ’s functions, duties or
responsibilities as President and Chief Executive Officer, which change would cause the Participant
‘s position with the Corporation to become of less dignity, responsibility, importance, or scope as
compared to the position and attributes that applied to the Participant immediately prior to the
Change in Control, or an adverse change in the Participant ’s title, position or his obligation and
right to report directly to the Board;

(B) Any reduction in the Participant ’s base annual salary, MIP target or Long Term Incentive
compensation (LTI) targets, which LTI targets include cash awards with performance periods greater
than one year and equity based grants, except for reductions that are equivalent to reductions
applicable to executive officers of the Corporation;

(C) Any material failure by the Corporation to comply with any of the provisions of an award
(or of any employment agreement between the parties) subsequent to a Change in Control;

(D) The Corporation’s requiring the Participant to be based at any office or location more
than 25 miles from the office at which the Participant is based on the date immediately preceding
the Change in Control, except for travel reasonably required in the performance of the
Participant’s responsibilities;

(E) Cancellation of the automatic renewal mechanism set forth in the Participant’s Employment
Agreement;

(F) If the Board removes the Participant as Chairman at or after a Change in Control (or prior
to a Change in Control if at the request of any third party participating in or causing the Change
in Control), unless such removal is required by then-applicable law; or

(G) A change in the majority of the members of the Board as it was construed immediately prior
to the Change in Control.

6. “Grant Date” means the date the Administrator grants the Award.

7. “Long-Term Disability” means a physical or mental condition which the Social
Security Administration has determined renders the Participant eligible to receive Social Security
benefits on account of disability.

8. “Normal Retirement” means retirement at age 65 (62, in the case of a participant in
the McKesson Corporation 1984 Executive Benefit Retirement Plan) with at least ten years of Service
with the Corporation.

9. “Option Period” means the period commencing on the Grant Date of an Option and,
except at otherwise provided in Section II.5, ending on the Termination Date.

10. “Service” means “Service” as defined in the Corporation’s Profit-Sharing
Investment Plan.

11. “Short-Term Disability” means short-term disability as defined in the
Corporation’s short-term disability plan.

12. “Termination Date” means the date that an Option expires as set forth in the
Option Agreement.EX-10.1

Exhibit 10.1

ENGAGEMENT AGREEMENT

THIS AGREEMENT is made the 22nd day of May 2006.

	 	 	 	 	 
	BETWEEN:	 	CONSOLIDATED WATER CO. LTD.,
	 
	 	a Cayman Islands company having its registered office at

	 
	 	Regatta Office Park, Windward 3, 4th Floor, West Bay Road

	 
	 	P.O. Box 1114 GT, Grand Cayman, B.W.I.

	 
	 	(“the Company”)
	AND:
	 	DAVID W. SASNETT
	 
	 	of 16254 SW 67th Court, Ft. Lauderdale, Florida  33331

	 
	 	(the “CFO”)

IT IS HEREBY AGREED:

Engagement

	1.	 	Subject to satisfaction of the condition precedent in Clause 14, the CFO is hereby engaged as
Executive Vice President and Chief Financial Officer of the Company from the 3rd day of June,
2006 to the 31st of December, 2007 (the “Term”) subject to the termination
provisions set out in Clauses 20 and 21 hereof and to the extension provisions set out in
Clause 23 hereof.

	2.	 	The CFO is a Director of the Company and, subject to re-election by the shareholders from
time to time, shall remain so, for the duration of this Agreement, upon the same terms as
other Executive Directors of the Company.

Remuneration

	3.	 	The CFO’s remuneration will be US$155,000.00 per annum, payable monthly in arrears (the “Base
Salary”).

	4.	 	In addition, during the Term of this Agreement, the Company will pay the cost of providing
medical insurance in the United States, with coverage reasonably equivalent to that
generally provided for the Company’s Cayman Islands employees from time to time, for the CFO
and his immediate family.

	5.	 	In addition, during the Term of this Agreement, the Company will make all statutory payroll
contributions required of employers in the United States, including but not limited to FICA,
Medicare, SUI, and WC in respect of the CFO to the appropriate United States regulatory
agencies as mandated by applicable United States laws.

	6.	 	As of January 1st each year, the CFO’s Base Salary will be reviewed by the Chief
Executive Officer (“CEO”) who may grant an increase but shall not reduce the CFO’s Base Salary
below the level set out in Clause 3 hereof.

	7.	 	If, within 90 days of the date of this Agreement in respect of the year 2006, and by not
later than March 31st in each calendar year commencing with the year 2007, the CFO
and the CEO have agreed to Performance Goals for that calendar year, and if such Performance
Goals are met for that year, then the Company shall pay to the CFO a Performance Bonus for
that year in an amount not less than 25% of the CFO’s Base Salary for that calendar year as
adjusted by Clause 6. The Board of Directors, in its sole and absolute discretion may
determine to pay an amount in excess of 25% of the CFO’s Base Salary for a calendar year as
adjusted by Clause 6. In any calendar year that all of the Performance Goals are not met, the
Board of Directors, in its sole and absolute discretion, may, but shall not be obligated to,
pay the CFO a Performance Bonus in an amount determined by the Board of Directors. The
Performance Bonus shall be paid entirely in cash.

The Performance Bonus, if any, calculated as aforesaid for a calendar year shall be paid not
later than the following 28th February or within 14 days of the first directors’
meeting of the Company for that following year, whichever is later.

	8.	 	Subject to the approval by the stockholders of the Company, which stockholder vote will occur
by no later than August 31, 2007, the Company will issue the equivalent value of US$40,000 of
ordinary shares of the Company to the CFO. Such shares will vest quarterly in increments of
12.5% over a two year period beginning on the date hereof. On each anniversary of the date
hereof, provided the CFO remains employed by the Company and stockholder approval has been
obtained for the issuance of ordinary shares to the CFO, the Company will issue the equivalent
value of US$40,000 of ordinary shares to the CFO, which shares shall be subject to the same
vesting schedule as set forth in the preceding sentence. If the stockholders of the Company
do not approve the issuance of ordinary shares to the CFO by the date of the Company’s Annual
General Meeting in 2007 (or if no such meeting is held in 2007), the Company will pay in cash
to the CFO US$ 40,000 for each year commencing with 2006, until such time as the stockholders
vote to either approve the issuance of ordinary shares to the CFO or vote against the issuance
of shares to the CFO.

For purposes of determining the number of ordinary shares equivalent in value to US$40,000,
the average of the closing bid and asked prices of the ordinary shares on the principal
market on which such ordinary shares are traded for the five business days prior to the date
that the ordinary shares are issued to the CFO shall be used.

	9.	 	During the first calendar year of this Agreement, the Company will provide the CFO with a
monthly automobile expense allowance of US$700. This monthly automobile allowance will
increase on January 1 of each subsequent calendar year by US$50 per month (or US$600 per year)
during the term of this Agreement.

Responsibilities

	10.	 	The CFO’s work will be performed mainly in South Florida, United States of America.

	11.	 	The CFO shall devote the whole of his business time and attention to perform his duties
hereunder and shall use his best endeavors to promote the Company’s interests and welfare.
These duties include responsibility for certain administrative functions in the U.S and
providing financial advice and assistance to the CEO.

As Chief Financial Officer, the CFO will generally provide strategic and operational
direction to the Company’s financial function and assist the Board and senior management in
establishing financial and operating strategic objectives and policies to ensure attainment
of corporate objectives.

In this regard, the CFO shall perform the duties commonly performed by a Chief Financial
Officer of a United States publicly listed company which duties include, in conjunction with
reasonable and appropriate subordinate staff to be provided by the Company, the following:-

	 	(a)	 	maintaining the accounts of the Company, its wholly-owned subsidiaries and
managed affiliates (collectively “the Group”);

	 	(b)	 	managing subordinate staff in the Group’s accounting and administrative
departments;

	 	(c)	 	preparing all annual and quarterly financial reports to be filed with the U.S.
SEC in a timely manner, including financial statements and disclosures included in
management’s discussion and analysis;

	 	(d)	 	preparing financial information required for U.S. SEC or other regulatory
agency filings relating to the issue by the Company of debt and/or equity, including
historical financial data, pro forma financial statements, financial projections and
other financial data included in the filings;

	 	(e)	 	liaising with the Group’s independent accountants and internal auditors and the
Company’s Audit Committee, and promptly preparing and communicating all information
requested by the independent accountants, internal auditors and the Audit Committee
during the course of the annual audit, quarterly reviews, or any other review;

	 	(f)	 	preparing monthly management accounts and analytical analysis of monthly
performance versus projections and prior periods for presentation to management and the
Board of Directors;

	 	(g)	 	preparing financial and other reports for various government, local government
and regulatory agencies as required in the operating licenses of the Group Companies,
and communicating that information to the CEO and the applicable regulatory bodies;

	 	(h)	 	monitoring Group compliance with debt security documentation, contracts and
Licenses and preparing bank covenant compliance calculations for the Group, as required
in the Company’s loan agreements, from time to time, and communicating that information
to the CEO and the applicable banks;

	 	(i)	 	preparing and maintaining the consolidated budget for the Group;

	 	(j)	 	assessing, establishing and maintaining the Group’s disclosure controls and
procedures (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”);

	 	(k)	 	assessing, establishing and maintaining the Group’s internal control over
financial reporting procedures (as defined in Rule 15d-15(f) of the 1934 Act;

	 	(l)	 	overseeing the supervision of subordinate accounting and administrative
personnel, including work allocation, training, and problem resolution; evaluating
performance and making recommendations for personnel actions; motivating employees to
achieve peak productivity and performance;

	 	(m)	 	maintaining the Company’s share register, for all classes of shares,
outstanding stock options, and warrants, and liaising with the Company’s stock transfer
agent; and

	 	(n)	 	carrying out all duties reasonably required of and assigned to him by the CEO,
which he shall discharge in accordance with directions of the CEO.

The CFO shall perform his duties under this Agreement during normal business hours from
Monday to Friday inclusive (save on bank holidays) but he accepts that his duties, which
include traveling on the Company’s business both within the United States of America and
abroad, may, from time to time, require work to be undertaken on Saturdays, Sundays and bank
and public holidays.

The CFO shall directly report to the CEO, diligently follow and implement all management
policies and decisions which the CEO communicates to him, prepare and forward in a timely
manner all reports and accountings requested by the CEO, the Board of Directors, or any
statutory body having regulatory authority over the Company and/or its subsidiaries, and
shall generally be responsible for the Company’s financial management and administration
functions.

Except when required to do so by law, the CFO shall not directly or indirectly knowingly
engage in any activities or work which are deemed by the Board to be detrimental to the best
interests of the Company.

The Company and the CFO will enter into an indemnification agreement identical to that
approved at the August 11, 2004 Annual General Meeting of the Company.

	12.	 	In case of inability to work due to illness or injury, the CFO shall notify the Company
immediately and produce a medical certificate for any absence longer than ten working days.

	13.	 	The CFO is entitled to up to ten (10) days sick leave per year without a medical certificate.

	14.	 	This Agreement is conditional upon the CFO undergoing a medical examination in such form as
is usual and customary in the Cayman Islands or the United States, the results of which must
demonstrate to the CEO’s satisfaction that the CFO is capable of performing the
responsibilities set forth in Clauses 10 and 11. The Company will meet the cost of such
medical examination, or any amounts not covered by the CFO’s health insurance plan.

Holidays

	15.	 	The CFO is entitled, during every calendar year to the following holidays during which his
remuneration will continue to be payable:

	 	(a)	 	all public holidays in the United States of America but not in the Cayman
Islands unless the CFO is in the Islands on Company business over a Cayman public
holiday, and

	 	(b)	 	four (4) weeks vacation to be taken at a time to be approved by the CEO.

Reimbursement of Expenses/Fees Earned

	16.	 	(a) All expenses for which the CFO claims reimbursement shall be in accordance with any
policies established by the Company from time to time and shall be within the operating
budgets approved by the Board of Directors. The Company shall reimburse the CFO for the costs
incurred by the CFO in his performance of his duties and responsibilities under this Agreement
upon production of the necessary vouchers or, if he is unable to produce vouchers, on the CFO
proving, to the CEO’s satisfaction, the amount he has spent for those purposes.

	 	(b)	 	All fees and payments received by the CFO for or in relation to acting as
director or officer of a subsidiary or affiliate of the Company shall be the property
of the Company and the CFO shall account to the Company for the same.

Non-Competition

	17.	 	The CFO agrees, as a separate and independent agreement, that he will not during any period
for which he has been remunerated hereunder, and for a period of one (1) year thereafter,
whether for his own account or for the account of any other person, firm or company, either
alone or jointly with or as manager, agent for or employee of or as consultant to any person,
company or firm, directly or indirectly, carry on or be engaged or concerned or interested in
any person firm or entity who conducts business identical to or similar to that conducted by
the Group in any jurisdiction in which the Group carries on business (whether directly or
indirectly).

Company Information, Documents, Confidentiality, and Non-Solicitation

	18.	 	(a) All information, documents, books, records, notes, files, memoranda, reports, customer
lists and other documents, and all copies of them, relating to the Group’s business or
opportunities which the CFO keeps, prepares or conceives or which become known to him or which
are delivered or disclosed to him or which, by any means come into his possession, and all the
Group’s property and equipment are and will remain the Group’s sole and exclusive property
both during the term of this Agreement and after the termination or expiration thereof;

	 	(b)	 	If this Agreement is terminated for any reason, or if the Company at any time
requests, the CFO must promptly deliver to the Company the originals and all copies of
all relevant documents that are in his possession, custody or control together with any
other property belonging to the Group, provided, however, that should the CFO require
access to copies of such documents for any reasonable purpose, the Company shall
provide the same at his request;

	 	(c)	 	The CFO shall not, at any time during the Term of this Agreement or within one
year after its termination or expiration, either for his own account or for the account
of any other person, firm or company, solicit, interfere with or endeavor to entice
away from the Group any person, firm or company who, at any time during the currency of
this Agreement were employees, customers or suppliers of or were in the habit of
dealing with the Group.

	19.	 	Except where such information is a matter of public record or when required to do so by law,
the CFO must not, either before or after this Agreement ends, disclose to any person any
information relating to the Group or its customers of which he becomes possessed while acting
as the CFO.

Termination

	20.	 	At the option of the Company, this Agreement shall terminate and, except to the extent
previously accrued, all rights and obligations of both parties under it shall cease if the
CFO:

	 	(a)	 	dies; or

	 	(b)	 	is adjudicated bankrupt or makes any arrangement or composition with his
creditors; or

	 	(c)	 	is convicted of any felony (whether or not relating to the Company or its
subsidiaries or affiliates).

	21.	 	(a) The Company may terminate this Agreement forthwith if the CFO knowingly commits any act
or omission that could reasonably be expected to result in material harm to the business or
reputation of the Company or any of its subsidiaries or affiliates, which failure and/or
conduct continues un-remedied for ten (10) days after written notice from the CEO to the CFO
setting forth in reasonable detail a description of such conduct, and, except to the extent
previously accrued, all rights and obligations of both parties under this Agreement shall
cease.

	 	(b)	 	If through physical or mental illness, the CFO is unable to discharge his
duties for sixty (60) successive days, as to which a certificate by any doctor
appointed by the Company will be conclusive, then

	 	1.	 	the CFO will be relieved of his duties, his salary reduced to
US$1,000.00 per annum and his bonus entitlement suspended, but

	 	2.	 	the Company will continue to pay the full cost of providing
medical insurance for the CFO and his wife and minor children,

until the CFO is able once again to resume his duties in full.

If this incapacity continues for a period of one year (including the 60-day period
referred to above) the CFO’s employment will be deemed to have been terminated by
mutual consent at the expiration of that period.

	 	(c)	 	The CFO may give six (6) months written notice of termination to the Company
and if he does so, this Agreement shall terminate at the expiration of that period and,
except to the extent previously accrued, all rights and obligations of both parties
under it shall cease.

	22.	 	If this Agreement is terminated by the CFO in accordance with Clause 21(c) or by the Company
in accordance with Clause 21(a) , all unvested ordinary shares issuable to the CFO pursuant to
Clause 8 shall be forfeited by the CFO. If this Agreement is otherwise terminated or in the
event of a Change in Control, as defined below, during the term of this Agreement, all
unvested ordinary shares issuable to the CFO pursuant to Clause 8 shall vest immediately.

If there is a Change of Control of the Company, then the CFO, at his option, may terminate
this Agreement upon ninety (90) days’ prior written notice (“Notice Period”) to the Company
after the Change in Control. In such event, the Company shall pay the CFO on the last
business day of the Notice Period in cash in one lump sum an amount equal to twice the CFO’s
then-current Base Salary. The parties agree that this paragraph is subject to modification
if required by the final regulations to be issued under Section 409A of the United States
Internal Revenue Code.

For the purposes of this Agreement, a “Change of Control” shall be deemed to have taken
place if: (i) any person, including a “group” as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, publicly announces that such person or group
has become the beneficial owner of more than 50% of the combined voting power (“Controlling
Voting Power”) of the then outstanding securities of the Company that may be cast for the
election of directors of the Company and (ii) the persons who were directors of the Company
before such event shall cease to constitute a majority of the Board of Directors of the
Company, or any successor to the Company, as the direct or indirect result of any person or
group acquiring Controlling Voting Power.

Extension

	23.	 	On or before September 30th of each year during the Term of this Agreement (or any extension
thereof), the CEO shall determine whether to extend the Term of this Agreement, and if the CEO
so determines, the term of this Agreement shall be extended such that the term shall continue
for two (2) years from January 1st of the next following year.

In the event that the CEO determines not to extend the Agreement in any year, the Term of
this Agreement shall expire on December 31st of the next following year.

Notices

	24.	 	Any notice to be served under this Agreement must be in writing and shall be deemed to be
duly served if it is handed personally to the Secretary of the Company or to the CFO as the
case may be, or if it is sent by registered post to the address at the head of this Agreement.
A notice sent by post shall be deemed to be served on the third day following the date on
which it was posted.

Previous Agreements Superseded

	25.	 	This Agreement supersedes all prior contracts and understandings between the parties save
that benefits earned or accrued under prior contracts shall not be extinguished or affected.

Waiver

	26.	 	No change or attempted waiver of any of the provisions hereof shall be binding unless in
writing and signed by the party against whom it is sought to be enforced.

Severability of Provisions

	27.	 	Whenever possible, each provision of this Agreement must be interpreted in such manner as to
be effective and valid. If any provision of this Agreement or the application of it is
prohibited or is held to be invalid, that prohibition or invalidity will not affect any other
provision, or the application of any other provision which can be given effect without the
invalid provision or prohibited application and, to this end, the provisions of this Agreement
are declared to be severable.

Headings

	28.	 	The headings herein are included for convenience only and have no legal effect.

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Applicable Law and Jurisdiction

	29.	 	This Agreement shall be construed and the legal relations between the parties determined in
accordance with the laws of the Cayman Islands to the jurisdiction of the courts of which the
parties hereby agree to submit. The CFO appoints      (“the Process
Agent”) whose address at the date of this Agreement is      his
agent in the Cayman Islands to receive on his behalf service of copies of the summons and
complaint and any other process which may be served in any action or proceeding under this
Agreement. Such service may be made by personally serving the Process Agent at the Process
Agent’s above address, with a copy to the CFO at his address above, and the CFO irrevocably
authorizes and directs the Process Agent to accept such service on his behalf.

	 	 	 	 	 	 	 	 	 
	EXECUTED for and on behalf of
	 	 	)	 	 	CONSOLIDATED WATER CO. LTD.

	CONSOLIDATED WATER CO. LTD.
	 	 	)	 	 	 	 	 
	By:
	 	 	)	 	 	 	 	 
	In the presence of:
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	____________________________
	 	 	 	 	 	 	)	 
	Witness
	 	 	 	 	 	/s/ Frederick W. McTaggart_______
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	President and Chief Executive Officer

	EXECUTED by DAVID SASNETT
	 	 	)	 	 	 	 	 
	In the presence of:
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	 
	 	 	)	 	 	 	 	 
	____________________________
	 	 	 	 	 	)/s/ David Sasnett__________________
	 
	 	 	 	 	 	 	 	 
	Witness
	 	 	 	 	 	DAVID W. SASNETT

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