GWRS 10-Q
Global Water Resources, Inc. (GWRS)
10-Q
2026-08-13
For: 2026-06-30
View Original
Added on
August 14, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________________________________________
FORM 10-Q
_____________________________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _______________ to _______________
Commission File Number: 001-37756
______________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
______________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: (480 ) 360-7775
Securities registered pursuant to Section 12(b) of the Act:
______________________________________________________________
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||||||||
| x | Smaller reporting company | |||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No
As of August 7, 2026, the registrant had 28,795,352 shares of common stock, $0.01 par value per share, outstanding.
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TABLE OF CONTENTS
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DEFINED TERMS
The following is a list of frequently used abbreviations or acronyms that are found in this report:
| The Company’s Utilities | |||||
| GW-Santa Cruz | Global Water - Santa Cruz Water Company, Inc. | ||||
| GW-Palo Verde | Global Water - Palo Verde Utilities Company, Inc. | ||||
| GW-Farmers | Global Water - Farmers Water Company, Inc. | ||||
| GW-Hassayampa | Global Water - Hassayampa Utilities Company, Inc. | ||||
| GW-Belmont | Global Water - Belmont Water Company, Inc. | ||||
| GW-Turner | Global Water - Turner Ranches Irrigation, Inc. | ||||
| GW-Saguaro | Global Water - Saguaro District Water Company, Inc. | ||||
GW-Ocotillo | Global Water - Ocotillo Water Company, Inc. | ||||
| Abbreviations and Other | |||||
| ACC | Arizona Corporation Commission | ||||
| ADWR | Arizona Department of Water Resources | ||||
| AFUDC | Allowance for funds utilized during construction | ||||
Ag-to-Urban | The June 2025 Arizona Senate Bill 1611, known as the Arizona Assured Water Supply “Ag-to-Urban” program | ||||
| AIAC | Advances in Aid of Construction | ||||
| ALJ | Administrative Law Judge | ||||
| ARO | Asset retirement obligation | ||||
| ASC | Accounting Standards Codification | ||||
| ASU | Accounting Standards Update | ||||
| CIAC | Contributions in Aid of Construction | ||||
| CODM | Chief operating decision maker | ||||
Company (we, us, our, GWRI) | Global Water Resources, Inc. | ||||
| CP Water | Global Water - CP Water Company, Inc. | ||||
| DAWS | Designation of Assured Water Supply | ||||
| EPS | Earnings per share | ||||
| FASB | Financial Accounting Standards Board | ||||
| GAAP | Accounting principles generally accepted in the United States of America | ||||
| HUF | Hook-up fee | ||||
| ICFA | Infrastructure coordination and financing agreement | ||||
| IT | Information technology | ||||
| Northern Trust | The Northern Trust Company, an Illinois banking corporation | ||||
| Revolver | Revolving credit facility with Northern Trust | ||||
RSA | Restricted stock award | ||||
RSU | Restricted stock unit | ||||
| RUCO | The Residential Utility Consumer Office, an office representing the interests of residential utility ratepayers | ||||
| SEC | Securities and Exchange Commission | ||||
SOFR | Secured Overnight Financing Rate | ||||
| Sonoran | Sonoran Utility Services, Inc. | ||||
Southwest Plant | All GW-Palo Verde wastewater and GW-Santa Cruz water infrastructure located in Pinal County, southwest of the City of Maricopa (e.g. mains, tanks, water reclamation facility, wells, etc.) | ||||
| WIFA | Water Infrastructure Finance Authority of Arizona | ||||
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Index to Condensed Consolidated Financial Statements (unaudited)
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
GLOBAL WATER RESOURCES, INC.
Condensed Consolidated Balance Sheets (unaudited)
| (in thousands, except share and per share amounts) | June 30, 2026 | December 31, 2025 | ||||||
| Assets | ||||||||
| Utility Plant | $ | $ | ||||||
| Less: accumulated depreciation | ( | ( | ||||||
| Net utility plant | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
Accounts receivable, net of allowance for credit losses of $ | ||||||||
| Unbilled revenue | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other Assets | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Regulatory assets | ||||||||
| Restricted cash | ||||||||
| Right-of-use assets, net | ||||||||
| Other noncurrent assets | ||||||||
| Total other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Capitalization and Liabilities | ||||||||
| Capitalization | ||||||||
Common stock, $ | $ | $ | ||||||
Treasury stock, | ( | ( | ||||||
| Additional paid-in capital | ||||||||
| Retained deficit | ( | ( | ||||||
Total shareholders’ equity | ||||||||
| Long-term debt, net | ||||||||
| Total Capitalization | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Customer and meter deposits | ||||||||
| Long-term debt, current portion | ||||||||
| Leases, current portion | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Other Liabilities | ||||||||
| Revolver borrowings | ||||||||
| Long-term lease liabilities | ||||||||
| Deferred revenue - ICFA | ||||||||
| Regulatory liabilities | ||||||||
| Advances in aid of construction | ||||||||
| Contributions in aid of construction, net | ||||||||
| Deferred income tax liabilities, net | ||||||||
| Hook-up fee liabilities | ||||||||
| Other noncurrent liabilities | ||||||||
| Total other liabilities | ||||||||
Commitments and contingencies (Refer to Note 14) | ||||||||
| Total Capitalization and Liabilities | $ | $ | ||||||
See accompanying notes to the Condensed Consolidated Financial Statements (unaudited)
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GLOBAL WATER RESOURCES, INC.
Condensed Consolidated Statements of Operations (unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in thousands, except share and per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Revenue | ||||||||||||||
| Water service | $ | $ | $ | $ | ||||||||||
| Wastewater and recycled water service | ||||||||||||||
| Unregulated revenue | ||||||||||||||
| Total revenue | ||||||||||||||
| Operating Expenses | ||||||||||||||
| Operations and maintenance | ||||||||||||||
| General and administrative | ||||||||||||||
| Depreciation, amortization and accretion | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating Income | ||||||||||||||
| Other Income (Expense) | ||||||||||||||
| Interest income | ||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||
| Other, net | ||||||||||||||
| Total other expense | ( | ( | ( | ( | ||||||||||
| Income Before Income Taxes | ||||||||||||||
| Income tax expense | ( | ( | ( | ( | ||||||||||
| Net Income | $ | $ | $ | $ | ||||||||||
| Basic earnings per common share | $ | $ | $ | $ | ||||||||||
| Diluted earnings per common share | $ | $ | $ | $ | ||||||||||
| Dividends declared per common share | $ | $ | $ | $ | ||||||||||
| Weighted average number of common shares used in the determination of: | ||||||||||||||
| Basic | ||||||||||||||
| Diluted | ||||||||||||||
See accompanying notes to the Condensed Consolidated Financial Statements (unaudited)
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GLOBAL WATER RESOURCES, INC.
Condensed Consolidated Statements of Shareholders’ Equity (unaudited)
| (in thousands, except share and per share amounts) | Common Stock Shares | Common Stock | Treasury Stock Shares | Treasury Stock | Additional Paid-in Capital | Retained Deficit | Total Equity | ||||||||||||||||
| Balance as of December 31, 2025 | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||
Dividend declared $ | — | — | — | — | ( | — | ( | ||||||||||||||||
| Share-based compensation | ( | — | — | ||||||||||||||||||||
| Net Loss | — | — | — | — | — | ( | ( | ||||||||||||||||
| Balance as of March 31, 2026 | ( | ( | ( | ||||||||||||||||||||
Dividend declared $ | — | — | — | — | ( | ( | |||||||||||||||||
| Share-based compensation | ( | — | — | ||||||||||||||||||||
| Net Income | — | — | — | — | — | ||||||||||||||||||
| Balance as of June 30, 2026 | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||
| Common Stock Shares | Common Stock | Treasury Stock Shares | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Equity | |||||||||||||||||
| Balance as of December 31, 2024 | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||
Dividend declared $ | — | — | — | — | ( | ( | ( | ||||||||||||||||
| Issuance of common stock, net | — | — | — | ||||||||||||||||||||
| Share-based compensation | — | ( | — | — | |||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Balance as of March 31, 2025 | ( | ( | |||||||||||||||||||||
Dividend declared $ | — | — | — | — | ( | ( | ( | ||||||||||||||||
| Issuance of common stock, net | — | — | — | — | ( | — | ( | ||||||||||||||||
| Share-based compensation | ( | — | ( | — | |||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||
See accompanying notes to the Condensed Consolidated Financial Statements (unaudited)
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GLOBAL WATER RESOURCES, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
| Six Months Ended June 30, | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, amortization and accretion | ||||||||
| Share-based compensation | ||||||||
| Deferred income tax expense | ||||||||
| AFUDC-Equity | ( | ( | ||||||
| Unregulated revenue | ( | |||||||
| Operating lease expense | ||||||||
| Other adjustments | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable and other current assets | ( | |||||||
| Accounts payable and other current liabilities | ( | ( | ||||||
| Other noncurrent assets | ( | |||||||
| Other noncurrent liabilities | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | ( | ( | ||||||
| Net cash used in investing activities | ( | ( | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Dividends paid | ( | ( | ||||||
| Advances and contributions in aid of construction | ||||||||
| Refunds of advances for construction | ( | |||||||
| Principal payments under finance lease | ( | |||||||
| Repayments of long-term debt | ( | ( | ||||||
| Revolver borrowings | ||||||||
| Revolver repayments | ( | |||||||
| Issuance of common stock, net of issuance costs | ||||||||
| Financing costs of debt and equity transactions | ( | |||||||
| Other financing activities | ( | ( | ||||||
| Net cash provided by financing activities | ||||||||
| Increase (Decrease) in cash, cash equivalents, and restricted cash | ( | |||||||
| Cash, cash equivalents, and restricted cash — Beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash — End of period | $ | $ | ||||||
See accompanying notes to the Condensed Consolidated Financial Statements (unaudited)
Supplemental disclosure of cash flow information:
| Six Months Ended June 30, | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
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GLOBAL WATER RESOURCES, INC.
Notes to the Condensed Consolidated Financial Statements (unaudited)
1. Basis of Presentation and Recent Accounting Pronouncements
Basis of Presentation and Principles of Consolidation
The Company’s Condensed Consolidated Financial Statements (unaudited) and related disclosures as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These financial statements follow the same accounting policies and methods of their application as the Company’s most recent annual consolidated financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. In the Company’s opinion, these financial statements include all normal and recurring adjustments necessary for the fair statement of the results for the interim period. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the full year, due to the seasonality of our business.
The Company prepares its financial statements in accordance with the rules and regulations of the SEC. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which improves and clarifies the guidance regarding when disclosures should be provided in interim reporting periods. This standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impacts this amendment will have on its interim disclosures, as well as the timing of adoption.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance on the accounting for government grants, including grants related to an asset and grants related to income. This standard specifies the timing of recognition, the two available approaches to record the grant (the deferred income and the cost accumulation approach) and requires disclosure consistent with current disclosure requirements. The standard is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impacts this amendment will have on its consolidated financial statements and required disclosures, as well as the timing of adoption.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This pronouncement requires disaggregated disclosure of income statement expenses for public business entities. In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of this standard. This standard requires disclosure in tabular format of disaggregation of relevant expense captions presented on the income statement by certain natural expense categories with certain related qualitative disclosures within the notes to the financial statements. The ASU does not change the expense captions an entity presents on the income statement. The standard is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impacts this amendment will have on its consolidated financial statements and required disclosures and will adopt the guidance on the effective date.
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2. Acquisitions
Acquisition of Water Systems from City of Tucson
On July 8, 2025, the Company’s GW-Ocotillo subsidiary completed the previously announced acquisition of seven water systems from Tucson Water, the City of Tucson’s water utility, in an all-cash transaction for an amended purchase price of approximately $8.1 million. The systems served approximately 2,200 water service connections in Pima County with a rate base of approximately $7.7 million at the time of acquisition.
The acquisition, which served to grow our footprint in Pima County, was accounted for as a business combination under ASC Topic 805, Business Combinations and the purchase price was allocated to the acquired utility assets and liabilities based on the acquisition-date fair values. Fair values are determined in accordance with ASC Topic 820, Fair Value Measurement, which allows for the characteristics of the acquired assets and liabilities to be considered, particularly restrictions on the use of the asset and liabilities. Regulation is considered both a restriction on the use of the assets and liabilities, as it relates to inclusion in rate base, and a fundamental input to measuring the fair value in a business combination. Substantially all the Company’s operations are subject to the rate-setting authority of the ACC and are accounted for pursuant to accounting guidance for regulated operations. The rate-setting and cost recovery provisions currently in place for the Company’s regulated operations provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. As such, the fair value of the acquired utility assets and liabilities subject to these rate-setting provisions approximates the pre-acquisition carrying values and does not reflect any net valuation adjustments.
The purchase price allocation of the net assets acquired in the transaction is as follows as of the acquisition date:
Net assets acquired (in thousands): | |||||
| Utility plant, net | $ | ||||
| Cash | |||||
| Accounts receivable | |||||
| Other accrued liabilities | ( | ||||
| Total net assets assumed | |||||
| Goodwill | |||||
| Total purchase price | $ | ||||
The goodwill reflects the value paid primarily for the long-term potential for connection growth as a result of the Company’s increased scale and diversity, opportunities for synergies, and an improved risk profile.
3. Regulatory Matters
Recent ACC Rulings and Activity
2025 GW-Santa Cruz and GW-Palo Verde Rate Cases
On March 5, 2025, GW-Santa Cruz and GW-Palo Verde each filed a general rate case application and related schedules with the ACC for, among other things, increased water and wastewater rates, respectively, based on a test year ended December 31, 2024, with updates for post-test year plant. On October 1, 2025, the ACC Utilities Division (“ACC Staff”) and RUCO filed their respective initial written testimonies with the ACC in the rate cases, with subsequent rebuttal, surrebuttal and rejoinder testimonies having been filed by the parties.
On April 28, 2026, the parties entered into a settlement agreement (the “Settlement Agreement”) to bifurcate the two rate cases pursuant to which, among other things: (i) the GW-Santa Cruz rate case has settled; (ii) GW-Palo Verde will withdraw its rate case application with the intent of refiling its rate case in 2027 using a 2026 test year; and (iii) GW-Palo Verde will seek authorization to increase the temporary bill credit for customers related to the Company’s Southwest Plant that was originally approved in connection with Decision No. 79424 issued by the ACC. The proposed increase in the temporary bill credit is expected to reduce revenue by an additional $0.4 million annually with the parties agreeing that the final resolution relating to this bill credit will be addressed in GW-Palo Verde’s 2027 rate review.
In addition, under the terms of the Settlement Agreement, the parties have agreed to, among other things: (i) an increase in GW-Santa Cruz’s annual revenue requirement of approximately $2.3 million; (ii) a requested effective date of the new rates for GW-Santa Cruz of November 1, 2026; and (iii) $3.4 million of utility plant for GW-Santa Cruz would be classified as plant held for
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future use for ratemaking purposes. The settlement preserves the Company’s ability to seek inclusion of these assets in rate base in a future rate review, subject to ACC review and approval. The Company has also agreed to miscellaneous adjustments that would result in disallowances of approximately $0.1 million.
On July 9, 2026, GW-Palo Verde filed a motion to withdraw its rate application in accordance with the Settlement Agreement. On July 29, 2026, the ALJ issued a procedural order granting the motion to withdraw the GW-Palo Verde rate application. Hearings concluded on August 3, 2026, and the GW-Santa Cruz rate case, along with the Settlement Agreement, is under advisement with the ALJ. The Company expects a decision on the GW-Santa Cruz rate case by the end of 2026. The Settlement Agreement remains subject to the approval of the ACC, and there can be no assurance that the ACC will approve the Settlement Agreement in the form filed or otherwise modify provisions contained therein. Therefore, no adjustments related to this settlement have been reflected in the accompanying Condensed Consolidated Financial Statements (unaudited).
2024 GW-Farmers Rate Case - Decision No. 80695 - Issued April 29, 2025
On June 27, 2024, GW-Farmers filed a rate case application with the ACC for increased water rates based on a 2023 test year, with updates for changes in post-test year plant through December 31, 2024. On April 29, 2025, the ACC approved GW-Farmers’ rate case application in Decision No. 80695. Among other approvals, Decision No. 80695 approved an increase in GW-Farmers’ annual revenue requirement of $1.1 million and a return on equity of 9.6 %, with increased rates to be phased-in over three periods. 50 % of the increase was effective on May 1, 2025, with another 25 % effective on November 1, 2025. The final 25 % increase was phased in on May 1, 2026. In addition to the rate increase, Decision No. 80695 also approved a deferral of the recovery of an acquisition premium of approximately $3 million related to the Company’s acquisition of GW-Farmers, which the Company recorded as of March 31, 2025. Decision No. 80695 calls for the acquisition premium to be recovered in a future rate case, subject to the GW-Farmers utility being found viable by the ACC.
Southwest Service Area Wastewater Collection Mains and Recycled Water Mains
In January 2024, the Company discovered that approximately $7.8 million of construction costs for wastewater mains and recycled water mains in the Company’s Southwest service area had been prematurely included as “plant in service” for rate-making purposes in 2007, and were reflected in the calculation of customer rates in Decision No. 71878 (September 15, 2010). Those costs were also included as “plant in service” in Decision No. 74364 (February 26, 2014) and Decision No. 78644 (July 27, 2022). The Company disclosed this circumstance to the ACC on March 1, 2024, and on April 25, 2024, GW-Palo Verde filed an application with the ACC requesting a monthly bill credit for customers that would be in place until the conclusion of the next GW-Palo Verde rate case. The ACC issued Decision No. 79424 on July 18, 2024 approving the bill credit with an effective date of August 1, 2024. The bill credit reduced revenue earned by $0.2 0.3
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4. Revenue Recognition
Disaggregated Revenue
Disaggregated revenue from contracts with customers by major source and customer class was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Regulated revenue | ||||||||||||||
| Water Service | ||||||||||||||
| Residential | $ | $ | $ | $ | ||||||||||
| Irrigation | ||||||||||||||
| Commercial | ||||||||||||||
| Multi-family | ||||||||||||||
| Construction | ||||||||||||||
| Other water revenue | ||||||||||||||
| Total water revenue | ||||||||||||||
| Wastewater and recycled water service | ||||||||||||||
| Residential | ||||||||||||||
| Commercial | ||||||||||||||
| Multi-family | ||||||||||||||
| Recycled water revenue | ||||||||||||||
| Other wastewater revenue | ||||||||||||||
| Total wastewater and recycled water revenue | ||||||||||||||
| Total regulated revenue | ||||||||||||||
| Unregulated revenue | ||||||||||||||
| Total unregulated revenue | ||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||
Contract Balances
The Company’s contract assets and liabilities consisted of the following:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||
| Contract assets | ||||||||
| Accounts receivable, net | $ | $ | ||||||
| Total contract assets | $ | $ | ||||||
| Contract liabilities | ||||||||
| Deferred revenue - ICFA | $ | $ | ||||||
| Total contract liabilities | $ | $ | ||||||
Accounts Receivable and Allowance for Credit Losses
Accounts receivable consisted of the following:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||
| Billed receivables | $ | $ | ||||||
| Less: provision for credit losses | ( | ( | ||||||
| Accounts receivable, net | $ | $ | ||||||
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The following table summarizes the allowance for credit loss activity:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||
| Beginning of period | $ | ( | $ | ( | ||||
| Credit loss expense | ( | ( | ||||||
| Write offs | ||||||||
| Recoveries | ( | ( | ||||||
| End of period | $ | ( | $ | ( | ||||
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Deferred revenue from ICFAs is recognized as revenue once the obligations specified within the applicable ICFA are met, including construction of sufficient operating capacity to serve the customers for which revenue was deferred. Due to the uncertainty of future events, the Company is unable to estimate when to expect recognition of deferred revenue from ICFAs.
The following table summarizes the ICFA deferred revenue activity:
| (in thousands) | June 30, 2026 | ||||
| Beginning of period | $ | ||||
| Payments allocated to deferred revenue | |||||
| Reclassifications from HUF | |||||
| Revenue recognized | ( | ||||
| End of period | $ | ||||
5. Earnings Per Share
Basic EPS in each period of this report was calculated by dividing net income by the weighted-average number of shares during those periods. Diluted EPS includes additional weighted-average common stock equivalents (options and restricted stock awards), if dilutive. In periods of a net loss position, basic and diluted weighted average common shares are the same. A reconciliation of the denominator used in basic and diluted EPS calculations is shown in the following table:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Basic weighted average common shares outstanding | ||||||||||||||
| Effect of dilutive securities: | ||||||||||||||
| Option grants | ||||||||||||||
| Restricted stock awards | ||||||||||||||
| Total dilutive securities | ||||||||||||||
| Diluted weighted average common shares outstanding | ||||||||||||||
| Anti-dilutive shares excluded from earnings per diluted share | ||||||||||||||
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6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||
| Prepaid expense | $ | $ | ||||||
| Buckeye growth premiums receivable | ||||||||
| Prepaid insurance | ||||||||
| Regulatory assets, current | ||||||||
| Stop loss medical claims | ||||||||
| Prepaid income tax | ||||||||
| Other current assets | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
7. Equity
Public Offering of Common Stock
On March 27, 2025, the Company completed a public offering of 3,220,000 shares of its common stock at a public offering price of $10.00 per share, which included 420,000 shares issued and sold to the underwriters following the exercise in full of their option to purchase additional shares of common stock. Certain existing shareholders, including certain directors and/or their affiliates, purchased an aggregate of 1,439,200 shares of common stock at the public offering price. The public offering resulted in approximately $32.2 million of gross proceeds or $30.8 million of net proceeds, after deducting underwriting discounts, commissions and offering expenses paid by the Company.
Private Placement of Common Stock
On September 30, 2025, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 1,270,572 shares of the Company’s common stock at a purchase price of $10.30 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder. The Company received gross proceeds of approximately $13.1 million from the offering. Certain existing shareholders, including certain directors and/or their affiliates, purchased an aggregate of 882,223 shares of common stock in the offering at the purchase price.
8. Debt
Revolver
The Company maintains a revolving credit facility with Northern Trust pursuant to a loan agreement entered into between the parties (as amended, the “Northern Trust Loan Agreement”). On April 30, 2026, the Company and Northern Trust entered into a seventh amendment to the Northern Trust Loan Agreement to, among other things, extend the scheduled maturity date from May 18, 2027 to May 18, 2028. Pursuant to the Northern Trust Loan Agreement, the amounts outstanding bear interest, payable monthly, at a rate equal to the SOFR plus 2.10 %. Additionally, the Company pays a quarterly facility fee equal to 0.35 % of the average daily unused amount of the Revolver.
The Company had $5.8 million of outstanding borrowings under the Revolver as of June 30, 2026 and no outstanding borrowings as of December 31, 2025.
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9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||
| Other taxes | $ | $ | ||||||
| Project liabilities | ||||||||
| AIAC refunds, current portion | ||||||||
| Interest | ||||||||
| Dividend payable | ||||||||
| Customer prepayments | ||||||||
| Medical claims | ||||||||
| Payroll | ||||||||
| License fees | ||||||||
| ACC assessment fee | ||||||||
| Contingent consideration, current portion | ||||||||
| Regulatory Liabilities, current | ||||||||
| Other accrued liabilities | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
10. Fair Value
Fair Value Measurements
Recurring Fair Value Measurements
Financial assets and liabilities measured at fair value on a recurring basis were as follows:
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Contingent Consideration | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Contingent consideration is included within Other noncurrent liabilities on the Condensed Consolidated Balance Sheets (unaudited). Refer to Note 14 — “Commitments and Contingencies” for additional information about contingent consideration.
Other Fair Value Disclosures for Financial Instruments
Restricted cash on the Condensed Consolidated Balance Sheets (unaudited) consists of HUF funds and certificates of deposit, both of which are valued at amortized cost, which approximates fair value.
The fair value of outstanding long-term debt is estimated based on interest rates considered available for instruments of similar terms and remaining maturities. Certain premium costs associated with the early settlement of long-term debt are not taken into consideration in determining fair value. These fair value measurements are classified within Level 2 of the fair value hierarchy. The carrying amount and estimated fair values of these financial instruments were as follows:
| June 30, 2026 | December 31, 2025 | |||||||||||||
| (in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||
| Long-term debt | $ | $ | $ | $ | ||||||||||
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11. Income Taxes
Our interim effective tax rates reflect the estimated annual effective tax rates for 2026 and 2025 applied to year-to-date pretax income, adjusted for tax expense associated with certain discrete items.
The effective tax rates for the three months ended June 30, 2026 and 2025 were 26.2 % and 27.7 %, respectively. The decrease was primarily the result of ICFA revenue recognized in the current year period, which did not occur in the prior year period.
The effective tax rates were largely consistent for the six months ended June 30, 2026 and 2025, at 26.8 % and 26.6 %, respectively.
12. Share-based Compensation
Share-based compensation to both employees and non-employees were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Employee - RSA | $ | $ | $ | $ | ||||||||||
| Employee - RSU | ||||||||||||||
| Total employee share-based compensation | ||||||||||||||
| Non-employee - RSA | ||||||||||||||
| Non-employee - RSU | ( | ( | ( | |||||||||||
| Total non-employee share-based compensation | ( | ( | ||||||||||||
| Total share-based compensation | $ | $ | $ | $ | ||||||||||
13. Transactions With Related Parties
The Company provides medical benefits to employees through its participation in a pooled plan sponsored by an affiliate of a significant shareholder and director of the Company. For the three months ended June 30, 2026 and 2025, medical claims expense was $0.7 million and $0.4 million, respectively. For the six months ended June 30, 2026 and 2025, medical claims expense was $1.5 million and $0.9 million, respectively.
Additionally, certain directors and/or their affiliates purchased an aggregate of 1,439,200 shares of common stock at the public offering price in the Company’s public offering of common stock in March 2025. Refer to Note 7 — “Equity,” for additional information.
14. Commitments and Contingencies
Commitments
On February 1, 2023, the Company acquired all of the equity of Farmers Water Co., an operator of a water utility with service area in Pima County, Arizona. Under the terms of the purchase agreement, the Company is obligated to pay the seller a growth premium equal to $1,000 (not in thousands) for each new account established within the specified growth premium areas, up to a maximum total aggregate growth premium of $3.5 million. The obligation period of the growth premium commenced on the closing date of the acquisition and ends (i) ten years after the first new account for residential purposes is established on land that was, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area; or (ii) ten years after the date of closing if a new account (as previously described) has not been established. As of June 30, 2026, no new account was established on land that was undeveloped or unplatted at the closing date of the acquisition. The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions. Significant inputs used in the fair value calculation are as follows: year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate. The estimated fair value of the remaining liability was $1.2
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Within the service area of its GW-Saguaro utility, the Company is required to pay a growth premium equal to $750 (not in thousands) for each new account established within specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date, or twenty years from the acquisition date. As of June 30, 2026, no meters have been installed and no accounts have been established in any of the specified growth premium areas. The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions. Significant inputs used in the fair value calculation are as follows: year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate. The fair value of the remaining liability was $0.7
The Company has previously received certain ICFA advances related to its CP Water utility, which the Company is obligated to repay in the form of specified future ICFA fee reductions when those ICFA fees are due. The liability was $0.9
Contingencies
From time to time, in the ordinary course of business, the Company may be subject to pending or threatened lawsuits in which claims for monetary damages are asserted. The Company intends to continue to defend itself vigorously in such matters. The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. An estimated loss contingency is accrued in its financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it currently does not have any amount accrued related to legal matters. Management is not aware of any legal proceeding of which the ultimate resolution could materially affect the Company’s financial position, results of operations, or cash flows.
15. Business Segment Information
As of June 30, 2026, the Company is organized and operated as one
The Company’s CODM is the Chief Executive Officer. While the Company reports revenue disaggregated by service type on the face of its Condensed Consolidated Financial Statements (unaudited), the Company does not manage the business based on any performance measure at the individual revenue stream level. The CODM uses consolidated financial information, as outlined below, to evaluate performance against budget and peers and to make all significant decisions regarding the allocation of the Company’s resources, and communicate results and performance to the Company’s board of directors.
The CODM regularly reviews the results of the Company based on GAAP net income as well as non-GAAP measures, EBITDA and Adjusted EBITDA. The CODM uses GAAP net income in the assessment of performance and to make strategic decisions regarding resource allocation predominantly in the annual budget.
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The CODM reviews the following significant expense categories:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Segment Revenue | $ | $ | $ | $ | ||||||||||
| Segment Expenses | ||||||||||||||
| Personnel costs - operations and maintenance | ||||||||||||||
| Utilities, chemicals and repairs | ||||||||||||||
| Other operations and maintenance expenses | ||||||||||||||
| Personnel costs - general and administrative | ||||||||||||||
| Professional fees | ||||||||||||||
| Other general and administrative expenses | ||||||||||||||
| Depreciation, amortization and accretion | ||||||||||||||
| Other Income (Expense) | ||||||||||||||
| Buckeye growth premiums | ||||||||||||||
| Other segment income and expenses | ( | ( | ( | ( | ||||||||||
| Income tax expense | ( | ( | ( | ( | ||||||||||
| Net Income | $ | $ | $ | $ | ||||||||||
Other operations and maintenance and other general and administrative expenses include contract services, business development, board compensation, rent, insurance and taxes other than income taxes. Other segment income expenses include interest income, interest expense, AFUDC, and gains and losses on disposal of assets.
16. Other, Net
Other, net consisted of the following:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||
Buckeye growth premiums(1) | $ | $ | $ | $ | ||||||||||
| AFUDC-Equity | ||||||||||||||
| Other | ( | ( | ||||||||||||
| Total Other, net | $ | $ | $ | $ | ||||||||||
(1)The City of Buckeye is obligated to pay the Company a growth premium equal to $3,000 for each new water meter installed within Valencia’s prior service areas in the City of Buckeye, for a 20-year period ending December 31, 2034, subject to a maximum payout of $45.0 million over the term of the agreement. An aggregate of $17.2 million in growth premiums have been invoiced or received to date.
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17. Supplemental Cash Flow Information
The following is supplemental cash flow information:
| Six Months Ended June 30, | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest - net of amounts capitalized | $ | $ | ||||||
| Cash paid for income taxes | ||||||||
| Operating cash flows used for finance leases | ||||||||
| Operating cash flows used for operating leases | ||||||||
| Financing cash flows used for finance leases | ||||||||
| Non-cash financing and investing activities: | ||||||||
| Capital expenditures included in accounts payable and accrued liabilities | ||||||||
| Utility Plant constructed by developers and conveyed | ||||||||
| HUF transferred to CIAC | ||||||||
| Asset retirement obligation additions | ||||||||
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis of Global Water Resources, Inc.’s financial condition and results of operations (“MD&A”) relate to the three and six months ended June 30, 2026 and should be read together with the consolidated financial statements and accompanying notes included in Part I, Item 1 of this report.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q are forward-looking in nature and may constitute “forward-looking information” within the meaning of applicable securities laws. Often, but not always, forward-looking statements can be identified by the words “believes”, “anticipates”, “plans”, “expects”, “intends”, “projects”, “estimates”, “objective”, “goal”, “focus”, “aim”, “should”, “could”, “may”, and similar expressions.
These forward-looking statements include future estimates described in “Business Outlook”, “Factors Affecting our Results of Operations”, and “Liquidity and Capital Resources”. These forward-looking statements include, but are not limited to, statements about our strategies; expectations about future business plans, prospective performance, growth, and opportunities, including the potential for new service connections; future financial performance; regulatory and ACC proceedings, decisions and approvals, such as the outcome, timing and other statements regarding our plans, expectations and estimates relating to our rate cases and other applications with the ACC and other regulatory bodies, including with respect to the Settlement Agreement; our plans relating to future filings of our rate cases and other regulatory applications; acquisition plans and strategies, including our ability to complete additional acquisitions, and our expectations about future benefits of our acquisitions, such as projected revenue from our acquisitions, as well as our plans relating to the integration and upgrade of acquired water systems; statements concerning Arizona’s Assured Water Supply “Ag-to-Urban” program and the State Route 347 Improvement Project, including anticipated benefits; population and growth projections; technologies, including expected benefits from implementing such technologies; revenue; metrics; operating expenses; trends relating to our industry, market, population and job growth, and housing permits; the adequacy of our water supply to service our current demand and growth for the foreseeable future; liquidity and capital resources; plans and expectations for capital expenditures; cash flows and uses of cash; dividends; depreciation and amortization; tax payments; our ability to repay indebtedness and invest in initiatives; the anticipated impact and resolutions of legal matters; the anticipated impact of new or proposed laws, including regulatory requirements, tax changes, and judicial decisions; the anticipated impact of accounting changes and other pronouncements; and other statements that are not historical facts.
Forward-looking statements should not be read as a guarantee of future performance or results. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Consequently, actual results may vary materially from what is contained in a forward-looking statement. Investors are cautioned not to place undue reliance on forward-looking information. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks related to legal, regulatory, and legislative matters; risks related to our business and operations; risks related to market and financial matters; risks related to technology; and risks related to the ownership of our common stock, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
These and other factors are discussed in the risk factors described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) and in Part II, Item 1A “Risk Factors” in this report, as updated from time to time in our subsequent filings with the SEC. Any forward-looking statement speaks only as of the date of this report. Except as required by law, we undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Overview
GWRI is a water resource management company that owns, operates, and manages thirty-nine water, wastewater, and recycled water public utility systems in strategically located communities, principally in metropolitan Phoenix and Tucson, Arizona. We seek to deploy an integrated approach, referred to as “Total Water Management.” Total Water Management is a comprehensive approach to water utility management that reduces demand on scarce non-renewable water sources and costly renewable water supplies, in a manner that ensures sustainability and greatly benefits communities both environmentally and economically. This approach employs a series of principles and practices that can be tailored to each community:
•Reuse of recycled water, either directly or to non-potable uses, through aquifer recharge, or possibly direct potable reuse in the future;
•Regional planning;
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•Use of advanced technology and data;
•Employing respected subject matter experts and retaining thought leaders;
•Leading outreach and educational initiatives to ensure all stakeholders including customers, development partners, municipalities, regulators, and utility staff are knowledgeable on the principles and practices of the Total Water Management approach; and
•Establishing partnerships with communities, developers, and industry stakeholders to gain support of the Total Water Management principles and practices.
Business Outlook
We continue to experience organic growth exhibited through our year-over-year organic increase in active connections (i.e., exclusive of acquisition-related growth) of 2.7% as of June 30, 2026. According to the 2025 U.S. Census estimates, the Phoenix metropolitan statistical area (“MSA”) is the 10th largest MSA in the U.S. and had an estimated population of 5.2 million, an increase of 7.9% over the 4.8 million people reported in the 2020 Census. Growth in the Phoenix MSA continues as a result of its excellent weather, large and growing universities, a diverse employment base, and low taxes. The Arizona Office of Economic Opportunity predicts that the Phoenix metropolitan area will have a population of 5.7 million people by 2030 and 6.3 million by 2040. In addition, the Arizona Office of Economic Opportunity also projects statewide employment will increase from approximately 3.5 million jobs in 2024 to approximately 4.0 million jobs in 2034, representing an increase of approximately 0.5 million jobs, or an average annual growth rate of 1.2%, compared with projected annual employment growth of 0.3% for the United States over the same period.
Our organic growth continues to be primarily influenced by the comparatively lower cost of housing in the City of Maricopa relative to other areas within the Phoenix MSA. As of June 2026, the median home sales price in the City of Maricopa was 25% lower than in the City of Phoenix. In addition, construction on the State Route 347 Improvement Project began in June 2026, with completion scheduled for 2029. The project represents a transformative investment in regional infrastructure that we believe will enhance safety, improve mobility and support the continued growth of the City of Maricopa and surrounding areas.
We continue to monitor potential effects on our operations due to changes in the macroeconomic environment, such as the impacts of tariffs on our operational costs and construction work in progress, as well as new home construction in our service areas. We continue to expect a positive long-term outlook based on forecasted performance of job and population growth, as well as indicators of stabilizing construction in the single-family housing market in the Phoenix MSA.
The 2026 and 2027 residential permit forecasts, published by Arizona State University - W.P. Carey School of Business Greater Phoenix Blue Chip Real Estate Consensus Panel in the second quarter of 2026, are presented in the table below:
| 2026 | 2027 | |||||||
| Phoenix MSA Consensus | ||||||||
| Single family permits | 21,178 | 22,518 | ||||||
| Multi-family permits | 8,482 | 9,031 | ||||||
Single family and multi-family housing equivalent permits issued are presented in the table below:
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
| 2026 | 2025 | # | % | 2026 | 2025 | # | % | ||||||||||||||||||||||
| Single family permits | |||||||||||||||||||||||||||||
| City of Maricopa | 185 | 175 | 10 | 6 | % | 342 | 363 | (21) | (6) | % | |||||||||||||||||||
| Phoenix MSA | 5,653 | 5,929 | (276) | (5) | % | 10,857 | 12,337 | (1,480) | (12) | % | |||||||||||||||||||
| Multi-family housing equivalent permits | |||||||||||||||||||||||||||||
| City of Maricopa | — | 86 | (86) | (100) | % | 215 | 290 | (75) | (26) | % | |||||||||||||||||||
While new permit activity has slowed, growth in the Phoenix MSA, particularly in the City of Maricopa, is reflected in the Company’s 2.7% year-over-year organic increase in active connections. Management believes, despite fluctuations in permit projections, we remain well-positioned to benefit from the anticipated long-term growth of the Phoenix MSA.
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Factors Affecting our Results of Operations
Our financial condition and results of operations are influenced by a variety of industry-wide factors, including but not limited to:
•population and community growth;
•economic and environmental utility regulation;
•the need for infrastructure investment;
•production and treatment costs;
•weather and seasonality; and
•adequate water supply.
We are subject to regulation by the state regulator, the ACC. The U.S. federal and state governments also regulate environmental, health and safety, and water quality matters. We continue to execute on our strategy to optimize and focus the Company in order to provide greater value to our customers and shareholders by aiming to deliver predictable financial results, making prudent capital investments, and focusing our efforts on earning an appropriate rate of return on our investments.
We continue to monitor the impact of business and macroeconomic conditions on our business and operations, including those relating to inflationary pressures, changes in tariff policy and geopolitical conflicts, such as the ongoing military conflict in the Middle East. While these conditions did not have a material effect on our business operations, results of operations, cash flows and financial position for the three and six months ended June 30, 2026, we are unable to predict the ultimate extent to which our business operations, results of operations, cash flows, and financial position could be impacted.
Population and Community Growth
Population and community growth in the metropolitan Phoenix area served by our utilities have a direct impact on our earnings. An increase or decrease in our active service connections will affect our revenue and variable expenses in a corresponding manner. As of June 30, 2026, active service connections increased 3,790, or 5.8%, to 69,429 compared to 65,639 active service connections as of June 30, 2025, primarily due to organic growth in our service areas and the acquisition of seven water systems from the City of Tucson in July 2025. Approximately 87.4% of the 69,429 active service connections are serviced by our GW-Santa Cruz and GW-Palo Verde utilities as of June 30, 2026.
The graph below presents the historical change in active connections for our ongoing operations over the past five years.
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Recent Acquisition Activity
Acquisition of Water Systems from City of Tucson
On July 8, 2025, the Company’s GW-Ocotillo subsidiary completed the previously announced acquisition of seven water systems from Tucson Water, the City of Tucson’s water utility, in an all-cash transaction for an amended purchase price of approximately $8.1 million. The systems served approximately 2,200 water service connections in Pima County with a rate base of approximately $7.7 million at the time of acquisition. The Company adopted Tucson Water’s rates for the acquired water systems, including a previously approved 5.0% rate increase that took effect in July 2026. Following the acquisition, the total number of Global Water customers in Pima County exceeded 7,200. The Company expects the acquired water systems to generate approximately $1.5 million in revenue annually. The Company will integrate the acquired water systems using the same proven approach to consolidation and effective water management implemented in its other acquisitions in Pima County. The Company plans to update the acquired water systems over time with the installation of upgraded AMI, which will include smart meters that enable wireless usage metering, similar to the technology that Global Water has deployed for approximately 90% of its active customers.
Economic and Environmental Utility Regulation
We are subject to extensive regulation of our rates by the ACC, which is charged with establishing rates based on the provision of reliable service at a reasonable cost while also providing an opportunity to earn a fair rate of return on rate base for investors in the state’s utilities. The ACC uses a historical test year to evaluate whether the plant in service is used and useful, to assess whether costs were prudently incurred, and to set “just and reasonable” rates. Rate base is typically the depreciated original cost of the plant in service (net of CIAC and AIAC, which are funds or property provided to a utility under the terms of a main extension agreement, the value of which may be refundable), that has been determined to have been “prudently invested” and “used and useful”, although the reconstruction cost of the utility plant may also be considered in determining the rate base. The ACC also decides on an applicable capital structure based on actual or hypothetical analyses. The ACC determines a “rate of return” on that rate base, which includes the approved capital structure and the actual cost of debt and a fair and reasonable cost of equity based on the ACC’s judgment. The overall revenue requirement for rate making purposes is established by multiplying the rate of return by the rate base and adding reasonably incurred operating expenses for the test year, depreciation, taxes, and any applicable pro forma adjustments.
To ensure an optimal combination of access to water and water conservation, balanced with a fair rate of return for investors, our water utility operating revenue is based on two components: a fixed fee and a consumption or volumetric fee. For our water utilities, the fixed fee, or “basic service charge,” provides access to water for residential usage and has generally been set at a level to produce approximately 50% of total water revenue. The volumetric fee is based on the total volume of water supplied to a given customer after the minimum number of gallons, if any, covered by the basic service charge, multiplied by a price per gallon set by a tariff approved by the ACC. A discount to the volumetric rate applies for customers that use less than an amount specified by the ACC. For all investor-owned water utilities, the ACC has, as a policy matter, required the establishment of inverted tier conservation-oriented rates, meaning that the price of water increases as consumption increases. For wastewater utilities, wastewater collection and treatment can be based on volumetric or fixed fees. Our wastewater service is billed based solely on a fixed fee, determined by the size of the water meter installed. Recycled water is sold on a volumetric basis with no fixed fee component.
We are required to file rate cases with the ACC to obtain approval for a change in the rates we charge to customers. Rate cases and other rate-related proceedings can take a year or more to complete. As a result, there is frequently a delay, or regulatory lag, between the time of a capital investment or incurrence of an operating expense increase and when those costs are reflected in rates. We generally expect to file for rate increases every three to five years, in line with common industry practice. Refer to “— Rate Regulation Updates” below and Note 3 — “Regulatory Matters” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report for additional information.
Additionally, our water and wastewater utility operations are subject to extensive regulation by U.S. federal, state, and local regulatory agencies that enforce environmental, health, and safety requirements, which affect all of our regulated subsidiaries. Environmental, health and safety, and water quality regulations are complex, change frequently, and have tended to become more stringent over time. Although it is difficult to project the ultimate costs of complying with pending or future requirements, we do not expect requirements under current regulations to have a material impact on our operations or financial condition, though it is possible new methods of treating drinking water may be required if additional regulations become effective in the future. See “Business—Regulation”, included in Part I, Item 1 of the 2025 Form 10-K for additional information.
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Infrastructure Investment
Capital expenditures for infrastructure investment are a component of the rate base on which our regulated utility subsidiaries are allowed to earn a rate of return. Capital expenditures for infrastructure provide a basis for earnings growth by expanding our “used and useful” rate base, which is a component of our permitted return on investment and revenue requirement. We have generally been able to recover a rate of return on these capital expenditures (return on equity and debt), together with debt service and certain operating costs, through the rates we charge.
We have an established capital improvement plan to make targeted capital investments to repair and replace existing infrastructure as needed, address operating redundancy requirements and expand our infrastructure in areas where growth is occurring. Refer to “— Liquidity and Capital Resources” below for additional information.
Production and Treatment Costs
Our water and wastewater service requires significant production resources and therefore results in significant production costs. Although we are permitted to recover these costs through the rates we charge, regulatory lag can decrease our margins and earnings if production costs or other operating expenses increase significantly before we are able to recover them through increased rates. Our most significant costs include labor, chemicals used to treat water and wastewater, and power used to operate pumps and other equipment. Power and chemical costs can be volatile. However, we employ a variety of technologies and methodologies to minimize costs and maximize operational efficiencies.
Weather and Seasonality
Our ability to meet the existing and future water demands of our customers depends on the availability of an adequate supply of water. Drought, overuse of sources of water, the protection of threatened species or habitats, or other factors may limit the availability of ground and surface water.
Also, customer usage of water and recycled water is affected by weather conditions, particularly during the summer. Our water systems generally experience higher demand in the summer months due to the warmer temperatures and increased usage by customers for irrigation and other outdoor uses. However, summer weather that is cooler or wetter than average generally suppresses customer water demand and can have a downward effect on our operating revenue and operating income. Conversely, when weather conditions are extremely dry, our business may be affected by government-issued drought-related warnings and/or water usage restrictions that would artificially lower customer demand and reduce our operating revenue.
The limited geographic diversity of our service areas makes the results of our operations more sensitive to the effect of extreme weather patterns. The second and third quarters of the year are generally those in which water service revenue and wastewater service revenue are highest. For additional information and risks associated with weather and seasonality, refer to “Risk Factors—Business and Operational Factors—Our utilities business is subject to seasonal fluctuations and other weather-related conditions, such as droughts, which could adversely affect the supply of and demand for our service and our results of operations,” and “Risk Factors—Business and Operational Factors—Climate variability may cause increased volatility in weather and may impact water usage and related revenue or require additional expenditures, all of which may not be fully recoverable in rates or otherwise,” included in Part I, Item 1A of the 2025 Form 10-K.
Adequate Water Supply
In many areas of Arizona (including certain areas that we service), water supplies are limited and, in some cases, current usage rates exceed sustainable levels for certain water resources. We currently rely predominantly on the pumping of groundwater and the generation and delivery of recycled water for non-potable uses to meet future demands in our service areas. At present, groundwater (and recycled water derived from groundwater) is the primary water supply available to us. In addition, regulatory restrictions on the use of groundwater and the development of groundwater wells, lack of available water rights, drought, overuse of local or regional sources of water, protection of threatened species or habitats, or other factors, including climate change, may limit the availability of ground or surface water. In particular, water resource constraints exist in certain areas within Pinal County near and around the City of Maricopa. We have obtained a DAWS in the Maricopa/Casa Grande region (GW-Santa Cruz) for two distinct service areas for 22,914 acre-feet of water use in total. We have significant unused DAWS capacity in the larger service area in the north, including the incorporated City of Maricopa. In a smaller service area southwest of the City of Maricopa within Pinal County, the DAWS coverage is limited and more constrained by state law and groundwater regulations, which may impact developers’ ability to obtain final plat approval if the DAWS is not expanded. While we believe we have sufficient capacity for many years to support connection growth in this area, it is the increase in land entitlement that may exceed the allocation of the smaller service area within the DAWS, which in turn may limit future plat approvals. We are working with our development partners and others to develop long-term solutions for this area. Regardless,
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considering the existing capacity in the DAWS, we believe that we have an adequate supply of water to service our current demand and growth for the foreseeable future in our service areas. For additional information and risks associated with the access to and quality of water supply, see “Risk Factors—Business and Operational Factors—Inadequate water supplies and wastewater capacity could have a material adverse effect upon our ability to achieve the customer growth necessary to increase our revenue,” included in Part I, Item 1A of the 2025 Form 10-K.
Ag-to-Urban and GW-Santa Cruz DAWS Application
In January 2026, a developer in GW-Santa Cruz’s service area filed their initial application with the ADWR under the new Ag-to-Urban program for the conversion of agricultural land to urban development that allows for the creation of Groundwater Savings Credits (“GSCs”). On June 2, 2026, GW-Santa Cruz filed an application with the ADWR to modify its DAWS to incorporate these GSCs, along with additional recycled water, and requested an increase from 22,914 to 27,466 acre-feet per year. If the DAWS modification application is approved, the Company believes this will expand GW-Santa Cruz’s water resource portfolio and provide increased water resource security in addition to providing water for growth in the utility’s service area.
GW-Ocotillo DAWS Application
On March 27, 2026, the Company’s GW-Ocotillo utility filed a DAWS application with the ADWR to secure water supplies and provide water resource security in its service area.
The Company anticipates decisions from the ADWR on both the GW-Santa Cruz and GW-Ocotillo DAWS applications by the fourth quarter of 2027. There can be no assurance that the ADWR will approve the DAWS applications or on the timing of such decisions by the ADWR.
Rate Regulation Updates
GW-Santa Cruz and GW-Palo Verde Rate Cases
On March 5, 2025, GW-Santa Cruz and GW-Palo Verde each filed a general rate case application and related schedules with the ACC for, among other things, increased water and wastewater rates, respectively, based on a test year ended December 31, 2024, with updates for post-test year plant. On October 1, 2025, the ACC Utilities Division (“ACC Staff”) and RUCO filed their respective initial written testimonies with the ACC in the rate cases, with subsequent rebuttal, surrebuttal and rejoinder testimonies having been filed by the parties.
On April 28, 2026, GW-Santa Cruz, GW-Palo Verde, RUCO, and ACC Staff filed with the ACC a settlement agreement (the “Settlement Agreement”) detailing the terms upon which the parties have agreed to bifurcate and settle the rate cases. Pursuant to the Settlement Agreement, the parties have agreed to, among other things:
•an increase in GW-Santa Cruz’s annual revenue requirement of approximately $2.3 million with a capital structure of 55% common equity/45% debt and a return on equity of 9.6%;
•a requested effective date of the new rates for GW-Santa Cruz of November 1, 2026; and
•the withdrawal of the GW-Palo Verde rate case, with an agreement that GW-Palo Verde will refile its rate application in 2027 using a 2026 test year without seeking formula rates.
Additionally, in consideration of the Settlement Agreement, GW-Palo Verde has agreed to seek an amendment to Decision No. 79424 (July 18, 2024) issued by the ACC to increase the amount of the temporary bill credit for customers related to the Company’s Southwest Plant. The Settlement Agreement provides that the increase to the temporary bill credit will coincide with new rates described above for GW-Santa Cruz going into effect and is expected to reduce revenue by approximately $0.4 million annually. The parties have also agreed that the final resolution relating to this bill credit will be addressed in GW-Palo Verde’s 2027 rate case.
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On July 9, 2026, GW-Palo Verde filed a motion to withdraw its rate application in accordance with the Settlement Agreement. On July 29, 2026, the ALJ issued a procedural order granting the motion to withdraw the GW-Palo Verde rate application. Hearings concluded on August 3, 2026, and the GW-Santa Cruz rate case, along with the Settlement Agreement, is under advisement with the ALJ. The Company expects a decision on the GW-Santa Cruz rate case by the end of 2026. The Settlement Agreement remains subject to the approval of the ACC, and there can be no assurance that the ACC will approve the Settlement Agreement in the form filed or otherwise modify provisions contained therein.
See “Risk Factors—Legal, Regulatory, and Legislative Factors—We are subject to the jurisdiction and regulations of the ACC, the primary utility regulator in Arizona, and our financial condition depends upon our ability to recover costs in a timely manner from customers through regulated rates,” included in Part I, Item 1A of the 2025 Form 10-K for additional information.
The following table describes current rate case actions as applicable for each of our regulated utilities (in millions):
| Company | Approved Return on Equity | Approved Incremental Annual Revenue(1) ($) | Filing Date | ACC Decision # | Rates Effective | ||||||||||||
| Approved Rate Cases | |||||||||||||||||
GW-Santa Cruz(2) | 9.20% | 1.2 | July 22, 2020 | 78644 | July 1, 2022 | ||||||||||||
GW-Palo Verde(2) | 9.20% | 0.7 | July 22, 2020 | 78644 | July 1, 2022 | ||||||||||||
GW-Belmont(2) | 9.20% | 0.2 | July 22, 2020 | 78644 | July 1, 2022 | ||||||||||||
GW-Turner(2) | 9.20% | 0.1 | July 22, 2020 | 78644 | July 1, 2022 | ||||||||||||
GW-Saguaro(3) | 9.60% | 0.4 | June 27, 2023 | 79383 | July 1, 2024 | ||||||||||||
GW-Farmers(4) | 9.60% | 1.1 | June 27, 2024 | 80695 | May 1, 2025 | ||||||||||||
| Pending Rate Cases | |||||||||||||||||
GW-Santa Cruz(5) | In process | In process | March 5, 2025 | In process | In process | ||||||||||||
GW-Palo Verde(6) | n/a | n/a | March 5, 2025 | n/a | n/a | ||||||||||||
(1)Approved incremental annual revenue represents the aggregate annual revenue increase following the final phase-in period. To the extent that the number of active service connections has increased and continues to increase from a rate case’s test year levels, the additional revenues may be greater than the amounts set forth above. On the other hand, if active connections decrease or the Company experiences declining usage per customer, the Company may not realize all of the anticipated revenues.
(2)The final phase-in of rates under this rate case was effective January 1, 2024.
(3)The first increase for GW-Saguaro was effective July 1, 2024. The subsequent four increases will be effective on January 1 of each subsequent year. The majority of the revenue increase was phased in on January 1, 2025.
(4)Rates were phased-in over three periods. 50% of the increase was effective on May 1, 2025, with another 25% effective on November 1, 2025. The final 25% increase was phased in on May 1, 2026.
(5)In March 2025, GW-Santa Cruz filed a general rate case application and related schedules with the ACC based on a test year ended December 31, 2024, with updates for post-test year plant. On April 28, 2026, the Settlement Agreement pertaining to the rate case was filed with the ACC. Hearings concluded in August 2026, and the Settlement Agreement is under advisement with the ALJ. Refer to “—Rate Regulation Updates—GW-Santa Cruz and GW-Palo Verde Rate Cases” above for additional information.
(6)In March 2025, GW-Palo Verde filed a general rate case application and related schedules with the ACC based on a test year ended December 31, 2024. On April 28, 2026, the Settlement Agreement pertaining to the rate case was filed with the ACC. On July 9, 2026, GW-Palo Verde filed a motion to withdraw its rate application in accordance with the Settlement Agreement. On July 29, 2026, the ALJ issued a procedural order granting the motion to withdraw the rate application. Refer to “—Rate Regulation Updates—GW-Santa Cruz and GW-Palo Verde Rate Cases” above for additional information.
Refer to Note 3 — “Regulatory Matters” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report for additional information.
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Comparison of Results of Operations for the Three Months Ended June 30, 2026 and 2025
The Company is not organized around a specific product or service, geographic region, or regulatory environment. Refer to Note 15 — “Business Segment Information” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report for additional segment information.
Financial data is summarized in the following tables.
| Three Months Ended | Favorable (Unfavorable) | |||||||||||||
| June 30, | 2026 vs. 2025 | |||||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | $ | % | ||||||||||
Revenue | $ | 17,767 | $ | 14,241 | $ | 3,526 | 24.8 | % | ||||||
| Operating expenses | 13,261 | 11,621 | (1,640) | (14.1) | % | |||||||||
| Operating income | 4,506 | 2,620 | 1,886 | 72.0 | % | |||||||||
| Total other expense | (782) | (391) | (391) | (100.0) | % | |||||||||
| Income before income taxes | 3,724 | 2,229 | 1,495 | 67.1 | % | |||||||||
| Income tax expense | (977) | (617) | (360) | (58.3) | % | |||||||||
| Net income | $ | 2,747 | $ | 1,612 | $ | 1,135 | 70.4 | % | ||||||
| Basic earnings per common share | $ | 0.10 | $ | 0.06 | $ | 0.04 | 66.7 | % | ||||||
| Diluted earnings per common share | $ | 0.10 | $ | 0.06 | $ | 0.04 | 66.7 | % | ||||||
Revenue
Operating revenue is substantially derived from regulated water, wastewater, and recycled water service provided to customers based upon tariff rates approved by the ACC. Regulated revenue consists of amounts billed to customers based on approved fixed monthly fees and consumption based fees, as well as unbilled revenue, which is estimated revenue from the last meter reading date to the end of the accounting period utilizing historical customer data recorded. Unregulated revenue represents revenue that is not subject to the ratemaking process of the ACC. Unregulated revenue is primarily related to the revenue recognized on a portion of ICFA funds received. Refer to Note 1 — “Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of the 2025 Form 10-K for additional information pertaining to how we earn and recognize revenue.
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| Three Months Ended | Favorable (Unfavorable) | |||||||||||||
| June 30, | 2026 vs. 2025 | |||||||||||||
| (in thousands) | 2026 | 2025 | % | |||||||||||
Water service | ||||||||||||||
| Basic charge | $ | 3,938 | $ | 3,619 | $ | 319 | 8.8 | % | ||||||
| Consumption | 4,226 | 3,611 | 615 | 17.0 | % | |||||||||
| Other | 240 | 138 | 102 | 73.5 | % | |||||||||
| Total water service | 8,404 | 7,368 | 1,036 | 14.1 | % | |||||||||
Wastewater and recycled water service | ||||||||||||||
| Basic | 6,527 | 6,280 | 247 | 3.9 | % | |||||||||
| Consumption | 613 | 505 | 108 | 21.4 | % | |||||||||
| Other | 112 | 88 | 24 | 27.4 | % | |||||||||
| Total wastewater and recycled water service | 7,252 | 6,873 | 379 | 5.5 | % | |||||||||
| Total regulated revenue | 15,656 | 14,241 | 1,415 | 9.9 | % | |||||||||
| Unregulated revenue | 2,111 | — | 2,111 | N/M | ||||||||||
| Total revenue | $ | 17,767 | $ | 14,241 | $ | 3,526 | 24.8 | % | ||||||
| Active water connections | 39,293 | 36,382 | 2,911 | 8.0 | % | |||||||||
| Active wastewater connections | 30,136 | 29,257 | 879 | 3.0 | % | |||||||||
| Total active connections | 69,429 | 65,639 | 3,790 | 5.8 | % | |||||||||
| Consumption (in million gallons) | ||||||||||||||
| Water service | 1,248 | 1,176 | 72 | 6.1 | % | |||||||||
| Recycled water | 348 | 289 | 59 | 20.4 | % | |||||||||
N/M denotes a change not considered meaningful due to immaterial prior year value
The increase in regulated revenue for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily attributable to:
•The acquisition of the seven water systems from the City of Tucson in July 2025.
•Organic growth in active water and wastewater connections.
•Increased water consumption, predominantly driven by growth in active connections and higher usage largely as a result of higher temperatures and drier weather during the current year period.
•Higher rates for GW-Farmers resulting from the GW-Farmers general rate case, effective November 1, 2025 and May 1, 2026.
The increase in unregulated revenue for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was related to ICFA revenue recorded in connection with the commissioning of a new wastewater reclamation facility in GW-Hassayampa’s service territory in June 2026.
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Operating Expenses
| Three Months Ended | Favorable (Unfavorable) | |||||||||||||
| June 30, | 2026 vs. 2025 | |||||||||||||
| (in thousands) | 2026 | 2025 | $ | % | ||||||||||
| Personnel costs - operations and maintenance | $ | 1,538 | $ | 1,356 | $ | (182) | (13.4) | % | ||||||
| Utilities, chemicals and repairs | 1,388 | 1,183 | (205) | (17.3) | % | |||||||||
| Other operations and maintenance expenses | 1,629 | 1,378 | (251) | (18.2) | % | |||||||||
| Total operations and maintenance expense | 4,555 | 3,917 | (638) | (16.3) | % | |||||||||
| Personnel costs - general and administrative | 2,054 | 2,236 | 182 | 8.1 | % | |||||||||
| Professional fees | 355 | 441 | 86 | 19.5 | % | |||||||||
| Other general and administrative expenses | 1,896 | 1,710 | (186) | (10.9) | % | |||||||||
| Total general and administrative expense | 4,305 | 4,387 | 82 | 1.9 | % | |||||||||
| Depreciation, amortization and accretion | 4,401 | 3,317 | (1,084) | (32.7) | % | |||||||||
| Total operating expenses | $ | 13,261 | $ | 11,621 | $ | (1,640) | (14.1) | % | ||||||
Operations and Maintenance
Operations and maintenance expenses primarily consist of personnel costs, production costs (primarily chemicals and purchased electrical power), maintenance costs, and property tax.
•Higher personnel costs were primarily attributable to rising medical costs.
•Higher utilities, chemicals and repairs were primarily the result of increased purchased power driven by increased consumption and additional processing equipment in operation as a result of our 2025 capital improvement plan. Increased consumption also resulted in increased expenditures for chemicals and supplies.
•The increase in other operations and maintenance expenses was primarily driven by a $0.1 million loss on the disposal of utility plant and expenses related to wastewater disposal prior to the start-up of the GW-Hassayampa wastewater reclamation facility in June 2026 and $0.1 million in new operating costs for the seven water systems acquired from the City of Tucson in July 2025.
General and Administrative
General and administrative expenses primarily consist of the day-to-day expenses of office operations, personnel costs, legal and other professional fees, insurance, rent, and regulatory fees.
•Lower personnel costs were primarily driven by decreased hiring and moving expenses and lower salaries and wages, partially offset by increased medical costs.
•The decrease in professional fees was largely attributable to higher legal fees in the prior year period associated with the Nikola bankruptcy and the acquisition of the seven water systems from the City of Tucson in July 2025.
•The increase in other general and administrative expenses was primarily attributable to:
◦Increased rent expense related to the renewal of our corporate office lease in August 2025.
◦Higher general liability insurance costs.
Depreciation, Amortization and Accretion - The increase for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was substantially attributable to an 18.8% increase in depreciable fixed assets as a result of our 2025 capital improvement plan, which resulted in a significant number of assets placed in service in the fourth quarter of 2025.
Total Other Expense – The increase in other expense for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was substantially attributable to:
•An increase in interest expense of $0.2 million primarily due to a term loan entered into in December 2025 to support our 2025 capital improvement plan and increased borrowings under the Revolver in the current year period.
•A decrease in interest income of $0.2 million as a result of carrying lower average cash balances.
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Income tax expense – The primary driver for the increase in income tax expense was higher pre-tax income for the three months ended June 30, 2026 compared to the same period in the prior year, substantially attributable to ICFA revenue recognized during the current year period that did not occur in the prior year period.
Comparison of Results of Operations for the Six Months Ended June 30, 2026 and 2025
Financial data is summarized in the following tables.
| Six Months Ended | Favorable (Unfavorable) | |||||||||||||
| June 30, | 2026 vs. 2025 | |||||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | $ | % | ||||||||||
Revenue | $ | 31,053 | $ | 26,698 | $ | 4,355 | 16.3 | % | ||||||
| Operating expenses | 26,158 | 22,823 | (3,335) | (14.6) | % | |||||||||
| Operating income | 4,895 | 3,875 | 1,020 | 26.3 | % | |||||||||
| Total other expense | (1,642) | (872) | (770) | (88.3) | % | |||||||||
| Income before income taxes | 3,253 | 3,003 | 250 | 8.3 | % | |||||||||
| Income tax expense | (872) | (800) | (72) | (9.0) | % | |||||||||
| Net income | $ | 2,381 | $ | 2,203 | $ | 178 | 8.1 | % | ||||||
| Basic earnings per common share | $ | 0.08 | $ | 0.08 | $ | — | — | % | ||||||
| Diluted earnings per common share | $ | 0.08 | $ | 0.08 | $ | — | — | % | ||||||
Revenue
| Six Months Ended | Favorable (Unfavorable) | |||||||||||||
| June 30, | 2026 vs. 2025 | |||||||||||||
| (in thousands) | 2026 | 2025 | % | |||||||||||
Water service | ||||||||||||||
| Basic charge | $ | 7,828 | $ | 7,127 | $ | 701 | 9.8 | % | ||||||
| Consumption | 6,755 | 5,957 | 798 | 13.4 | % | |||||||||
| Other | 427 | 264 | 163 | 61.5 | % | |||||||||
| Total water service | 15,010 | 13,348 | 1,662 | 12.4 | % | |||||||||
Wastewater and recycled water service | ||||||||||||||
| Basic | 12,999 | 12,484 | 515 | 4.1 | % | |||||||||
| Consumption | 733 | 698 | 35 | 5.0 | % | |||||||||
| Other | 200 | 168 | 32 | 19.0 | % | |||||||||
| Total wastewater and recycled water service | 13,932 | 13,350 | 582 | 4.4 | % | |||||||||
| Total regulated revenue | 28,942 | 26,698 | 2,244 | 8.4 | % | |||||||||
| Unregulated revenue | 2,111 | — | 2,111 | N/M | ||||||||||
| Total revenue | $ | 31,053 | $ | 26,698 | $ | 4,355 | 16.3 | % | ||||||
| Active water connections | 39,293 | 36,382 | 2,911 | 8.0 | % | |||||||||
| Active wastewater connections | 30,136 | 29,257 | 879 | 3.0 | % | |||||||||
| Total active connections | 69,429 | 65,639 | 3,790 | 5.8 | % | |||||||||
| Consumption (in million gallons) | ||||||||||||||
| Water service | 2,151 | 2,011 | 140 | 7.0 | % | |||||||||
| Recycled water | 418 | 399 | 19 | 4.8 | % | |||||||||
N/M denotes a change not considered meaningful due to immaterial prior year value
The increase in regulated revenue for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily attributable to:
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•The acquisition of the seven water systems from the City of Tucson in July 2025.
•Organic growth in active water and wastewater connections.
•Increased water consumption, predominantly driven by growth in active connections and higher usage largely as a result of higher temperatures and drier weather during the current year period.
•Higher rates for GW-Farmers resulting from the GW-Farmers general rate case, effective November 1, 2025 and May 1, 2026.
The increase in unregulated revenue for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was related to ICFA revenue recorded in connection with the commissioning of a new wastewater reclamation facility in GW-Hassayampa’s service territory in June 2026.
Operating Expenses
| Six Months Ended | Favorable (Unfavorable) | |||||||||||||
| June 30, | 2026 vs. 2025 | |||||||||||||
| (in thousands) | 2026 | 2025 | $ | % | ||||||||||
| Personnel costs - operations and maintenance | $ | 3,021 | $ | 2,696 | $ | (325) | (12.1) | % | ||||||
| Utilities, chemicals and repairs | 2,560 | 2,215 | (345) | (15.6) | % | |||||||||
| Other operations and maintenance expenses | 3,158 | 2,693 | (465) | (17.3) | % | |||||||||
| Total operations and maintenance expense | 8,739 | 7,604 | (1,135) | (14.9) | % | |||||||||
| Personnel costs - general and administrative | 4,411 | 4,431 | 20 | 0.5 | % | |||||||||
| Professional fees | 744 | 908 | 164 | 18.1 | % | |||||||||
| Other general and administrative expenses | 3,602 | 3,235 | (367) | (11.3) | % | |||||||||
| Total general and administrative expense | 8,757 | 8,574 | (183) | (2.1) | % | |||||||||
| Depreciation, amortization and accretion | 8,662 | 6,645 | (2,017) | (30.4) | % | |||||||||
| Total operating expenses | $ | 26,158 | $ | 22,823 | $ | (3,335) | (14.6) | % | ||||||
Operations and Maintenance
•Higher personnel costs were primarily attributable to rising medical costs.
•Higher utilities, chemicals and repairs were primarily the result of increased purchased power driven by increased consumption and additional processing equipment in operation as a result of our 2025 capital improvement plan. Increased consumption also resulted in increased expenditures for chemicals and supplies.
•The increase in other operations and maintenance expenses was primarily driven by a $0.1 million loss on the disposal of utility plant and expenses related to wastewater disposal prior to the start-up of the GW-Hassayampa wastewater reclamation facility in June 2026 and $0.1 million in new operating costs for the seven water system acquired from the City of Tucson in July 2025.
General and Administrative
•Lower professional fees were substantially the result of higher legal fees in the prior year period associated with the Nikola bankruptcy and the acquisition of the seven water systems from the City of Tucson.
•The increase in other general and administrative expenses was primarily attributable to:
◦Increased contract service costs primarily associated with increased IT expenses.
◦Increased rent expense related to the renewal of our corporate office lease in August 2025.
◦Higher general liability insurance costs.
Depreciation, Amortization and Accretion - The increase for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was substantially attributable to an 18.8% increase in depreciable fixed assets as a result of our 2025 capital improvement plan, which resulted in a significant number of assets placed in service in the fourth quarter of 2025. In addition, amortization of intangible assets increased in the first quarter of 2026 in connection with ICFA payments received.
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Total Other Expense –The increase in total other expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was substantially attributable to:
•An increase in interest expense of $0.4 million primarily due to a term loan entered into in December 2025 to support our 2025 capital improvement plan and increased borrowings under the Revolver in the current year period.
•A decrease in interest income of $0.2 million as a result of carrying lower average cash balances.
•A decrease in income associated with Buckeye growth premiums of $0.1 million that resulted from fewer new meter connections in the area. Refer to Note 16 — “Other, Net” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report for additional information regarding the Buckeye growth premiums.
Income tax expense – Pre-tax income and the resulting tax expense was comparable for the six months ended June 30, 2026 and 2025.
Liquidity and Capital Resources
The Company’s capital resources are primarily provided by internally generated cash flows from operations, debt and equity financing and certain government grants. External debt financing is provided primarily through the issuance of long-term debt or utilization of the Company’s $20.0 million Revolver. Additionally, its regulated utility subsidiaries receive advances and contributions from customers, home builders, and real estate developers to partially fund construction necessary to extend service to new areas.
Significant sources of funds from historical financing activity included:
Sales of Equity Securities
The Company has historically completed multiple equity raises through sales of its common stock in both public and private offerings, including the recent transactions below.
On September 30, 2025, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 1,270,572 shares of the Company’s common stock at a purchase price of $10.30 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder. The Company received gross proceeds of approximately $13.1 million from the offering. Certain existing shareholders, including certain directors and/or their affiliates, purchased an aggregate of 882,223 shares of common stock in the offering at the purchase price.
On March 27, 2025, the Company completed a public offering of 3,220,000 shares of its common stock at a public offering price of $10.00 per share, which included 420,000 shares issued and sold to the underwriters following the exercise in full of their option to purchase additional shares of common stock. Certain existing shareholders, including certain directors and/or their affiliates, purchased an aggregate of 1,439,200 shares of common stock at the public offering price. The public offering resulted in approximately $32.2 million of gross proceeds or $30.8 million of net proceeds, after deducting underwriting discounts, commissions and offering expenses paid by the Company.
WIFA Grant and Note
On April 30, 2024, the Company’s Global Water - Rincon Water Company, Inc. utility (now part of GW-Saguaro) entered into a loan agreement with WIFA for a note with a principal amount of $2.4 million (the “WIFA Note”) to improve the utility’s infrastructure, including enhancements to the fluoride treatment system and other projects, of which $0.7 million is forgivable. The WIFA Note is due on April 1, 2044 and bears an interest rate of 4.911%. Funding occurs through one or more draw requests submitted by the Company and the subsequent disbursement of principal by WIFA. The Company received the final disbursements in May 2025. As of June 30, 2026, the outstanding balance of the WIFA Note was $1.6 million. In connection with the underlying assets being placed in service, the forgivable portion of the loan was recognized as CIAC in June 2025.
Revolver
The Company maintains a revolving credit facility with Northern Trust pursuant to a loan agreement entered into between the parties (as amended, the “Northern Trust Loan Agreement”) that provides for a $20 million maximum borrowing capacity. On April 30, 2026, the Company and Northern Trust entered into a seventh amendment to the Northern Trust Loan Agreement to, among other things, extend the scheduled maturity date from May 18, 2027 to May 18, 2028. Pursuant to the Northern Trust Loan Agreement, the amounts outstanding bear interest, payable monthly, at a rate equal to the SOFR plus 2.10%. Additionally,
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the Company pays a quarterly facility fee equal to 0.35% of the average daily unused amount of the Revolver. As of June 30, 2026, the Company had $5.8 million of outstanding borrowings under the Revolver.
Senior Secured Notes
On June 24, 2016, the Company issued two series of senior secured notes with a total principal balance of $115.0 million at a blended interest rate of 4.55%. The Series A notes (the “Series A Notes”) carry a principal balance of $28.8 million and bear an interest rate of 4.38%, payable semi-annually on June 15 and December 15 of each year, over a twelve-year term, with the principal payment due on June 15, 2028. The Series B notes (the “Series B Notes”) carry a principal balance of $67.1 million and bear an interest rate of 4.58%, payable semi-annually on June 15 and December 15 of each year, over a 20-year term, with the final principal balance due on June 15, 2036. The Series B Notes were interest only for the first five years, with $1.9 million principal payments paid semi-annually thereafter beginning December 2021.
Additionally, on January 3, 2024, the Company issued $20 million aggregate principal amount of 6.91% Senior Secured Notes due on January 3, 2034 (the “6.91% Notes” and collectively with the Series A Notes and the Series B Notes, the “Senior Secured Notes”). The 6.91% Notes accrue interest at 6.91% per annum from the date of issuance, payable semi-annually on January 3 and July 3 of each year, beginning on July 3, 2024, with a balloon payment due on January 3, 2034.
Term Loan
On December 10, 2025, the Company entered into a credit agreement with, and issued a related promissory note to, CoBank, ACB, a federally-chartered instrumentality of the United States. Under the terms of the credit agreement and promissory note, the Company was provided term loan borrowings with an aggregate principal amount of $15 million (the “Term Loan”). The Term Loan bears interest at a fixed rate of 5.49% per annum, payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2026, with the principal payment due on December 10, 2035, the scheduled maturity date. As of June 30, 2026, the Term Loan carried a principal balance of $15.0 million.
The Company uses capital resources primarily to:
•fund operating costs;
•fund capital requirements, including construction expenditures;
•make debt and interest payments;
•fund acquisitions; and
•pay dividends.
The Company’s utility subsidiaries operate in rate-regulated environments in which the amount of new investment recovery may be limited. Such recovery will take place over an extended period of time because recovery through rate increases is subject to regulatory lag.
On July 8, 2025, the Company completed the previously announced acquisition of seven water systems from Tucson Water, the City of Tucson’s water utility, for a purchase price of approximately $8.1 million.
As of June 30, 2026, the Company has no notable near-term cash expenditures, other than for its capital improvement plan, payment of dividends and the principal payments for its Series B Notes in the amount of $1.9 million due in both December 2026 and June 2027. While specific facts and circumstances could change, the Company believes that with the cash on hand and the ability to draw on its Revolver, it will be able to generate sufficient cash flows to meet its operating cash flow requirements and capital maintenance needs, whilst remaining in compliance with its financial debt covenants for the next twelve months and beyond. In addition, the Company may choose to raise additional funds from time to time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures and/or strategic acquisitions for the next twelve months and beyond. However, there are currently no commitments in place for future financing, and there can be no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. Additional issuances of equity or convertible debt securities will result in dilution to our shareholders.
The Company maintains a monthly dividend program with dividends currently set at $0.02533 per share ($0.30396 per share annually). Although the Company expects that monthly dividends will be declared and paid for the foreseeable future, the declaration of any dividends is at the discretion of the Company’s board of directors and is subject to legal requirements and debt service ratio covenant requirements.
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Cash from Operating Activities
Cash flows provided by operating activities are used for operating needs and to meet capital expenditure requirements. The Company’s future cash flows from operating activities will be affected by economic utility regulation, growth in service connections, customer usage of water, compliance with environmental health and safety standards, production costs, weather, and seasonality.
For the six months ended June 30, 2026, net cash provided by operating activities totaled $9.2 million compared to $8.8 million for the six months ended June 30, 2025, which was largely consistent year-over-year.
Cash from Investing Activities
The net cash used in investing activities totaled $12.9 million for the six months ended June 30, 2026 compared to $35.4 million for the six months ended June 30, 2025. The $22.5 million decrease in cash used in investing activities was the result of a planned decrease in capital expenditures in 2026 compared to 2025 under the Company’s capital improvement plan.
The Company continues to invest capital prudently in existing, core service areas where the Company is able to deploy the Total Water Management model as this includes any required maintenance capital expenditures and the construction of new water and wastewater treatment and delivery facilities. The timing and magnitude of projected capital expenditures and other investments are subject to periodic review and revision to reflect changes in economic conditions and other factors. As a result, the Company may adjust capital expenditures to correspond with any substantial changes in demand for new development in its service areas.
Cash from Financing Activities
The net cash provided by financing activities totaled $1.8 million for the six months ended June 30, 2026, a $26.0 million decrease, as compared to $27.8 million in cash provided by financing activities for the six months ended June 30, 2025. This decrease was primarily driven by the $31.0 million of aggregate proceeds from the issuances of common stock sold in the Company’s public offering, net of issuance costs, during the six months ended June 30, 2025, and a $0.4 million increase in dividends paid during the six months ended June 30, 2026 resulting from a greater number of shares outstanding. The decrease was partially offset by an increase in net Revolver borrowings of $5.8 million during the six months ended June 30, 2026.
Insurance Coverage
The Company carries various property, casualty, and financial insurance policies with limits, deductibles, and exclusions consistent with industry standards. However, insurance coverage may not be adequate or available to cover unanticipated losses or claims. The Company is self-insured to the extent that losses are within the policy deductible or exceed the amount of insurance maintained. Such losses could have a material adverse effect on the Company’s short-term and long-term financial condition and the results of operations and cash flows.
Debt Covenants
The Company’s Senior Secured Notes, Term Loan and Revolver (collectively, the “debt instruments”) require the Company to maintain a debt service coverage ratio of consolidated EBITDA to consolidated debt service of at least 1.10 to 1.00. Consolidated EBITDA is calculated as net income plus depreciation and amortization, taxes, interest and other non-cash charges net of non-cash income. The debt instruments also contain a provision limiting the payment of dividends if the Company falls below a debt service ratio of 1.25. Further, the foregoing covenants are subject to various qualifications and limitations as set forth in each of the debt instruments’ respective agreements. The debt instruments are subject to certain customary events of default after which they could be declared due and payable if not cured within the grace period or, in certain circumstances, could be declared due and payable immediately. As of June 30, 2026, the Company was in compliance with its financial debt covenants under the debt instruments.
Contractual Obligations and Off-Balance Sheet Arrangements
A summary of contractual obligations is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Contractual Obligations” of our 2025 Form 10-K. There have been no material changes in our reported contractual obligations from those disclosed in our 2025 Form 10-K.
As of June 30, 2026, the Company did not have any off-balance sheet arrangements.
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Critical Accounting Estimates
A summary of our critical accounting estimates is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of our 2025 Form 10-K. There were no material changes made as of June 30, 2026.
ITEM 3. Qualitative and Quantitative Disclosures About Market Risk
Not applicable
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, reviewed and evaluated the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, the disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no material change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In the ordinary course of business, the Company may, from time to time, be subject to various pending and threatened lawsuits in which claims for monetary damages are asserted. To our knowledge, the Company is not involved in any legal proceeding which is expected to have a material effect on the Company.
ITEM 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” included in Part I, Item 1A of the 2025 Form 10-K. There have been no material changes to such risk factors.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Unregistered Securities
No unregistered securities were sold during the three months ended June 30, 2026.
Issuer Purchases of Equity Securities
The following table presents information with respect to purchases of common stock the Company made during the three months ended June 30, 2026.
| Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
| April 1 to April 30, 2026 | — | $ | — | — | $ | — | ||||||||
| May 1 to May 31, 2026 | 14,540 | 7.06 | — | — | ||||||||||
| June 1 to June 30, 2026 | — | — | — | — | ||||||||||
| Total | 14,540 | — | $ | — | ||||||||||
(1) Represents shares withheld from employees or board members to satisfy certain tax obligations due in connection with the vesting of restricted stock awards granted under the Global Water Resources, Inc. 2020 Omnibus Incentive Plan. The average price paid per share for the common stock withheld was based on the closing price of the Company’s common stock on the applicable vesting date.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2026, none of our directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted terminated
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ITEM 6. Exhibits
| Exhibit Number | Description of Exhibit | Method of Filing | ||||||
| 3.1 | Incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed May 4, 2016. | |||||||
| 3.2 | Incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K filed May 4, 2016. | |||||||
| 10.1 | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 30, 2026. | |||||||
| 10.2 | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2026. | |||||||
| 10.3 | Filed herewith. | |||||||
| 10.4 | Filed herewith. | |||||||
| 10.5 | Filed herewith. | |||||||
| 10.6 | Filed herewith. | |||||||
| 31.1 | Filed herewith. | |||||||
| 31.2 | Filed herewith. | |||||||
| 32.1 | Furnished herewith. | |||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Filed herewith. | ||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith. | ||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | ||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. | ||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith. | ||||||
| 101. PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. | ||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) | Filed herewith. | ||||||
| * | Management contract or compensatory plan or arrangement. | ||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Global Water Resources, Inc. | |||||||||||
| Date: | August 12, 2026 | By: | /s/ Michael J. Liebman | ||||||||
| Michael J. Liebman | |||||||||||
| Chief Financial Officer and Corporate Secretary | |||||||||||
| (Duly Authorized Officer and Principal Financial and Accounting Officer) | |||||||||||
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Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective as of the 12th day of August, 2026 (the “Effective Date”), and is made by and between Global Water Resources, Inc., a Delaware corporation (the “Company”), and Ron L. Fleming, a resident of the State of Arizona (the “Executive”).
RECITALS
WHEREAS, the Company desires to continue to employ the Executive as its President and Chief Executive Officer, as well as President of Global Water, LLC and all utility subsidiaries, and the Executive desires to continue such employment; and
WHEREAS, the Company and the Executive previously entered into an employment agreement dated as of December 20, 2024 (the “Superseded Agreement”); and
WHEREAS, the parties desire to enter into this Agreement to replace the Superseded Agreement and to set forth the terms and conditions of the Executive’s employment with the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the representations, covenants and mutual agreements contained herein, the Company and the Executive agree as follows:
1.Employment. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Executive as its President and Chief Executive Officer, and as President of Global Water, LLC and all regulated utility subsidiaries, and the Executive agrees to diligently perform the duties associated with such positions, including (without limitation) those duties listed on Exhibit A attached hereto. The Executive shall perform his duties primarily at the Company’s headquarters located in Phoenix, Arizona. The Executive will report directly to the Company’s board of directors (the “Board”) and shall perform such other duties as the Board may assign from time to time, provided that such additional duties are reasonable and consistent with the scope of the positions held by the Executive. The Executive will devote substantially all of his business time, attention and energies to the business of the Company and will comply with the policies and guidelines established by the Company from time to time applicable to its senior management executives. During the term of this Agreement, the Executive shall not, without the Company’s prior written consent, be a director, officer, employee, consultant or advisor of or to any person, firm, association, syndicate, partnership, trust or corporation engaged in, concerned with or interested in a business substantially similar to the business of the Company. Notwithstanding the foregoing, the Executive may (a) serve on civic or charitable or not-for-profit industry-related organizations, (b) engage in charitable, civic, educational, professional community and/or industry activities without remuneration therefore, (c) manage personal and family investments, and (d) purchase securities in any corporation whose securities are regularly
Exhibit 10.3
traded, provided that such purchase shall not result in the Executive beneficially owning 5% or more of the equity securities of any business in competition with the Company at any time.
2.Term. The Executive will be employed under this Agreement from the Effective Date until January 1, 2030, unless the Executive’s employment is terminated earlier pursuant to Section 7 or Section 8 hereof. Thereafter, the Agreement and Executive’s employment under it will automatically renew for one or more additional 12-month periods (each a “Renewal Term”), unless either party provides written notice of its intention to terminate employment under this Agreement at least sixty (60) days prior to the applicable renewal date.
3.Base Salary. For calendar year 2026, the Company will pay the Executive an annual base salary of $603,750 (“Base Salary”). The Board or the Compensation Committee may review the Base Salary on an annual basis to determine, in its sole and absolute discretion, whether any increases (over and above the Base Salary increases described above) are appropriate based on a combination of factors, which shall include (without limitation) the Executive’s achievement of specified performance objectives and/or the amount of compensation paid to the Executive’s peers at other, similarly situated public companies. The Base Salary may not be reduced without the Executive’s consent. The Base Salary will be payable in accordance with the payroll practices of the Company in effect from time to time and will be subject to customary withholding for applicable taxes and other deductions.
4.Incentive Compensation. The Executive may be entitled to annual incentive compensation as determined (a) in the discretion of the Board (or the Compensation Committee) or (b) pursuant to any incentive compensation program adopted by the Company from time to time.
(A)Short-Term Incentive Compensation. For each calendar year, the Executive will be eligible to receive target incentive compensation equal to 33.33% of his Base Salary for each calendar year. The actual incentive compensation that Executive receives, if any, shall be determined each year by the Compensation Committee based on the Executive satisfying the performance goals established by the Board (or the Compensation Committee). The annual incentive compensation will be payable in cash and/or restricted stock units in the discretion of the Compensation Committee. The Compensation Committee will determine the percentage of the incentive compensation that will be paid in the form of cash and/or restricted stock units following the end of the performance period. For 2026, no more than 50% of the incentive compensation will be paid in the form of restricted stock units. For 2027 and each year thereafter, 100% of the incentive compensation shall be paid in the form of cash. If the Executive is entitled to receive a cash incentive compensation award, such award shall be paid at such time as cash awards are otherwise payable to all employees under the incentive compensation program, but in no event later than March 15 of the year following the year in which the right to the cash incentive award, if any, becomes vested. Any restricted stock units will be issued pursuant to the terms of the Global Water Resources, Inc. 2020 Omnibus Incentive Plan or such successor equity plan (the “Incentive Plan”). The Board or the Compensation Committee will grant any restricted stock units following the end of the performance period and such restricted stock units will vest in equal quarterly installments over a period of three years. All restricted stock units shall be subject to the terms and conditions of the Incentive Plan and any award agreement issued pursuant to the Incentive Plan.
2
Exhibit 10.3
(B)Restricted Stock. In addition, the Executive is entitled to the following grants of restricted stock (the “Restricted Shares”):
(1)10,000 Restricted Shares, which shall have a Grant Date of May 5, 2026 and shall vest on May 8, 2027; and
(2)For calendar years 2027 and thereafter, Restricted Shares in an amount equal to 50% of Executive’s then current Base Salary for the calendar year, provided Executive remains employed on the last day of such calendar year. The Restricted Shares will be granted by the Compensation Committee in the first quarter of the calendar year following the end of the applicable calendar year, with the first grant to be made in the first quarter of 2028, provided Executive is employed on December 31, 2027. The Restricted Shares shall vest in three substantially equal installments on each December 15 with the first vesting date the December 15 immediately following the grant. For example, any Restricted Shares granted in the first quarter of 2028 will vest in substantially equal installments on December 15, 2028, December 15, 2029, and December 15, 2030.
No Restricted Shares shall be granted to the Executive pursuant to this Section 4(B) if the Executive’s employment with the Company terminates for any reason prior to the Grant Date. Further, the grant of Restricted Shares shall be subject to the terms of the Incentive Plan and the award agreement granting the Restricted Shares.
5.Reimbursement of Business Expenses. The Executive shall be entitled to reimbursement of reasonable and customary business expenses, including for all authorized travel and all out of pocket expenses incurred by the Executive as authorized by the Company in the performance of his duties. The Executive shall furnish any statements, receipts, invoices and other documentation that the Company may reasonably require in connection with processing such reimbursements.
6.Other Benefits. The Company will provide to the Executive such fringe and other benefits as are regularly provided by the Company to members of its senior management team, including participation in the Company’s welfare plans (e.g., health, medical, dental, vision, etc.) and other benefit programs (e.g., profit-sharing, long-term incentive compensation, retirement, investment, life and disability insurance, etc.) in effect from time to time, in each case to the extent that the Executive is eligible for participation under the terms of such plans or programs. The Executive shall be entitled to five (5) weeks of paid vacation per year, which vacation shall be paid at a rate equal to the Executive’s then current Base Salary. The Executive may take such vacation at such time(s) as the Executive and the Company shall mutually agree to, acting reasonably.
7.Termination of Employment.
(A)Voluntary Resignation by Executive without Good Reason. The Executive may voluntarily terminate his employment with the Company at any time by giving four (4) weeks advance written notice to the Company (which notice period the Company may waive in whole or in part in its sole discretion). If such voluntary termination is without Good Reason (as defined below), then (i) the Company will be obligated to pay the Executive’s then-
3
Exhibit 10.3
current Base Salary through the Date of Termination (as defined below) and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs; and (iii) the Company shall not pay or reimburse the Executive for COBRA (as defined below) premiums for the period that the Company is required to offer COBRA coverage as a matter of law. For the avoidance of doubt, any unvested phantom stock units, stock appreciation rights, shares of restricted stock, restricted stock units, or other equity-based awards shall be forfeited.
(B)Voluntary Resignation by Executive with Good Reason; Termination without Cause by the Company. If the Executive terminates his employment with the Company with Good Reason, or if the Company terminates the Executive’s employment without Cause, including by providing the notice of non-renewal referenced in Section 2, provided Executive complies with the release requirements of Section7(F), then (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs unless the termination of employment occurs during the last six (6) months of the Company’s fiscal year, in which case the Executive will be paid a pro rata portion of the cash incentive compensation award based upon the Company’s performance for the fiscal year payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program; (iii) if Executive timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s Separation from Service until the earliest of (A) 18 months following the date of Executive’s Separation from Service, (B) the date on which the Executive becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company or (C) the date the Executive is no longer eligible to receive COBRA continuation coverage; (iv) notwithstanding the provisions in the Incentive Plan or in any equity, phantom stock, restricted stock, restricted stock unit, or stock appreciation right plan or award agreement to the contrary, any equity or stock price-based awards (including phantom stock units, shares of restricted stock, restricted stock units, and stock appreciation rights) previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse; and (v) the Company will pay the Executive an amount equal to the sum of four (4.0) times the Executive’s current Base Salary as of the Date of Termination. Unless otherwise provided in this Agreement, this amount shall be paid in a lump-sum payment within 60 days following the Executive’s Separation from Service. The Executive will not be entitled to receive a grant of restricted stock units or Restricted Shares following his Separation from Service.
(C)Termination for Cause by the Company. If the Company terminates the Executive’s employment for Cause, then, (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; and (ii) no incentive compensation shall be payable for the year in which the termination occurs. For the avoidance of doubt, any unvested phantom stock units, stock appreciation rights, shares of restricted stock, restricted stock units or other equity-based awards shall be forfeited.
4
Exhibit 10.3
(D)Death or Disability. If Executive dies or becomes Disabled, then the Company will be obligated to pay (i) the Executive’s then current Base Salary through the date of death or the effective date of Disability and any incentive compensation earned in previous years but not yet paid, (ii) a pro-rated amount of the Executive’s actual cash incentive compensation for the year, payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program, (iii) if Executive or Executive’s qualified beneficiary timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive or Executive’s qualified beneficiary for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s death or Disability until the earliest of (A) 18 months following the date of Executive’s death or Disability, (B) the date on which the Executive or the Executive’s qualified beneficiary becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company, or (C) the date the Executive or his qualified beneficiary is no longer eligible to receive COBRA continuation coverage; and (iv) notwithstanding the provisions in the Incentive Plan or in any equity, phantom stock, restricted stock, restricted stock unit, or stock appreciation rights plan or award agreement to the contrary, any equity or stock price-based awards previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse and, to the extent permitted under the applicable plan’s governing documents, the Executive (or the Executive’s beneficiary(-ies) shall have a period of one (1) year from the effective date of death or Disability to exercise any such options (or if shorter, the expiration date of the option). The Executive will not be entitled to receive a grant of restricted stock units or Restricted Shares following his Separation from Service.
(E)Definitions. For purposes of this Agreement:
(1)“Cause” shall occur if the Executive (a) has engaged in malfeasance, willful or gross misconduct, or willful dishonesty that materially harms the Company, its reputation, or its stockholders; (b) is convicted of a felony that is materially detrimental to the Company, its reputation, or the Company’s stockholders; (c) is convicted of or enters a plea of nolo contendere to a felony that materially damages the Company’s financial condition or reputation or to a crime involving fraud; (d) is in material violation of the Company’s ethics/policy code or employment policies, including willful breach of duty of loyalty in connection with the Company’s business; (e) willfully fails to perform his duties under this Agreement after written notice by the Company and a reasonable opportunity to cure; or (f) impedes, interferes or fails to reasonably cooperate with an investigation authorized by the Company or fails to follow a legal and proper Company directive. For purposes hereof, no act, or failure to act, by the Executive will be considered “willful” unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company. No action shall be deemed Cause hereunder if undertaken by the Executive at the direction of the Board or upon following the advice of counsel to the Company or any of its affiliates. For the avoidance of doubt, poor performance shall not, by itself, constitute Cause hereunder. The Executive shall not be terminated for Cause (other than pursuant to clauses (b) or (c) of the preceding sentence due to conviction or entering a plea of nolo contendere) unless he is first given notice by the Board of its intention to terminate him for Cause and provided a period of at least thirty (30) days to cure (if capable of cure) the event or events alleged to constitute Cause
5
Exhibit 10.3
hereunder. Executive shall have an opportunity to address the Board, with counsel present if he so elects, before being terminated and any termination for Cause shall be by a vote of a majority of the Board.
(2)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(3)“Code” means the Internal Revenue Code of 1986, as amended.
(4)“Date of Termination” shall mean (a) if employment under this Agreement is terminated as a result of the Executive’s death, the date of the Executive’s death, (b) if employment under this Agreement is terminated by the Executive, the last day of his employment with the Company, (c) if this Agreement is terminated as a result of the Executive’s Disability, the effective date of the Disability, (d) if employment under this Agreement is terminated by the Company for Cause, the date a final determination is provided to the Executive by the Company, or (e) if this Agreement is terminated by the Company without Cause, the date notice of termination is given to the Executive by the Company.
(5)“Disability” shall mean if, by reason of any medically determinable physical or mental impairment which actually hinders the Executive’s ability to perform his job and which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than six months under an accident and health plan established by the Company for its employees. The effective date of Executive’s Disability is the last day of the sixth month on which the Executive receives the income replacement benefits.
(6)“Good Reason” shall mean a Separation from Service within two (2) years following the occurrence of one or more of the following circumstances without Executive’s express consent: (a) a material diminution in the Executive’s authority, duties or responsibilities, (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; (c) a material diminution in Executive’s Base Salary not consented to as required under Section 3; (d) a material change in the geographic location of Executive’s principal office; or (e) any other action or inaction that constitutes a material breach by the Company of this Agreement. Executive must provide written notice to Company of the existence of the Good Reason condition described in clauses (a) – (e) above within ninety (90) days of the Executive’s knowledge of the existence of the condition. Notwithstanding anything to the contrary, an event described in clauses (a) – (e) above will not constitute Good Reason if, within thirty (30) days after Executive gives Company notice of the occurrence or existence of an event that Executive believes constitutes Good Reason, Company has cured (if capable of cure) the event or events alleged to constitute Good Reason hereunder.
(7)“Separation from Service” shall mean either (a) termination of the Executive’s employment with Company and all affiliates of the Company, or (b) a permanent reduction in the level of bona fide services the Executive provides to the Company and all affiliates to an amount that is 20% or less of the average level of bona fide services the Executive provided to the Company in the immediately preceding 36 months, with the level of bona fide service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii). Solely
6
Exhibit 10.3
for purposes of determining whether the Executive has a Separation from Service, the Executive’s employment relationship is treated as continuing while the Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Executive’s period of leave exceeds six (6) months and the Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6)-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
(F)Release Agreement. Notwithstanding anything to the contrary herein, no payment shall be made under this Section 7 or Section 8(B) unless the Executive executes (and does not revoke) a release (“Release Agreement”), substantially in the form and substance attached hereto as Exhibit B. The Release Agreement shall be provided to the Executive within five (5) days following the Executive’s Separation from Service. The Release Agreement must be executed and returned to the Company within the 21- or 45-day (as applicable) period described in the Release Agreement and it must not be revoked by the Executive within the seven (7)-day revocation period described in the Release Agreement. Notwithstanding anything in this Section 7 or Section 8(B) to the contrary, if the 21- or 45-day consideration period, plus the seven-day revocation period, spans two calendar years, the first payment to which Executive is entitled shall be made to the Executive in the second calendar year.
(G)Compliance with Section 409A of the Code. The Company believes that the payments due pursuant to this Agreement qualify for the short-term deferral exception or the separation pay exception to Section 409A as set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding anything to the contrary in this Agreement, if the Company determines that neither the short-term deferral exception, separation pay exception nor any other exception to Section 409A applies to the payments due pursuant to this Agreement, to the extent any payments are due on the Executive’s Separation from Service and if Executive is a “specified employee” (as defined in Treasury Regulation Section 1.409A-1(i)) at the time of Executive’s Separation from Service, then such payments shall be paid on the first business day following the expiration of the six-month period following the Executive’s Separation from Service along with accrued interest at the Bank of America, Arizona prime rate determined as of the date of the payment. This Agreement shall be operated in compliance with Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an applicable exception. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code. Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. The reimbursement of the COBRA premiums provided for in the Agreement shall be paid to Executive on the fifth day of the month immediately following the month in which Executive timely remits the premium payment. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by this Agreement.
7
Exhibit 10.3
8.Change of Control Fee.
(A)Notwithstanding the provisions of the Incentive Plan or any equity, phantom stock, restricted stock, restricted stock unit, or stock appreciation rights plan or award agreement to the contrary, any equity or stock price based awards (including phantom stock units, shares of restricted stock, restricted stock units, and stock appreciation rights) previously granted to the Executive will become fully vested and exercisable and all restrictions on restricted awards will lapse upon any Change of Control (as defined below), regardless of whether the Executive remains employed by the Company or its successor following the Change of Control.
(B)If the Executive terminates his employment with the Company with Good Reason, or if the Company terminates the Executive’s employment without Cause within 24 months following a Change of Control of the Company, the Executive will be entitled to a lump-sum cash payment equal to the sum of four (4.0) times the Executive’s current Base Salary as of the date of the Change of Control. Such payment shall be made in a single lump sum payment within 60 days of the date of the Executive’s Separation from Service, provided that the Executive complies with the release requirements of Section 7(F). To the extent that any disputes arise involving the terms and conditions of this Agreement (or the termination of the Executive’s employment) following a Change of Control, the Executive shall be entitled to reimbursement by the Company for his reasonable attorneys’ fees and other legal fees and expenses incurred in connection with contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for under this Agreement. Any such fees and expenses shall be reimbursed by the Company as they are incurred. All reimbursements will be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. The amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. Executive may not elect to receive cash or any other benefit in lieu of the reimbursement of legal fees and expenses provided by this Section 8(B). If Executive is entitled to a payment pursuant to this Section 8, the Executive shall be ineligible for any payment due pursuant to Section 7.
(C)For purposes of this Agreement, “Change of Control” shall mean (i) a “change in the ownership or effective control of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “change in the effective control,” “50 percent” shall be used instead of “30 percent,” (ii) a “change in the ownership of a substantial portion of the assets of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “substantial portion of the assets of the corporation,” “85 percent” shall be used instead of “40 percent,” or (iii) individuals who, as of the Effective Date of this Agreement constitute the Board and individuals whose election or nomination for election as a member of the Board of Directors was approved by the directors then in office (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Exchange Act) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in
8
Exhibit 10.3
Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director (unless specifically deemed to be an Incumbent Director by a vote of at least a majority of the Incumbent Directors before the date of the appointment or election). Notwithstanding the foregoing, any payment that is subject to Section 409A of the Code that is to be made upon a Change of Control shall only be made upon an event that constitutes a change in ownership or control as described in Treasury Regulation 1.409A-3(i)(5).
(D)The following limitations apply to payments pursuant to this Section 8.
(1)Section 4999 of the Code imposes an excise tax (currently 20%) on an employee if the total payments and certain other benefits received by the employee due to a “change in control” (which for this purpose, has the meaning ascribed to it in Section 280G of the Code and the related regulations) exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company the payments and benefits to which Executive will be entitled pursuant to Section 8 or any other arrangement between the Company and the Executive will be limited so that the sum of such payments and benefits, when combined with all other “payments in the nature of compensation” (as that term is defined in Section 280G of the Code and related regulations), the receipt of which is contingent on a change in control, will not exceed an amount equal to the maximum amount that can be payable without the imposition of the Section 4999 excise tax (which maximum amount is referred to below as the “Capped Benefit”).
(2)The limitation described in Section 8(D)(1) will not apply if the Executive’s “Uncapped Benefit” minus the Section 4999 excise taxes exceeds the Executive’s Capped Benefit. For this purpose, an Executive’s “Uncapped Benefit” is equal to the total payments to which the Executive will be entitled pursuant to this Agreement, or otherwise, without regard to the limitation described in Section 8(D)(1).
(3)If the Company believes that Section 8(D)(1) may result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive as soon as possible. The Company will then, at its expense, retain a “Consultant” (which shall be a certified public accounting firm and/or a firm of recognized executive compensation consultants working with a law firm or certified public accounting firm) to provide a determination concerning whether the Executive’s total payments and benefits under this Agreement or otherwise will result in the imposition of the Section 4999 excise tax and, if so, whether the Executive is subject to the limitations of Section 8(D)(1) or, alternatively, whether the exception described in Section 8(D)(2) applies.
(4)If the Company believes that the limitations of Section 8(D)(1) are applicable, it will nonetheless make payments to the Executive, at the times described in Section 8, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid if due after the opinions called for above have been received.
9
Exhibit 10.3
(5)If the amount paid to the Executive by the Company is ultimately determined by the Internal Revenue Service to have exceeded the limitations of this Section 8(D), the Executive must repay the excess promptly on demand of the Company. If it is ultimately determined by the Consultant or the Internal Revenue Service that a greater payment should have been made to the Executive, the Company shall pay the Executive the amount of the deficiency, together with interest thereon from the date such amount should have been paid to the date of such payment so that the Executive will have received or be entitled to receive the maximum amount to which the Executive is entitled under the Agreement. For purposes of this Section 8, the applicable interest rate shall be the Bank of America, Arizona prime rate from the date the amounts described in the preceding sentence should have been paid to the Executive.
(6)As a general rule, the Consultant’s determination shall be binding on the Executive and the Company. Section 280G and the excise tax rules of Section 4999, however, are complex and uncertain and, as a result, the Internal Revenue Service may disagree with the Consultant’s conclusions. If the Internal Revenue Service determines that the Capped Benefit is actually lower than calculated by the Consultant, the Capped Benefit will be recalculated by the Consultant. Any payment over that revised Capped Benefit will then be repaid by the Executive to Company. If the Internal Revenue Service determines that the actual Capped Benefit exceeds the amount calculated by the Consultant, the Company shall pay the Executive any shortage.
(7)The Company has the right to challenge any determinations made by the Internal Revenue Service. If the Company agrees to indemnify an Executive from any taxes, interest and penalties that maybe imposed upon the Executive (including any taxes, interest and penalties on the amounts paid pursuant to the Company’s indemnification agreement), the Executive must cooperate fully with the Company in connection with any such challenge. The Company shall bear all costs associated with the challenge of any determination made by the Internal Revenue Service and the Company shall control all such challenges.
(8)Executive must notify the Company in writing of any claim or determination by the Internal Revenue Service that, if upheld, would result in the payment of excise taxes. Such notice shall be given as soon as possible but in no event later than 15 days following the Executive’s receipt of notice of the Internal Revenue Service’s position.
(9)In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 8(D) shall be of no further force or effect. Moreover, if the provisions of Sections280G and 4999 of the Code do not apply to impose the excise tax on payments under this Agreement, then the provisions of this Section 8(D) shall not apply.
9.Non-Solicitation.
(A)The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Clients to withdraw, curtail, cancel, or decrease the level of their business with the Company or request that they do business with any Competing Business. The Company’s Clients are any person or entity:
10
Exhibit 10.3
(i) for whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, provided Company’s Services and with whom Executive had material contact; (ii) about whom Executive had Confidential Information; and/or (iii) with respect to whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, held supervisory, managerial, and/or oversight responsibilities for the provision of Company’s services.
(B)The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Prospective Clients (defined as any person or entity who both (i) has been directly solicited to become a customer of the Company, and (ii) with whom Executive had material contact or about whom Executive has knowledge of such solicitation, within the 12-month period prior to the time Executive’s employment with the Company terminates) to forgo doing business with the Company or request that such prospective customer or client do business with any Competing Business.
(C)The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly hire or solicit for employment for any other business entity other than the Company (whether as an employee, consultant, independent contractor, or otherwise) any person who is, or within the six (6)-month period preceding the date of such activity was, an employee, independent contractor or the like of the Company or any of its subsidiaries, unless Company gives its written consent to such offer of employment. Nothing herein shall prevent Executive, directly, or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers, Internet postings, etc.) directed at the public at large (as opposed to directed specifically at the Company’s employees, contractors or the like that have the effect of inducing or influencing any of the Company’s employees, contractors, or the like to terminate their employment or business relationship with the Company.
(D)The covenants set forth in this Section 9 and in Section 10 will survive the Executive’s termination of employment under Section 7.
10.Non-Disclosure of Confidential Information.
(A)It is understood that in the course of the Executive’s employment with the Company, the Executive will become acquainted with Company Confidential Information (as defined below). The Executive recognizes that Company Confidential Information has been developed or acquired at great expense, is proprietary to the Company, and is and shall remain the exclusive property of the Company. Accordingly, the Executive agrees that he will not disclose to others, copy, make any use of, or remove from the Company’s premises any Company Confidential Information, except as the Executive’s duties may specifically require, without the express written consent of the Company, during the Executive’s employment with the Company and thereafter until such time as Company Confidential Information becomes generally known, or readily ascertainable by proper means by persons unrelated to the Company.
11
Exhibit 10.3
(B)Upon any termination of employment, the Executive shall promptly deliver to the Company the originals and all copies of any and all materials, documents, notes, manuals, or lists containing or embodying Company Confidential Information, or relating directly or indirectly to the business of the Company, in the possession or control of the Executive.
(C)“Company Confidential Information” shall mean confidential, proprietary information or trade secrets of the Company and its subsidiaries and affiliates including without limitation the following: (i) customer lists and customer information as compiled by the Company; (ii) the Company’s internal practices and procedures; (iii) the Company’s financial condition and financial results of operation; (iv) supply of materials information, including sources and costs, and current and prospective projects; (v) strategic planning, manufacturing, engineering, purchasing, finance, marketing, promotion, distribution, and selling activities; (vi) all other information which the Executive has a reasonable basis to consider confidential or which is treated by the Company as confidential; and (vii) all information having independent economic value to the Company that is not generally known to, and not readily ascertainable by proper means by, persons who can obtain economic value from its disclosure or use. Notwithstanding the foregoing provisions, the following shall not be considered “Company Confidential Information”: (1) the general skills of the Executive; (2) information generally known by senior management executives within the Company’s industry; (3) persons, entities, contacts or relationships of the Executive that are also generally known in the industry; and (4) information which becomes available on a non-confidential basis from a source other than the Executive which source is not prohibited from disclosing such confidential information by legal, contractual or other obligation.
(D)Nothing in this Agreement shall prevent Executive from the disclosure of Confidential Information that: (A) is made: (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In the event that Executive files a lawsuit alleging retaliation by the Company for reporting a suspected violation of law, Executive may disclose Confidential Information related to the suspected violation of law or alleged retaliation to Executive’s attorney and use that Information in the court proceeding if Executive’s attorney: files any document containing Confidential Information under seal; and does not disclose the Confidential Information, except pursuant to court order. Executive understands and acknowledges that the Company provides this notice in compliance with the Defend Trade Secrets Act of 2016.
11.Waiver of Intellectual Property and Moral Rights. The Executive agrees that any and all ideas, concepts, processes, discoveries, improvements and inventions conceived, discovered, made, designed, researched or developed by the Executive either solely or jointly with others, during the Executive’s employment with the Company and for the six (6) months thereafter, which relate to the Company’s business or resulting from any work the Executive does for the Company (collectively the “Intellectual Property”), are the Intellectual Property of the Company. The Executive hereby irrevocably assigns and grants to the Company all his right, title and interest in and to such Intellectual Property (including any moral rights
12
Exhibit 10.3
thereto). The Executive agrees to deliver to the Company all papers, documents, files, electronic data or media, reasonably requested by the Company in connection therewith. Without limiting the foregoing, the Executive acknowledges that any and all Intellectual Property, and any and all other property of the Company protectable by patent, copyright or trade secret law, developed in whole or in part by the Executive in connection with the performance of services to the Company as an employee, are the sole property of the Company.
12.Return of Company Property Following Termination. The Executive agrees that following the termination of his employment for any reason, he will promptly return all property of the Company, its affiliates and any divisions thereof he may have managed that is then in or thereafter comes into his possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing, as well as any materials or equipment supplied by the Company to the Executive.
13.Cooperation; No Disparagement. During the one (1)-year period following the Executive’s Date of Termination, the Executive agrees to provide reasonable assistance to the Company (including assistance with litigation matters), upon the Company’s request, concerning the Executive’s previous employment responsibilities and functions with the Company. Additionally, at all times after the Executive’s employment with the Company has terminated, the Company and the Executive agree to refrain from making any disparaging or derogatory remarks, statements and/or publications regarding the other, the Company’s employees or its services. In consideration for such cooperation, the Company shall compensate the Executive for the time the Executive spends on such cooperative efforts (at an hourly rate based on the Executive’s total compensation during the year preceding the Date of Termination) and the Company shall reimburse the Executive for his reasonable out-of-pocket expenses the Executive incurs in connection with such cooperative efforts.
14.Non-Competition. The Executive agrees that during his employment by the Company hereunder and for a period of one (1) year thereafter, he will not (except on behalf of or with the prior written consent of the Company), within the State of Arizona either engage in or carry on any activities of the type conducted, authorized, offered, or provided to Company, whether directly or indirectly, on his own behalf or in the service or on behalf of others, as a member of a limited liability company, partner of a partnership, or as a stockholder, investor, officer, director, trustee, or as an employee, agent, associate, consultant or in any other capacity in the water and wastewater utility business (“Competing Business”). This restriction shall not apply to the Executive working for a non-competitive state agency or municipal provider, or for a general contractor whose company solely constructs utility infrastructure on behalf of municipalities and utilities. The parties intend that the covenants contained in this Section 14 shall be deemed to be a series of separate covenants one for each county in the State of Arizona and except for geographic coverage, each such separate covenant shall be identical to the covenants contained in this Section 14. This restriction shall not apply if the Executive resigns with Good Reason or is terminated without Cause.
15.Reasonableness of Restrictions, Equitable Relief, and Severability.
13
Exhibit 10.3
(A)The Executive hereby agrees that the period of time and geographic scope provided for in the restrictions set forth herein do not impose an undue burden on Executive and are reasonable in subject matter and duration and necessary to protect the Company and its successors and assigns in the use and employment of the goodwill of the business conducted by the Company and to protect the Company’s legitimate business interests. The Executive further agrees that damages cannot compensate the Company in the event of a violation of Sections 9-14 and that, if such violation should occur, injunctive relief shall be essential for the protection of the Company and its successors and assigns. Accordingly, the Executive hereby covenants and agrees that, in the event any of the provisions of Sections 9-14 shall be violated or breached, the Company shall be entitled to obtain injunctive relief against the party or parties violating such covenants, without bond but upon due notice, in addition to such further or other relief as may be available at equity or law. Obtainment of such an injunction by the Company shall not be considered an election of remedies or a waiver of any right to assert any other remedies which the Company has at law or in equity. No waiver of any breach or violation hereof shall be implied from forbearance or failure by the Company to take action thereof. The prevailing party in any litigation, arbitration or similar dispute resolution proceeding to enforce this provision will recover any and all reasonable costs and expenses, including attorneys’ fees.
(B)If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any applicable law, then such provision will be deemed severed and this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly. Thereafter, the parties shall promptly and in good faith negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement.
16.Clawback Policy. The Executive acknowledges and agrees that any incentive compensation payable to the Executive pursuant to Section 4(A), any Restricted Shares granted to the Executive pursuant to Section 4(B), and any other incentive-based compensation the Executive may receive pursuant to this Agreement (collectively “Incentive-Based Compensation”) is subject to the provisions of the Company’s Clawback Policy (the “Policy”), as such Policy may be amended from time to time. As such, the Executive agrees to repay the Company or permit the Company to recoup any or all of such Incentive-Based Compensation to the extent that the Board (or its designee), in its sole and absolute discretion, determines that such repayment or recoupment is required under the terms of the Policy.
17.Assignment. The Executive acknowledges that the services to be rendered by him are unique and personal in nature. Accordingly, the Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation or entity that assumes this Agreement and all obligations and undertakings hereunder. Upon such consolidation, merger or transfer of assets and assumption, the term “Company” as used herein shall mean such other corporation or entity, as appropriate, and this Agreement shall continue in full force and effect.
14
Exhibit 10.3
18.Entire Agreement; Amendment; Waivers. This Agreement embodies the complete agreement of the parties hereto with respect to the subject matter hereof and supersedes any prior written, or prior or contemporaneous oral, understandings or agreements between the parties that may have related in any way to the subject matter hereof. This Agreement may be amended only in writing executed by the Company and the Executive. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants will not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement will not operate as a waiver of any other breach or default.
19.Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the internal laws, and not the law of conflicts, of the State of Arizona.
20.Notices. Any notice required or permitted under this Agreement must be in writing and will be deemed to have been given when delivered personally or by overnight courier service or three days after being sent by mail, postage prepaid, at the address indicated below or to such changed address as such person may subsequently give such notice of:
if to the Company: Global Water Resources, Inc.
21410 North 19th Avenue, Suite 220
Phoenix, AZ 85027
Attention: Board of Directors
Facsimile: (623) 518-4100
if to the Executive: at the address then shown in the Executive’s
employment records
21.Dispute Resolution. Except as otherwise provided in Section 10(D), any dispute, controversy, or claim, whether contractual or non-contractual, between the parties hereto arising directly or indirectly out of or connected with this Agreement, relating to the breach or alleged breach of any representation, warranty, agreement, or covenant under this Agreement, unless mutually settled by the parties hereto, shall be resolved by binding arbitration in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”). The parties agree that before the proceeding to arbitration that they will mediate their disputes before the AAA by a mediator approved by the AAA. Any arbitration shall be conducted by arbitrators approved by the AAA and mutually acceptable to the Company and the Executive. All such disputes, controversies, or claims shall be conducted by a single arbitrator, unless the dispute involves more than $50,000 in the aggregate in which case the arbitration shall be conducted by a panel of three arbitrators. If the parties hereto are unable to agree on the mediator or the arbitrator(s), then the AAA shall select the arbitrator(s). The resolution of the dispute by the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitrator(s) shall award damages to the prevailing party. The arbitration award shall be in writing and shall include a statement of the reasons for the award. The arbitration shall be held in the Phoenix/Scottsdale metropolitan area. The Company shall pay all AAA, mediation, and arbitrator’s fees and costs.
15
Exhibit 10.3
Except as otherwise provided in this Agreement, the arbitrator(s) shall award reasonable attorneys’ fees and costs to the prevailing party.
22.Withholding; Release; No Duplication of Benefits. All of the Executive’s compensation under this Agreement will be subject to deduction and withholding authorized or required by applicable law. The Company’s obligation to make any post-termination payments hereunder (other than salary payments and expense reimbursements through a given Date of Termination), shall be subject to receipt by the Company from the Executive of the Release Agreement described by Section 7(F), and compliance by the Executive with the covenants set forth in Sections 9, 10, 12, 13 and 14.
23.Successors and Assigns. This Agreement is solely for the benefit of the parties and their respective successors, assigns, heirs and legatees. Nothing herein shall be construed to provide any right to any other entity or individual.
24.Each Party the Drafter. This Agreement and the provisions contained in it will not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.
25.Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.
26.Execution of Agreement. This Agreement may be executed via facsimile, .pdf or similar electronic transmission and in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
16
Exhibit 10.3
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written.
COMPANY:
GLOBAL WATER RESOURCES, INC.,
By: /s/ Michael J. Liebman
Name: Michael J. Liebman
Title: Chief Financial Officer
EXECUTIVE:
/s/ Ron L. Fleming
Ron L. Fleming
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT – RON FLEMING]
17
EXHIBIT A
Executive Job Description
The Executive shall continue to perform his current duties as Chief Executive Officer and the duties necessary to his position and those assigned by the Board.
A-1
EXHIBIT B
Form of Release
This Release and Waiver of Claims (this “Release”) is entered into and delivered to Global Water Resources, Inc., a Delaware corporation (the “Company”), as of this [ ] day of [_______], 202[_], by [__________________] (the “Executive”).
Reference is made to the Employment Agreement dated as of August 12, 2026 (the “Employment Agreement”), by and between the Company and the Executive. Capitalized terms used herein without definition will have the meanings assigned to them in the Employment Agreement, a copy of which is attached hereto.
1.Release.
(a)General Waiver and Release by the Executive. In consideration of the parties’ respective obligations under the Employment Agreement in connection with and following the Executive’s termination of employment with the Company, and subject to the limitations set forth in Section 2 hereof, the Executive, on behalf of Executive and Executive’s heirs, executors, administrators, beneficiaries, personal representatives, and assigns, does hereby release, waive and forever discharge the Company, and its current, former and future shareholders, affiliates, direct and indirect parents, subsidiaries, predecessors, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “Company Parties”), from any and all claims, actions, causes of action, suits, costs, controversies, judgments, decrees, verdicts, damages, liabilities, attorneys’ fees, covenants, contracts, and agreements that the Executive may have against the Company Parties, or in the future may possess based on events occurring during the term of the Executive’s employment with the Company arising out of the Executive’s employment relationship with or service as an employee, officer or director of the Company and the Company’s subsidiaries and affiliates or the termination of such relationship or service, including any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date the Executive signs this Release, including, but not limited to, any claims arising under the following laws as amended: Fair Labor Standards Act of 1938 29 U.S.C. §§ 201 et seq.; Title VII of the Civil Rights Act of 1964 42 U.S.C. 2000e et seq.; the Rehabilitation Act of 1973, 29 U.S.C. §§ 701 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq.; the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Civil Rights Act of 1991, 42 U.S.C. § 1981a; the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.; the Family Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq.; the Equal Pay Act of 1963, 29 U.S.C. §§ 206 et seq.; the Workers Adjustment and Retraining Notification Act of 1988, 29 U.S.C. §§ 2101 et seq.; the Immigration Reform and Control Act, 8 U.S.C. § 1101 et seq.; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.; the Sarbanes-Oxley Act of 2002; False Claims Act; the Fair Credit Reporting Act; the Consolidated Omnibus Budget Reconciliation Act (COBRA); Arizona Employment Protection Act; Arizona Civil Rights Act; Arizona wage payment and paid sick leave laws; and the anti-retaliation portion of the Arizona workers compensation law;; or any other federal, state or local law or any foreign jurisdiction, whether such claim arises under statute, common law or in equity, and whether or not the Executive is currently aware of the existence of such claim, damage, action or cause of action, suit or demand (collectively,
B-1
including claims, actions and causes of action set forth in Section 1(b) below, the “Claims”). The Executive also does forever release, discharge and waive any right the Executive may have to recover in any proceeding brought by any federal, state or local agency against the Company Parties, respectively, to enforce any laws. Each of the parties hereto agrees that the value received or to be received in the future as described in the Employment Agreement will be in full satisfaction of any and all claims, actions or causes of action for payment or other benefits of any kind that the Executive may have against the Company Parties.
(b)ADEA Release. In further recognition of the above, the Executive hereby releases and forever discharges each of the Company Parties from any and all claims, actions and causes of action that he may have as of the date he signs and delivers to the Company this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”).
2.Limitations.
(a)No Impact on Obligations Under the Employment Agreement or Other Agreements. The releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive or the Company Parties with respect to their respective rights and obligations set forth in the Employment Agreement. In particular, and without limiting the generality of the preceding sentence, the Executive does not waive or release any claim he might now or in the future have to be paid or receive the payments and benefits provided for in Sections 7 or 8 of the Employment Agreement, and the Company Parties do not waive or release any claim they might now or in the future have under Sections 9-14 of the Employment Agreement. In addition, the releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive of (i) his entitlement to vested accrued compensation and benefits under the Company’s applicable plans and arrangements and (ii) his rights as an equity stakeholder in the Company.
(b)No Impact on Indemnification Rights. The releases contained herein do not, are not intended to, and will not be interpreted to serve as a release or waiver by the Executive with respect to any indemnification rights or directors’ and officers’ liability insurance policy (“D&O coverage”) he may have and such indemnification rights and D&O coverage will not be effected, modified or extinguished by the Executive’s execution of this Release.
3.No Pending Litigation. The Executive represents and agrees that he has not filed, and will not file, any action, complaint, charge, grievance or arbitration against any Company Party, except that such agreement will not apply to any claim based on any matter which, pursuant to Section 2, is excluded from the scope of this Release.
4.Acknowledgment. The Executive acknowledges and confirms that (a) the Release does not bar claims that arise after the execution of the Release; (b) the consideration under this Release he is receiving is in addition to anything of value to which he was already entitled before he received the Employment Agreement which provides consideration conditioned upon the execution of this Release; (c) he has been advised in writing by the Company in connection with his resignation to consult with an attorney of his choice prior to signing this Release and to have
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such attorney explain to him the terms of the Release, including, without limitation, the terms relating to his release of Claims arising under ADEA; (d) he has read this Release carefully and completely and understands each of the terms hereof; and (e) he was given not less than twenty-one (21) days [or forty-five (45) days, if applicable] to consider the terms of the Release and to consult with an attorney of his choosing with respect thereto; and (f) that for a period of seven (7) days following his signing of this Agreement, he will have the option to revoke this Agreement in accordance with the terms set forth in Section 6 below.
5.Successors. The rights and obligations under this Agreement will inure to any and all successors of the Company.
6.Revocation. The Executive have the right to revoke this Release during the seven (7)-day period commencing immediately following the date he signs and delivers this Agreement to the Company (the “Revocation Period”). The period will expire at 5:00 p.m., Mountain Time, on the last day of the seven (7)-day period; provided, however, that if such seventh (7th) day is not a business day, the period will extend to 5:00 p.m. on the next succeeding business day. In the event of any such revocation by the Executive, the obligations of the Company under this Release will terminate and be of no further force and effect as of the date of such revocation. No such revocation by the Executive will be effective unless it is in writing and signed by the Executive and received by a representative of the Company prior to the expiration of the Revocation Period. Executive understands and agrees that if he timely revokes this Release he forfeits any consideration provided for under the Employment Agreement conditioned upon this Release.
7.Clawback Policy. The Executive acknowledges and agrees that the terms of this Release do not alter the Executive’s obligations or the Company’s rights under Section 16 of the Employment Agreement.
8.Counterparts. This Release may be executed in two (2) or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties have caused this Release to be executed, as of the day and year first above written.
COMPANY:
GLOBAL WATER RESOURCES, INC.,
By: _________________________________
Name: _______________________________
Title: ________________________________
EXECUTIVE:
_____________________________________
Ron L. Fleming
[SIGNATURE PAGE TO WAIVER & RELEASE AGREEMENT – RON L. FLEMING
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Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective as of the 12th day of August, 2026 (the “Effective Date”), and is made by and between Global Water Resources, Inc., a Delaware corporation (the “Company”), and Michael J. Liebman, a resident of the State of Arizona (the “Executive”).
RECITALS
WHEREAS, the Company desires to continue to employ the Executive as its Executive Vice President, Secretary, and Chief Financial Officer, as well as Secretary/Treasurer of Global Water, LLC and all utility subsidiaries, and the Executive desires to continue such employment; and
WHEREAS, the Company and the Executive previously entered into an employment agreement dated as of December 20, 2024 (the “Superseded Agreement”); and
WHEREAS, the parties desire to enter into this Agreement to replace the Superseded Agreement and to set forth the terms and conditions of the Executive’s employment with the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the representations, covenants and mutual agreements contained herein, the Company and the Executive agree as follows:
1.Employment. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Executive as its Senior Vice President, Secretary, and Chief Financial Officer, and as Secretary/Treasurer of Global Water, LLC and all regulated utility subsidiaries, and the Executive agrees to diligently perform the duties associated with such positions, including (without limitation) those duties listed on Exhibit A attached hereto. The Executive shall perform his duties primarily at the Company’s headquarters located in Phoenix, Arizona. The Executive will report directly to the Company’s Chief Executive Officer and shall perform such other duties as the Chief Executive Officer may assign from time to time, provided that such additional duties are reasonable and consistent with the scope of the positions held by the Executive. The Executive will devote substantially all of his business time, attention and energies to the business of the Company and will comply with the policies and guidelines established by the Company from time to time applicable to its senior management executives. During the term of this Agreement, the Executive shall not, without the Company’s prior written consent, be a director, officer, employee, consultant or advisor of or to any person, firm, association, syndicate, partnership, trust or corporation engaged in, concerned with or interested in a business substantially similar to the business of the Company. Notwithstanding the foregoing, the Executive may (a) serve on civic or charitable or not-for-profit industry-related organizations, (b) engage in charitable, civic, educational, professional community and/or
industry activities without remuneration therefor, (c) manage personal and family investments, and (d) purchase securities in any corporation whose securities are regularly traded, provided that such purchase shall not result in the Executive beneficially owning 5% or more of the equity securities of any business in competition with the Company at any time.
2.Term. The Executive will be employed under this Agreement from the Effective Date until January 1, 2030, unless the Executive’s employment is terminated earlier pursuant to Section 7 or Section 8 hereof. Thereafter, the Agreement and Executive’s employment under it will automatically renew for one or more additional 12-month periods (each a “Renewal Term”), unless either party provides written notice of its intention to terminate employment under this Agreement at least sixty (60) days prior to the applicable renewal date.
3.Base Salary. For calendar year 2026, the Company will pay the Executive an annual base salary of $450,800 (“Base Salary”). The Board or the Compensation Committee may review the Base Salary on an annual basis to determine, in its sole and absolute discretion, whether any increases (over and above the Base Salary increases described above) are appropriate based on a combination of factors, which shall include (without limitation) the Executive’s achievement of specified performance objectives and/or the amount of compensation paid to the Executive’s peers at other, similarly situated public companies. The Base Salary may not be reduced without the Executive’s consent. The Base Salary will be payable in accordance with the payroll practices of the Company in effect from time to time and will be subject to customary withholding for applicable taxes and other deductions.
4.Incentive Compensation. The Executive may be entitled to annual incentive compensation as determined (a) in the discretion of the Board (or the Compensation Committee) or (b) pursuant to any incentive compensation program adopted by the Company from time to time.
(A)Short-Term Incentive Compensation. For each calendar year, the Executive will be eligible to receive target incentive compensation equal to 28.57% of his Base Salary for each calendar year. The actual incentive compensation that Executive receives, if any, shall be determined each year by the Compensation Committee based on the Executive satisfying the performance goals established by the Board (or the Compensation Committee). The annual incentive compensation will be payable in cash and/or restricted stock units at the discretion of the Compensation Committee. The Compensation Committee will determine the percentage of the incentive compensation that will be paid in the form of cash and/or restricted stock units following the end of the performance period. For 2026, no more than 50% of the incentive compensation will be paid in the form of restricted stock units. For 2027 and each year thereafter, 100% of the incentive compensation shall be paid in the form of cash. If the Executive is entitled to receive a cash incentive compensation award, such award shall be paid at such time as cash awards are otherwise payable to all employees under the incentive compensation program, but in no event later than March 15 of the year following the year in which the right to the cash incentive award, if any, becomes vested. Any restricted stock units will be issued pursuant to the terms of the Global Water Resources, Inc. 2020 Omnibus Incentive Plan or such successor equity plan (the “Incentive Plan”). The Board or the Compensation Committee will
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grant any restricted stock units following the end of the performance period and such restricted stock units will vest in equal quarterly installments over a period of three years. All restricted stock units shall be subject to the terms and conditions of the Incentive Plan and any award agreement issued pursuant to the Incentive Plan.
(B)Restricted Stock. In addition, the Executive is entitled to the following grants of restricted stock (the “Restricted Shares”):
(1)8,333 Restricted Shares, which shall have a Grant Date of May 5, 2026 and shall vest on May 8, 2027; and
(2)For calendar years 2027 and thereafter, Restricted Shares in an amount equal to 50% of Executive’s then current Base Salary for the calendar year, provided Executive remains employed on the last day of such calendar year. The Restricted Shares will be granted by the Compensation Committee in the first quarter of the calendar year following the end of the applicable calendar year, with the first grant to be made in the first quarter of 2028, provided Executive is employed on December 31, 2027. The Restricted Shares shall vest in three substantially equal installments on each December 15 with the first vesting date on the December 15 immediately following the grant. For example, any Restricted Shares granted in the first quarter of 2028 will vest in substantially equal installments on December 15, 2028, December 15, 2029, and December 15, 2030.
No Restricted Shares shall be granted to the Executive pursuant to this Section 4(B) if the Executive’s employment with the Company terminates for any reason prior to the Grant Date. Further, the grant of Restricted Shares shall be subject to the terms of the Incentive Plan and the award agreement granting the Restricted Shares.
5.Reimbursement of Business Expenses. The Executive shall be entitled to reimbursement of reasonable and customary business expenses, including for all authorized travel and all out of pocket expenses incurred by the Executive as authorized by the Company in the performance of his duties. The Executive shall furnish any statements, receipts, invoices and other documentation that the Company may reasonably require in connection with processing such reimbursements.
6.Other Benefits. The Company will provide to the Executive such fringe and other benefits as are regularly provided by the Company to members of its senior management team, including participation in the Company’s welfare plans (e.g., health, medical, dental, vision, etc.) and other benefit programs (e.g., profit-sharing, long-term incentive compensation, retirement, investment, life and disability insurance, etc.) in effect from time to time, in each case to the extent that the Executive is eligible for participation under the terms of such plans or programs. The Executive shall be entitled to five (5) weeks of paid vacation per year, which vacation shall be paid at a rate equal to the Executive’s then current Base Salary. The Executive may take such vacation at such time(s) as the Executive and the Company shall mutually agree to, acting reasonably.
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7.Termination of Employment.
(A)Voluntary Resignation by Executive without Good Reason. The Executive may voluntarily terminate his employment with the Company at any time by giving four (4) weeks advance written notice to the Company (which notice period the Company may waive in whole or in part in its sole discretion). If such voluntary termination is without Good Reason (as defined below), then (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination (as defined below) and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs; and (iii) the Company shall not pay or reimburse the Executive for COBRA (as defined below) premiums for the period that the Company is required to offer COBRA coverage as a matter of law. For the avoidance of doubt, any unvested phantom stock units, stock appreciation rights, shares of restricted stock, restricted stock units, or other equity-based awards shall be forfeited.
(B)Voluntary Resignation by Executive with Good Reason; Termination without Cause by the Company. If the Executive terminates his employment with the Company with Good Reason, or if the Company terminates the Executive’s employment without Cause, including by providing the notice of non-renewal referenced in Section 2, provided Executive complies with the release requirements of Section 7(F), then (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs unless the termination of employment occurs during the last six (6) months of the Company’s fiscal year, in which case the Executive will be paid a pro rata portion of the cash incentive compensation award based upon the Company’s performance for the fiscal year payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program; (iii) if Executive timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s Separation from Service until the earliest of (A) 18 months following the date of Executive’s Separation from Service, (B) the date on which the Executive becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company or (C) the date the Executive is no longer eligible to receive COBRA continuation coverage; (iv) notwithstanding the provisions in the Incentive Plan or in any equity, phantom stock, restricted stock, restricted stock unit, or stock appreciation right plan or award agreement to the contrary, any equity or stock price-based awards (including phantom stock units, shares of restricted stock, restricted stock units, and stock appreciation rights) previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse; and (v) the Company will pay the Executive an amount equal to the sum of 3.9 times the Executive’s current Base Salary as of the Date of Termination. Unless otherwise provided in this Agreement, this amount shall be paid in a lump-sum payment within 60 days following the Executive’s Separation from Service. The Executive will not be entitled to receive a grant of restricted stock units or Restricted Shares following his Separation from Service.
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(C)Termination for Cause by the Company. If the Company terminates the Executive’s employment for Cause, then, (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; and (ii) no incentive compensation shall be payable for the year in which the termination occurs. For the avoidance of doubt, any unvested phantom stock units, stock appreciation rights, shares of restricted stock, restricted stock units or other equity-based awards shall be forfeited.
(D)Death or Disability. If Executive dies or becomes Disabled, then the Company will be obligated to pay (i) the Executive’s then current Base Salary through the date of death or the effective date of Disability and any incentive compensation earned in previous years but not yet paid, (ii) a pro-rated amount of the Executive’s actual cash incentive compensation for the year, payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program, (iii) if Executive or Executive’s qualified beneficiary timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive or Executive’s qualified beneficiary for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s death or Disability until the earliest of (A) 18 months following the date of Executive’s death or Disability, (B) the date on which the Executive or the Executive’s qualified beneficiary becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company, or (C) the date the Executive or his qualified beneficiary is no longer eligible to receive COBRA continuation coverage; and (iv) notwithstanding the provisions in the Incentive Plan or in any equity, phantom stock, restricted stock, restricted stock unit, or stock appreciation rights plan or award agreement to the contrary, any equity or stock price-based awards previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse and, to the extent permitted under the applicable plan’s governing documents, the Executive (or the Executive’s beneficiary(ies)) shall have a period of one (1) year from the effective date of death or Disability to exercise any such options (or if shorter, the expiration date of the option). The Executive will not be entitled to receive a grant of restricted stock units or Restricted Shares following his Separation from Service.
(E)Definitions. For purposes of this Agreement:
(1)“Cause” shall occur if the Executive (a) has engaged in malfeasance, willful or gross misconduct, or willful dishonesty that materially harms the Company, its reputation or its stockholders; (b) is convicted of a felony that is materially detrimental to the Company, its reputation, or the Company’s stockholders; (c) is convicted of or enters a plea of nolo contendere to a felony that materially damages the Company’s financial condition or reputation or to a crime involving fraud; (d) is in material violation of the Company’s ethics/policy code or employment policies, including willful breach of duty of loyalty in connection with the Company’s business; (e) willfully fails to perform his duties under this Agreement after written notice by the Company and a reasonable opportunity to cure; or (f) impedes, interferes or fails to reasonably cooperate with an investigation authorized by the Company or fails to follow a legal and proper Company directive. For purposes hereof, no act, or
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failure to act, by the Executive will be considered “willful” unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company. No action shall be deemed Cause hereunder if undertaken by the Executive at the direction of the Board or upon following the advice of counsel to the Company or any of its affiliates. For the avoidance of doubt, poor performance shall not, by itself, constitute Cause hereunder. The Executive shall not be terminated for Cause (other than pursuant to clauses (b) or (c) of the preceding sentence due to conviction or entering a plea of nolo contendere) unless he is first given notice by the Board of its intention to terminate him for Cause and provided a period of at least thirty (30) days to cure (if capable of cure) the event or events alleged to constitute Cause hereunder.
(2)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(3)“Code” means the Internal Revenue Code of 1986, as amended.
(4)“Date of Termination” shall mean (a) if employment under this Agreement is terminated as a result of the Executive’s death, the date of the Executive’s death, (b) if employment under this Agreement is terminated by the Executive, the last day of his employment with the Company, (c) if this Agreement is terminated as a result of the Executive’s Disability, the effective date of the Disability, (d) if employment under this Agreement is terminated by the Company for Cause, the date a final determination is provided to the Executive by the Company, or (e) if this Agreement is terminated by the Company without Cause, the date notice of termination is given to the Executive by the Company.
(5)“Disability” shall mean if, by reason of any medically determinable physical or mental impairment which actually hinders the Executive’s ability to perform his job and which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than six (6) months under an accident and health plan established by the Company for its employees. The effective date of Executive’s Disability is the last day of the sixth month on which the Executive receives the income replacement benefits.
(6)“Good Reason” shall mean a Separation from Service within two (2) years following the occurrence of one or more of the following circumstances without Executive’s express consent: (a) a material diminution in the Executive’s authority, duties or responsibilities, (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; (c) a material diminution in Executive’s Base Salary not consented to as required under Section 3; (d) a material change in the geographic location of Executive’s principal office; or (e) any other action or inaction that constitutes a material breach by the Company of this Agreement. Executive must provide written notice to Company of the existence of the Good Reason condition described in clauses (a) – (e) above within ninety (90) days of the Executive’s knowledge of the existence of the condition. Notwithstanding anything to the contrary, an event described in clauses (a) – (e) above will not constitute Good Reason if, within thirty (30) days after Executive gives Company notice of the
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occurrence or existence of an event that Executive believes constitutes Good Reason, Company has cured (if capable of cure) the event or events alleged to constitute Good Reason hereunder.
(7)“Separation from Service” shall mean either (a) termination of the Executive’s employment with Company and all affiliates of the Company, or (b) a permanent reduction in the level of bona fide services the Executive provides to the Company and all affiliates to an amount that is 20% or less of the average level of bona fide services the Executive provided to the Company in the immediately preceding 36 months, with the level of bona fide service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii). Solely for purposes of determining whether the Executive has a Separation from Service, the Executive’s employment relationship is treated as continuing while the Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Executive’s period of leave exceeds six (6) months and the Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6)-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
(F)Release Agreement. Notwithstanding anything to the contrary herein, no payment shall be made under this Section 7 or Section 8(B) unless the Executive executes (and does not revoke) a release (“Release Agreement”), substantially in the form and substance attached hereto as Exhibit B. The Release Agreement shall be provided to the Executive within five (5) days following the Executive’s Separation from Service. The Release Agreement must be executed and returned to the Company within the 21- or 45-day (as applicable) period described in the Release Agreement and it must not be revoked by the Executive within the seven (7)-day revocation period described in the Release Agreement. Notwithstanding anything in this Section 7 or Section 8(B) to the contrary, if the 21- or 45-day consideration period, plus the seven-day revocation period, spans two calendar years, the first payment to which Executive is entitled shall be made to the Executive in the second calendar year.
(G)Compliance with Section 409A of the Code. The Company believes that the payments due pursuant to this Agreement qualify for the short-term deferral exception or the separation pay exception to Section 409A as set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding anything to the contrary in this Agreement, if the Company determines that neither the short-term deferral exception, separation pay exception nor any other exception to Section 409A applies to the payments due pursuant to this Agreement, to the extent any payments are due on the Executive’s Separation from Service and if Executive is a “specified employee” (as defined in Treasury Regulation Section 1.409A-1(i)) at the time of Executive’s Separation from Service, then such payments shall be paid on the first business day following the expiration of the six-month period following the Executive’s Separation from Service along with accrued interest at the Bank of America, Arizona prime rate determined as of the date of the payment. This Agreement shall be operated in compliance with Section 409A or
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an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an applicable exception. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code. Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. The reimbursement of the COBRA premiums provided for in the Agreement shall be paid to Executive on the fifth day of the month immediately following the month in which Executive timely remits the premium payment. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by this Agreement.
8. Change of Control Fee.
(A)Notwithstanding the provisions of the Incentive Plan or any equity, phantom stock, restricted stock, restricted stock unit or stock appreciation rights plan or award agreement to the contrary, any equity or stock price based awards (including phantom stock units, shares of restricted stock, restricted stock units, and stock appreciation rights) previously granted to the Executive will become fully vested and exercisable and all restrictions on restricted awards will lapse upon any Change of Control (as defined below), regardless of whether the Executive remains employed by the Company or its successor following the Change of Control.
(B)If the Executive terminates his employment with the Company with Good Reason, or if the Company terminates the Executive’s employment without Cause within 24 months following a Change of Control of the Company, the Executive will be entitled to a lump-sum cash payment equal to the sum of 3.9 times the Executive’s current Base Salary as of the date of the Change of Control. Such payment shall be made in a single lump sum payment within 60 days of the date of the Executive’s Separation from Service, provided that the Executive complies with the release requirements of Section 7(F). To the extent that any disputes arise involving the terms and conditions of this Agreement (or the termination of the Executive’s employment) following a Change of Control, the Executive shall be entitled to reimbursement by the Company for his reasonable attorneys’ fees and other legal fees and expenses incurred in connection with contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for under this Agreement. Any such fees and expenses shall be reimbursed by the Company as they are incurred. All reimbursements will be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. The amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. Executive may not elect to receive cash or any other benefit in lieu of the reimbursement of legal fees and expenses provided by this Section 8(B). If Executive is entitled to a payment pursuant to this Section 8, the Executive shall be ineligible for any payment due pursuant to Section 7.
(C)For purposes of this Agreement, “Change of Control” shall mean (i) a “change in the ownership or effective control of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for
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purposes of determining a “change in the effective control,” “50 percent” shall be used instead of “30 percent,” (ii) a “change in the ownership of a substantial portion of the assets of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “substantial portion of the assets of the corporation,” “85 percent” shall be used instead of “40 percent,” or (iii) individuals who, as of the Effective Date of this Agreement constitute the Board and individuals whose election or nomination for election as a member of the Board of Directors was approved by the directors then in office (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Exchange Act) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director (unless specifically deemed to be an Incumbent Director by a vote of at least a majority of the Incumbent Directors before the date of the appointment or election). Notwithstanding the foregoing, any payment that is subject to Section 409A of the Code that is to be made upon a Change of Control shall only be made upon an event that constitutes a change in ownership or control as described in Treasury Regulation 1.409A-3(i)(5).
(D)The following limitations apply to payments pursuant to this Section 8.
(1)Section 4999 of the Code imposes an excise tax (currently 20%) on an employee if the total payments and certain other benefits received by the employee due to a “change in control” (which for this purpose, has the meaning ascribed to it in Section 280G of the Code and the related regulations) exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company the payments and benefits to which Executive will be entitled pursuant to Section 8 or any other arrangement between the Company and the Executive will be limited so that the sum of such payments and benefits, when combined with all other “payments in the nature of compensation” (as that term is defined in Section 280G of the Code and related regulations), the receipt of which is contingent on a change in control, will not exceed an amount equal to the maximum amount that can be payable without the imposition of the Section 4999 excise tax (which maximum amount is referred to below as the “Capped Benefit”).
(2)The limitation described in Section 8(D)(1) will not apply if the Executive’s “Uncapped Benefit” minus the Section 4999 excise taxes exceeds the Executive’s Capped Benefit. For this purpose, an Executive’s “Uncapped Benefit” is equal to the total payments to which the Executive will be entitled pursuant to this Agreement, or otherwise, without regard to the limitation described in Section 8(D)(1).
(3)If the Company believes that Section 8(D)(1) may result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive as soon as possible. The Company will then, at its expense, retain a
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“Consultant” (which shall be a certified public accounting firm and/or a firm of recognized executive compensation consultants working with a law firm or certified public accounting firm) to provide a determination concerning whether the Executive’s total payments and benefits under this Agreement or otherwise will result in the imposition of the Section 4999 excise tax and, if so, whether the Executive is subject to the limitations of Section 8(D)(1) or, alternatively, whether the exception described in Section 8(D)(2) applies.
(4)If the Company believes that the limitations of Section 8(D)(1) are applicable, it will nonetheless make payments to the Executive, at the times described in Section 8, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid if due after the opinions called for above have been received.
(5)If the amount paid to the Executive by the Company is ultimately determined by the Internal Revenue Service to have exceeded the limitations of this Section 8(D), the Executive must repay the excess promptly on demand of the Company. If it is ultimately determined by the Consultant or the Internal Revenue Service that a greater payment should have been made to the Executive, the Company shall pay the Executive the amount of the deficiency, together with interest thereon from the date such amount should have been paid to the date of such payment so that the Executive will have received or be entitled to receive the maximum amount to which the Executive is entitled under the Agreement. For purposes of this Section 8, the applicable interest rate shall be the Bank of America, Arizona prime rate from the date the amounts described in the preceding sentence should have been paid to the Executive.
(6)As a general rule, the Consultant’s determination shall be binding on the Executive and the Company. Section 280G and the excise tax rules of Section 4999, however, are complex and uncertain and, as a result, the Internal Revenue Service may disagree with the Consultant’s conclusions. If the Internal Revenue Service determines that the Capped Benefit is actually lower than calculated by the Consultant, the Capped Benefit will be recalculated by the Consultant. Any payment over that revised Capped Benefit will then be repaid by the Executive to Company. If the Internal Revenue Service determines that the actual Capped Benefit exceeds the amount calculated by the Consultant, the Company shall pay the Executive any shortage.
(7)The Company has the right to challenge any determinations made by the Internal Revenue Service. If the Company agrees to indemnify an Executive from any taxes, interest and penalties that may be imposed upon the Executive (including any taxes, interest and penalties on the amounts paid pursuant to the Company’s indemnification agreement), the Executive must cooperate fully with the Company in connection with any such challenge. The Company shall bear all costs associated with the challenge of any determination made by the Internal Revenue Service and the Company shall control all such challenges.
(8)Executive must notify the Company in writing of any claim or determination by the Internal Revenue Service that, if upheld, would result in the payment of excise taxes. Such notice shall be given as soon as possible but in no event later than 15 days following the Executive’s receipt of notice of the Internal Revenue Service’s position.
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(9)In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 8(D) shall be of no further force or effect. Moreover, if the provisions of Sections 280G and 4999 of the Code do not apply to impose the excise tax on payments under this Agreement, then the provisions of this Section 8(D) shall not apply.
9.Non-Solicitation.
(A)The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Clients to withdraw, curtail, cancel, or decrease the level of their business with the Company or request that they do business with any Competing Business. The Company’s Clients are any person or entity: (i) for whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, provided Company’s Services and with whom Executive had material contact; (ii) about whom Executive had Confidential Information; and/or (iii) with respect to whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, held supervisory, managerial, and/or oversight responsibilities for the provision of Company’s services.
(B)The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Prospective Clients (defined as any person or entity who both (i) has been directly solicited to become a customer of the Company, and (ii) with whom Executive had material contact or about whom Executive has knowledge of such solicitation, within the 12-month period prior to the time Executive’s employment with the Company terminates) to forgo doing business with the Company or request that such prospective customer or client do business with any Competing Business.
(C)The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly hire or solicit for employment for any other business entity other than the Company (whether as an employee, consultant, independent contractor, or otherwise) any person who is, or within the six (6)-month period preceding the date of such activity was, an employee, independent contractor or the like of the Company or any of its subsidiaries, unless Company gives its written consent to such offer of employment. Nothing herein shall prevent Executive, directly, or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers, Internet postings, etc.) directed at the public at large (as opposed to directed specifically at the Company’s employees, contractors or the like that have the effect of inducing or influencing any of the Company’s employees, contractors, or the like to terminate their employment or business relationship with the Company.
(D)The covenants set forth in this Section 9 and in Section 10 will survive the Executive’s termination of employment under Section 7.
10.Non-Disclosure of Confidential Information.
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(A)It is understood that in the course of the Executive’s employment with the Company, the Executive will become acquainted with Company Confidential Information (as defined below). The Executive recognizes that Company Confidential Information has been developed or acquired at great expense, is proprietary to the Company, and is and shall remain the exclusive property of the Company. Accordingly, the Executive agrees that he will not disclose to others, copy, make any use of, or remove from the Company’s premises any Company Confidential Information, except as the Executive’s duties may specifically require, without the express written consent of the Company, during the Executive’s employment with the Company and thereafter until such time as Company Confidential Information becomes generally known, or readily ascertainable by proper means by persons unrelated to the Company.
(B)Upon any termination of employment, the Executive shall promptly deliver to the Company the originals and all copies of any and all materials, documents, notes, manuals, or lists containing or embodying Company Confidential Information, or relating directly or indirectly to the business of the Company, in the possession or control of the Executive.
(C)“Company Confidential Information” shall mean confidential, proprietary information or trade secrets of the Company and its subsidiaries and affiliates including without limitation the following: (i) customer lists and customer information as compiled by the Company; (ii) the Company’s internal practices and procedures; (iii) the Company’s financial condition and financial results of operation; (iv) supply of materials information, including sources and costs, and current and prospective projects; (v) strategic planning, manufacturing, engineering, purchasing, finance, marketing, promotion, distribution, and selling activities; (vi) all other information which the Executive has a reasonable basis to consider confidential or which is treated by the Company as confidential; and (vii) all information having independent economic value to the Company that is not generally known to, and not readily ascertainable by proper means by, persons who can obtain economic value from its disclosure or use. Notwithstanding the foregoing provisions, the following shall not be considered “Company Confidential Information”: (1) the general skills of the Executive; (2) information generally known by senior management executives within the Company’s industry; (3) persons, entities, contacts or relationships of the Executive that are also generally known in the industry; and (4) information which becomes available on a non-confidential basis from a source other than the Executive which source is not prohibited from disclosing such confidential information by legal, contractual or other obligation.
(D)Nothing in this Agreement shall prevent Executive from the disclosure of Confidential Information that: (A) is made: (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In the event that Executive files a lawsuit alleging retaliation by the Company for reporting a suspected violation of law, Executive may disclose Confidential Information related to the suspected violation of law or alleged retaliation to Executive’s attorney and use that Information in the court proceeding if Executive’s attorney: files any document containing Confidential Information
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under seal; and does not disclose the Confidential Information, except pursuant to court order. Executive understands and acknowledges that the Company provides this notice in compliance with the Defend Trade Secrets Act of 2016.
11.Waiver of Intellectual Property and Moral Rights. The Executive agrees that any and all ideas, concepts, processes, discoveries, improvements and inventions conceived, discovered, made, designed, researched or developed by the Executive either solely or jointly with others, during the Executive’s employment with the Company and for the six (6) months thereafter, which relate to the Company’s business or resulting from any work the Executive does for the Company (collectively the “Intellectual Property”), are the Intellectual Property of the Company. The Executive hereby irrevocably assigns and grants to the Company all his right, title and interest in and to such Intellectual Property (including any moral rights thereto). The Executive agrees to deliver to the Company all papers, documents, files, electronic data or media, reasonably requested by the Company in connection therewith. Without limiting the foregoing, the Executive acknowledges that any and all Intellectual Property, and any and all other property of the Company protectable by patent, copyright or trade secret law, developed in whole or in part by the Executive in connection with the performance of services to the Company as an employee, are the sole property of the Company.
12.Return of Company Property Following Termination. The Executive agrees that following the termination of his employment for any reason, he will promptly return all property of the Company, its affiliates and any divisions thereof he may have managed that is then in or thereafter comes into his possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing, as well as any materials or equipment supplied by the Company to the Executive.
13.Cooperation; No Disparagement. During the one (1)-year period following the Executive’s Date of Termination, the Executive agrees to provide reasonable assistance to the Company (including assistance with litigation matters), upon the Company’s request, concerning the Executive’s previous employment responsibilities and functions with the Company. Additionally, at all times after the Executive’s employment with the Company has terminated, the Company and the Executive agree to refrain from making any disparaging or derogatory remarks, statements and/or publications regarding the other, the Company’s employees or its services. In consideration for such cooperation, the Company shall compensate the Executive for the time the Executive spends on such cooperative efforts (at an hourly rate based on the Executive’s total compensation during the year preceding the Date of Termination) and the Company shall reimburse the Executive for his reasonable out-of-pocket expenses the Executive incurs in connection with such cooperative efforts.
14.Non-Competition. The Executive agrees that during his employment by the Company hereunder and for a period of one (1) year thereafter, he will not (except on behalf of or with the prior written consent of the Company), within the State of Arizona either engage in or carry on any activities of the type conducted, authorized, offered, or provided to Company, whether directly or indirectly, on his own behalf or in the service or on behalf of others, as a
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member of a limited liability company, partner of a partnership, or as a stockholder, investor, officer, director, trustee, or as an employee, agent, associate, consultant or in any other capacity in the water and wastewater utility business (“Competing Business”). This restriction shall not apply to the Executive working for a non-competitive state agency or municipal provider, or for a general contractor whose company solely constructs utility infrastructure on behalf of municipalities and utilities. The parties intend that the covenants contained in this Section 14 shall be deemed to be a series of separate covenants one for each county in the State of Arizona and except for geographic coverage, each such separate covenant shall be identical to the covenants contained in this Section 14. This restriction shall not apply if the Executive resigns with Good Reason or is terminated without Cause.
15.Reasonableness of Restrictions, Equitable Relief, and Severability.
(A)The Executive hereby agrees that the period of time and geographic scope provided for in the restrictions set forth herein do not impose an undue burden on Executive and are reasonable in subject matter and duration and necessary to protect the Company and its successors and assigns in the use and employment of the goodwill of the business conducted by the Company and to protect the Company’s legitimate business interests. The Executive further agrees that damages cannot compensate the Company in the event of a violation of Sections 9-14 and that, if such violation should occur, injunctive relief shall be essential for the protection of the Company and its successors and assigns. Accordingly, the Executive hereby covenants and agrees that, in the event any of the provisions of Sections 9-14 shall be violated or breached, the Company shall be entitled to obtain injunctive relief against the party or parties violating such covenants, without bond but upon due notice, in addition to such further or other relief as may be available at equity or law. Obtainment of such an injunction by the Company shall not be considered an election of remedies or a waiver of any right to assert any other remedies which the Company has at law or in equity. No waiver of any breach or violation hereof shall be implied from forbearance or failure by the Company to take action thereof. The prevailing party in any litigation, arbitration or similar dispute resolution proceeding to enforce this provision will recover any and all reasonable costs and expenses, including attorneys’ fees.
(B)If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any applicable law, then such provision will be deemed severed and this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly. Thereafter, the parties shall promptly and in good faith negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement.
16.Clawback Policy. The Executive acknowledges and agrees that any incentive compensation payable to the Executive pursuant to Section 4(A), any Restricted Shares granted to the Executive pursuant to Section 4(B), and any other incentive-based compensation the Executive may receive pursuant to this Agreement (collectively “Incentive-Based Compensation”) is subject to the provisions of the Company’s Clawback Policy (the “Policy”), as such Policy may be amended from time to time. As such, the Executive agrees to repay the
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Company or permit the Company to recoup any or all of such Incentive-Based Compensation to the extent that the Board (or its designee), in its sole and absolute discretion, determines that such repayment or recoupment is required under the terms of the Policy.
17.Assignment. The Executive acknowledges that the services to be rendered by him are unique and personal in nature. Accordingly, the Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation or entity that assumes this Agreement and all obligations and undertakings hereunder. Upon such consolidation, merger or transfer of assets and assumption, the term “Company” as used herein shall mean such other corporation or entity, as appropriate, and this Agreement shall continue in full force and effect.
18.Entire Agreement; Amendment; Waivers. This Agreement embodies the complete agreement of the parties hereto with respect to the subject matter hereof and supersedes any prior written, or prior or contemporaneous oral, understandings or agreements between the parties that may have related in any way to the subject matter hereof. This Agreement may be amended only in writing executed by the Company and the Executive. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants will not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement will not operate as a waiver of any other breach or default.
19.Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the internal laws, and not the law of conflicts, of the State of Arizona.
20.Notices. Any notice required or permitted under this Agreement must be in writing and will be deemed to have been given when delivered personally or by overnight courier service or three days after being sent by mail, postage prepaid, at the address indicated below or to such changed address as such person may subsequently give such notice of:
if to the Company: Global Water Resources, Inc.
21410 North 19th Avenue, Suite 220
Phoenix, AZ 85027
Attention: Board of Directors
Facsimile: (623) 518-4100
if to the Executive: at the address then shown in the Executive’s employment records
21.Dispute Resolution. Except as otherwise provided in Section 10(D), any dispute, controversy, or claim, whether contractual or non-contractual, between the parties hereto arising directly or indirectly out of or connected with this Agreement, relating to the breach or alleged breach of any representation, warranty, agreement, or covenant under this Agreement, unless
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mutually settled by the parties hereto, shall be resolved by binding arbitration in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”). The parties agree that before proceeding to arbitration that they will mediate their disputes before the AAA by a mediator approved by the AAA. Any arbitration shall be conducted by arbitrators approved by the AAA and mutually acceptable to the Company and the Executive. All such disputes, controversies, or claims shall be conducted by a single arbitrator, unless the dispute involves more than $50,000 in the aggregate in which case the arbitration shall be conducted by a panel of three arbitrators. If the parties hereto are unable to agree on the mediator or the arbitrator(s), then the AAA shall select the arbitrator(s). The resolution of the dispute by the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitrator(s) shall award damages to the prevailing party. The arbitration award shall be in writing and shall include a statement of the reasons for the award. The arbitration shall be held in the Phoenix/Scottsdale metropolitan area. The Company shall pay all AAA, mediation, and arbitrator’s fees and costs. Except as otherwise provided in this Agreement, the arbitrator(s) shall award reasonable attorneys’ fees and costs to the prevailing party.
22.Withholding; Release; No Duplication of Benefits. All the Executive’s compensation under this Agreement will be subject to deduction and withholding authorized or required by applicable law. The Company’s obligation to make any post-termination payments hereunder (other than salary payments and expense reimbursements through a given Date of Termination), shall be subject to receipt by the Company from the Executive of the Release Agreement described by Section 7(F), and compliance by the Executive with the covenants set forth in Sections 9, 10, 12, 13 and 14.
23.Successors and Assigns. This Agreement is solely for the benefit of the parties and their respective successors, assigns, heirs and legatees. Nothing herein shall be construed to provide any right to any other entity or individual.
24.Each Party the Drafter. This Agreement and the provisions contained in it will not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.
25.Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.
26.Execution of Agreement. This Agreement may be executed via facsimile, .pdf or similar electronic transmission and in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written.
COMPANY:
GLOBAL WATER RESOURCES, INC.,
By: /s/ Ron Fleming
Name: Ron Fleming
Title: Chairman, President, and Chief Executive Officer
EXECUTIVE:
/s/ Michael J. Liebman
Michael J. Liebman
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT – MICHAEL J. LIEBMAN]
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EXHIBIT A
Executive Job Description
The Executive shall continue to perform his current duties as Senior Vice President, Secretary, and Chief Financial Officer and other duties necessary to his position and those assigned by the Board and the Chief Executive Officer.
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EXHIBIT B
Form of Release
This Release and Waiver of Claims (this “Release”) is entered into and delivered to Global Water Resources, Inc., a Delaware corporation (the “Company”), as of this [ ] day of [_______], 202[_], by [__________________] (the “Executive”).
Reference is made to the Employment Agreement dated as of August 12, 2026 (the “Employment Agreement”), by and between the Company and the Executive. Capitalized terms used herein without definition will have the meanings assigned to them in the Employment Agreement, a copy of which is attached hereto.
1.Release.
(A)General Waiver and Release by the Executive. In consideration of the parties’ respective obligations under the Employment Agreement in connection with and following the Executive’s termination of employment with the Company, and subject to the limitations set forth in Section 2 hereof, the Executive, on behalf of Executive and Executive’s heirs, executors, administrators, beneficiaries, personal representatives, and assigns, does hereby release, waive and forever discharge the Company, and its current, former and future shareholders, affiliates, direct and indirect parents, subsidiaries, predecessors, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “Company Parties”), from any and all claims, actions, causes of action, suits, costs, controversies, judgments, decrees, verdicts, damages, liabilities, attorneys’ fees, covenants, contracts, and agreements that the Executive may have against the Company Parties, or in the future may possess based on events occurring during the term of the Executive’s employment with the Company arising out of the Executive’s employment relationship with or service as an employee, officer or director of the Company and the Company’s subsidiaries and affiliates or the termination of such relationship or service, including any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date the Executive signs this Release, including, but not limited to, any claims arising under the following laws as amended: Fair Labor Standards Act of 1938 29 U.S.C. §§ 201 et seq.; Title VII of the Civil Rights Act of 1964 42 U.S.C. 2000e et seq.; the Rehabilitation Act of 1973, 29 U.S.C. §§ 701 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq.; the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Civil Rights Act of 1991, 42 U.S.C. § 1981a; the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.; the Family Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq.; the Equal Pay Act of 1963, 29 U.S.C. §§ 206 et seq.; the Workers Adjustment and Retraining Notification Act of 1988, 29 U.S.C. §§ 2101 et seq.; the Immigration Reform and Control Act, 8 U.S.C. § 1101 et seq.; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.; the Sarbanes-Oxley Act of 2002; False Claims Act; the Fair Credit Reporting Act; the Consolidated Omnibus Budget Reconciliation Act (COBRA); Arizona Employment Protection Act; Arizona Civil Rights Act; Arizona wage payment and paid sick leave laws; and the anti-retaliation portion of the Arizona workers compensation law;; or any other federal, state or local law or any foreign jurisdiction, whether such claim arises under statute, common law or in equity, and whether or not the Executive is currently aware of the existence of such claim, damage, action or cause of action, suit or demand (collectively,
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including claims, actions and causes of action set forth in Section 1(b) below, the “Claims”). The Executive also does forever release, discharge and waive any right the Executive may have to recover in any proceeding brought by any federal, state or local agency against the Company Parties, respectively, to enforce any laws. Each of the parties hereto agrees that the value received or to be received in the future as described in the Employment Agreement will be in full satisfaction of any and all claims, actions or causes of action for payment or other benefits of any kind that the Executive may have against the Company Parties.
(B)ADEA Release. In further recognition of the above, the Executive hereby releases and forever discharges each of the Company Parties from any and all claims, actions and causes of action that he may have as of the date he signs and delivers to the Company this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”).
2.Limitations.
(A)No Impact on Obligations Under the Employment Agreement or Other Agreements. The releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive or the Company Parties with respect to their respective rights and obligations set forth in the Employment Agreement. In particular, and without limiting the generality of the preceding sentence, the Executive does not waive or release any claim he might now or in the future have to be paid or receive the payments and benefits provided for in Sections 7 or 8 of the Employment Agreement, and the Company Parties do not waive or release any claim they might now or in the future have under Sections 9-14 of the Employment Agreement. In addition, the releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive of (i) his entitlement to vested accrued compensation and benefits under the Company’s applicable plans and arrangements and (ii) his rights as an equity stakeholder in the Company.
(B)No Impact on Indemnification Rights. The releases contained herein do not, are not intended to, and will not be interpreted to serve as a release or waiver by the Executive with respect to any indemnification rights or directors’ and officers’ liability insurance policy (“D&O coverage”) he may have and such indemnification rights and D&O coverage will not be effected, modified or extinguished by the Executive’s execution of this Release.
3.No Pending Litigation. The Executive represents and agrees that he has not filed, and will not file, any action, complaint, charge, grievance or arbitration against any Company Party, except that such agreement will not apply to any claim based on any matter which, pursuant to Section 2, is excluded from the scope of this Release.
4.Acknowledgment. The Executive acknowledges and confirms that (a) the Release does not bar claims that arise after the execution of the Release; (b) the consideration under this Release he is receiving is in addition to anything of value to which he was already entitled before he received the Employment Agreement which provides consideration conditioned upon the execution of this Release; (c) he has been advised in writing by the Company in connection with his resignation to consult with an attorney of his choice prior to signing this Release and to have
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such attorney explain to him the terms of the Release, including, without limitation, the terms relating to his release of Claims arising under ADEA; (d) he has read this Release carefully and completely and understands each of the terms hereof; and (e) he was given not less than twenty-one (21) days [or forty-five (45) days, if applicable] to consider the terms of the Release and to consult with an attorney of his choosing with respect thereto; and (f) that for a period of seven (7) days following his signing of this Agreement, he will have the option to revoke this Agreement in accordance with the terms set forth in Section 6 below.
5.Successors. The rights and obligations under this Agreement will inure to any and all successors of the Company.
6.Revocation. The Executive have the right to revoke this Release during the seven (7)-day period commencing immediately following the date he signs and delivers this Agreement to the Company (the “Revocation Period”). The period will expire at 5:00 p.m., Mountain Time, on the last day of the seven (7)-day period; provided, however, that if such seventh (7th) day is not a business day, the period will extend to 5:00 p.m. on the next succeeding business day. In the event of any such revocation by the Executive, the obligations of the Company under this Release will terminate and be of no further force and effect as of the date of such revocation. No such revocation by the Executive will be effective unless it is in writing and signed by the Executive and received by a representative of the Company prior to the expiration of the Revocation Period. Executive understands and agrees that if he timely revokes this Release he forfeits any consideration provided for under the Employment Agreement conditioned upon this Release.
7.Clawback Policy. The Executive acknowledges and agrees that the terms of this Release do not alter the Executive’s obligations or the Company’s rights under Section 16 of the Employment Agreement.
8.Counterparts. This Release may be executed in two (2) or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Release to be executed, as of the day and year first above written.
COMPANY:
GLOBAL WATER RESOURCES, INC.,
By: _________________________________
Name: _______________________________
Title: ________________________________
EXECUTIVE:
_____________________________________
Michael J. Liebman
[SIGNATURE PAGE TO WAIVER & RELEASE AGREEMENT – MICHAEL J. LIEBMAN]
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Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of the 12th day of August 2026 (the “Effective Date”), and is made by and between Global Water Resources, Inc., a Delaware corporation (the “Company”), and Christopher D. Krygier, a resident of the State of Arizona (the “Executive”).
RECITALS
WHEREAS, the Company desires to continue to employ the Executive as its Executive Vice President and Chief Operating Officer, and the Executive desires to continue such employment; and
WHEREAS, the Company and the Executive previously entered into an employment agreement dated as of December 20, 2024 (the “Superseded Agreement”); and
WHEREAS, the parties wish to enter into this Agreement to replace the Superseded Agreement and to set forth the terms and conditions of the Executive’s employment with the Company.
NOW, THEREFORE, in consideration of the covenants and mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the representations, covenants and mutual agreements contained herein, the Company and the Executive agree as follows:
AGREEMENT
1.Employment. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Executive as its Chief Operating Officer and Executive also shall serve as the Chief Operating Officer of Global Water, LLC and all regulated utility subsidiaries of the Company. The Executive agrees to diligently perform the duties associated with such positions, including (without limitation) those duties listed on Exhibit A attached hereto. The Executive shall perform his duties primarily at the Company’s headquarters located in Phoenix, Arizona. The Executive will report to the Company’s Chief Executive Officer and shall perform such other duties as the Chief Executive Officer may assign from time to time, provided that such additional duties are reasonable and consistent with the scope of the positions held by the Executive. The Executive will devote substantially all of his business time, attention and energies to the business of the Company and its affiliates and will comply with the policies and guidelines established by the Company from time to time applicable to its senior management executives. During the term of this Agreement, the Executive shall not, without the Company’s prior written consent, be a director, officer, employee, consultant or advisor of or to any person, firm, association, syndicate, partnership, trust or corporation engaged in, concerned with or interested in a business substantially similar to the business of the Company or its affiliates. Notwithstanding the foregoing, the Executive may (a) serve on civic or charitable or not-for-profit industry-related organizations, (b) engage in charitable, civic, educational, professional community and/or industry activities without remuneration therefore, (c) manage personal and family investments, and (d) purchase securities in any corporation whose securities are regularly
traded, provided that such purchase shall not result in the Executive beneficially owning 5% or more of the equity securities of any business in competition with the Company or its affiliates at any time.
2.Term. The Executive will be employed under this Agreement from the Effective Date until January 1, 2030, unless the Executive’s employment is terminated earlier pursuant to Section 7 or Section 8 hereof. Thereafter, the Agreement and Executive’s employment under it will automatically renew for one or more additional 12-month periods (each a “Renewal Term”), unless either party provides written notice of its intention to terminate employment under this Agreement at least sixty (60) days prior to the applicable renewal date.
3.Base Salary. For calendar year 2026, the Company will pay the Executive an annual base salary (“Base Salary”) of $352,188. The Board or the Compensation Committee may review the Base Salary on an annual basis to determine, in its sole and absolute discretion, whether any increases (over and above the increases described above) are appropriate based on a combination of factors, which shall include (without limitation) the Executive’s achievement of specified performance objectives and/or the amount of compensation paid to the Executive’s peers at other, similarly situated public companies. The Base Salary may not be reduced without the Executive’s consent. The Base Salary will be payable in accordance with the payroll practices of the Company in effect from time to time and will be subject to customary withholding for applicable taxes and other deductions.
4.Incentive Compensation. In addition to Executive’s Base Salary, the Executive may be entitled to annual incentive compensation as determined (a) in the discretion of the Board (or the Compensation Committee) or (b) pursuant to any incentive compensation program adopted by the Company from time to time.
(A)Short-Term Incentive Compensation. For each calendar year, the Executive will be eligible to receive target incentive compensation equal to 25% of his Base Salary for each calendar year. The actual incentive compensation that Executive receives, if any, shall be determined each year by the Compensation Committee based on the Executive satisfying the performance goals established by the Board (or the Compensation Committee). The annual incentive compensation will be payable in cash and/or restricted stock units at the discretion of the Compensation Committee. The Compensation Committee will determine the percentage of the incentive compensation that will be paid in the form of cash and/or restricted stock units following the end of the performance period. For 2026, no more than 50% of the incentive compensation will be paid in the form of restricted stock units. For 2027 and each year thereafter, 100% of the incentive compensation shall be paid in the form of cash. If the Executive is entitled to receive a cash incentive compensation award, such incentive compensation award shall be paid at such time as cash incentive compensation awards are otherwise payable to all employees under the incentive compensation program, but in no event later than March 15 of the year following the year in which the right to the cash incentive award, if any, becomes vested. Any restricted stock units will be issued pursuant to the terms of the Global Water Resources, Inc. 2020 Omnibus Incentive Plan or such successor equity plan (the “Incentive Plan”). The Board or the Compensation Committee will grant any restricted stock
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units following the end of the performance period and such restricted stock units will vest in equal quarterly installments over a period of three (3) years. All restricted stock units shall be subject to the terms and conditions of the Incentive Plan and any award agreement issued pursuant to the Incentive Plan.
(B) Restricted Stock. In addition, the Executive is entitled to the following grants of restricted stock (the “Restricted Shares”):
(1)6,667 Restricted Shares which shall have a Grant Date of May 5, 2027 and shall vest on December 15, 2027; and
(2)For calendar years 2027 and thereafter, Restricted Shares in an amount equal to 50% of Executive’s then current Base Salary for the calendar year, provided Executive remains employed on the last day of such calendar year. The Restricted Shares will be granted by the Compensation Committee in the first quarter of the calendar year following the end of the applicable calendar year, with the first grant to be made in the first quarter of 2028, provided Executive is employed on December 31, 2027. The Restricted Shares shall vest in three substantially equal installments on each December 15 with the first vesting date on the December 15 immediately following the grant. For example, any Restricted Shares granted in the first quarter of 2028 will vest in substantially equal installments on December 15, 2028, December 15, 2029, and December 15, 2030.
No Restricted Shares shall be granted to the Executive pursuant to this Section 4(B) if the Executive’s employment with the Company terminates for any reason prior to the Grant Date. Further, the grant of Restricted Shares shall be subject to the terms of the Incentive Plan and the award agreement granting the Restricted Shares.
5.Reimbursement of Business Expenses. The Executive shall be entitled to reimbursement of reasonable and customary business expenses, including for all authorized travel and all out-of-pocket expenses incurred by the Executive as authorized by the Company in the performance of his duties. The Executive shall furnish any statements, receipts, invoices and other documentation that the Company requires in accordance with Company policy.
6.Other Benefits. The Company will provide to the Executive such fringe and other benefits as are regularly provided by the Company to members of its senior management team, including participation in the Company’s welfare plans (e.g., health, medical, dental, vision, etc.) and other benefit programs (e.g., profit-sharing, long-term incentive compensation, retirement, investment, life and disability insurance, etc.) in effect from time to time, in each case to the extent that the Executive is eligible for participation under the terms of such plans or programs. The Executive shall be entitled to five (5) weeks of paid vacation per year, which vacation shall be paid at a rate equal to the Executive’s then current Base Salary. The Executive may take such vacation at such time(s) as the Executive and the Company shall mutually agree to, acting reasonably.
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7.Termination of Employment.
A.Voluntary Resignation by Executive without Good Reason. The Executive may voluntarily terminate his employment with the Company at any time by giving four (4) weeks advance written notice to the Company (which notice period the Company may waive in whole or in part in its sole discretion). If such voluntary termination is without Good Reason (as defined below), then (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination (as defined below) and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs; and (iii) the Company shall not pay or reimburse the Executive for COBRA (as defined below) premiums for the period that the Company is required to offer COBRA coverage as a matter of law. For the avoidance of doubt, any unvested equity-based awards shall be forfeited.
B.Voluntary Resignation by Executive with Good Reason; Termination without Cause by the Company. If the Executive terminates his employment with the Company with Good Reason, or if the Company terminates the Executive’s employment without Cause, including by providing the notice of non-renewal referenced in Section 2, provided Executive complies with the release requirements of Section 7(F), then (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs, unless the termination of employment occurs during the last six (6) months of the Company’s fiscal year, in which case the Executive will be paid a pro rata portion of the cash incentive compensation award based upon the Company’s performance for the fiscal year payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program; (iii) if Executive timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s Separation from Service until the earliest of (A) 12 months following the date of Executive’s Separation from Service, (B) the date on which the Executive becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company or (C) the date the Executive is no longer eligible to receive COBRA continuation coverage; (iv) notwithstanding the provisions in the Incentive Plan or award agreement to the contrary, any equity awards previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse; and (v) the Company will pay the Executive an amount equal to the sum of 3.6 times the Executive’s current Base Salary as of the Date of Termination. Unless otherwise provided in this Agreement, this amount shall be paid in a lump-sum payment within sixty (60) days following the Executive’s Separation from Service. The Executive will not be entitled to receive a grant of restricted stock units or Restricted Shares following his Separation from Service.
C.Termination for Cause by the Company. If the Company terminates the Executive’s employment for Cause, then, (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; and (ii) no incentive compensation shall
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be payable for the year in which the termination occurs. For the avoidance of doubt, any unvested equity-based awards shall be forfeited.
D.Death or Disability. If Executive dies or becomes Disabled, then the Company will be obligated to pay the Executive’s then current Base Salary through the date of death or the effective date of Disability and any incentive compensation earned in previous years but not yet paid. If Executive dies or becomes Disabled, provided Executive complies with the release requirements of Section 7(F), the Executive (or the Executive’s beneficiary) also shall receive (i) a pro-rated amount of the Executive’s actual cash incentive compensation for the year, payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program, (ii) if Executive or Executive’s qualified beneficiary timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive or Executive’s qualified beneficiary for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s death or Disability until the earliest of (A) 18 months following the date of Executive’s death or Disability, (B) the date on which the Executive or the Executive’s qualified beneficiary becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company, or (C) the date the Executive or his qualified beneficiary is no longer eligible to receive COBRA continuation coverage; and (iii) notwithstanding the provisions in the Incentive Plan or award agreement to the contrary, any equity based awards previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse and, to the extent permitted under the applicable plan’s governing documents, the Executive (or the Executive’s beneficiary(ies)) shall have a period of one (1) year from the effective date of death or Disability to exercise any options (or if shorter, the expiration date of the option). The Executive will not be entitled to receive a grant of restricted stock units or Restricted Shares following his Separation from Service.
E.Definitions. For purposes of this Agreement:
(1)“Cause” shall occur if the Executive (a) has engaged in malfeasance, willful or gross misconduct, or willful dishonesty that materially harms the Company, its reputation or its stockholders; (b) is convicted of a felony that is materially detrimental to the Company, its reputation, or the Company’s stockholders; (c) is convicted of or enters a plea of nolo contendere to a felony that materially damages the Company’s financial condition or reputation or to a crime involving fraud; (d) is in material violation of the Company’s ethics/policy code or employment policies, including willful breach of duty of loyalty in connection with the Company’s business; (e) willfully fails to perform his duties under this Agreement after written notice by the Company and a reasonable opportunity to cure; or (f) impedes, interferes or fails to reasonably cooperate with an investigation authorized by the Company or fails to follow a legal and proper Company directive. For purposes hereof, no act, or failure to act, by the Executive will be considered “willful” unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company. No action shall be deemed Cause hereunder if undertaken by the Executive at the direction of the Board or upon following the advice of counsel to the Company or any of its affiliates. For the avoidance of doubt, poor performance shall not, by itself, constitute Cause hereunder. The Executive shall not be terminated for Cause (other than pursuant to clauses (b) or (c) of the
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preceding sentence due to conviction or entering a plea of nolo contendere) unless he is first given notice by the Board of its intention to terminate him for Cause and provided a period of at least thirty (30) days to cure (if capable of cure) the event or events alleged to constitute Cause hereunder.
(2)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(3)“Code” means the Internal Revenue Code of 1986, as amended.
(4)“Date of Termination” shall mean (a) if employment under this Agreement is terminated as a result of the Executive’s death, the date of the Executive’s death, (b) if employment under this Agreement is terminated by the Executive, the last day of his employment with the Company, (c) if this Agreement is terminated as a result of the Executive’s Disability, the effective date of the Disability, (d) if employment under this Agreement is terminated by the Company for Cause, the date a final determination is provided to the Executive by the Company, or (e) if this Agreement is terminated by the Company without Cause, the date notice of termination is given to the Executive by the Company.
(5)“Disability” shall mean if, by reason of any medically determinable physical or mental impairment which actually hinders the Executive’s ability to perform his job and which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than six (6) months under an accident and health plan established by the Company for its employees. The effective date of Executive’s Disability is the last day of the sixth month on which the Executive receives the income replacement benefits.
(6)“Good Reason” shall mean a Separation from Service within two (2) years following the occurrence of one or more of the following circumstances without Executive’s express consent: (a) a material diminution in the Executive’s authority, duties or responsibilities, (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; (c) a material diminution in Executive’s Base Salary not consented to as required under Section 3; (d) a material change in the geographic location of Executive’s principal office; or (e) any other action or inaction that constitutes a material breach by the Company of this Agreement. Executive must provide written notice to Company of the existence of the Good Reason condition described in clauses (a) – (e) above within ninety (90) days of the Executive’s knowledge of the existence of the condition. Notwithstanding anything to the contrary, an event described in clauses (a) – (e) above will not constitute Good Reason if, within thirty (30) days after Executive gives Company notice of the occurrence or existence of an event that Executive believes constitutes Good Reason, Company has cured (if capable of cure) the event or events alleged to constitute Good Reason hereunder.
(7)“Separation from Service” shall mean either (a) termination of the Executive’s employment with Company and all affiliates of the Company, or (b) a permanent reduction in the level of bona fide services the Executive provides to the Company and all affiliates to an amount that is 20% or less of the average level of bona fide services the Executive provided to the Company in the immediately preceding 36 months, with the level of bona fide
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service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii). Solely for purposes of determining whether the Executive has a Separation from Service, the Executive’s employment relationship is treated as continuing while the Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Executive’s period of leave exceeds six (6) months and the Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6)-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
F.Release Agreement. Notwithstanding anything to the contrary herein, no payment shall be made under this Section 7 or Section 8(B) unless the Executive executes (and does not revoke) a release (“Release Agreement”), substantially in the form and substance attached hereto as Exhibit B. The Release Agreement shall be provided to the Executive within five (5) days following the Executive’s Separation from Service. The Release Agreement must be executed and returned to the Company within the 21- or 45-day (as applicable) period described in the Release Agreement and it must not be revoked by the Executive within the seven (7)-day revocation period described in the Release Agreement. Notwithstanding anything in this Section 7 or Section 8(B) to the contrary, if the 21- or 45-day consideration period, plus the seven-day revocation period, spans two calendar years, the first payment to which Executive is entitled shall be made to the Executive in the second calendar year.
G.Compliance with Section 409A of the Code. The Company believes that the payments due pursuant to this Agreement qualify for the short-term deferral exception or the separation pay exception to Section 409A as set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding anything to the contrary in this Agreement, if the Company determines that neither the short-term deferral exception, separation pay exception nor any other exception to Section 409A applies to the payments due pursuant to this Agreement, to the extent any payments are due on the Executive’s Separation from Service and if Executive is a “specified employee” (as defined in Treasury Regulation Section 1.409A-1(i)) at the time of Executive’s Separation from Service, then such payments shall be paid on the first business day following the expiration of the six-month period following the Executive’s Separation from Service along with accrued interest at the Bank of America, Arizona prime rate determined as of the date of the payment. This Agreement shall be operated in compliance with Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an applicable exception. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code. Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. The reimbursement of the COBRA premiums provided for in the Agreement shall be paid to Executive on the fifth day of the month immediately following
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the month in which Executive timely remits the premium payment. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by this Agreement.
8.Change of Control Fee.
A.If within 24 months following a Change of Control of the Company, the Executive terminates his employment with the Company with Good Reason, or the Company terminates the Executive’s employment without Cause, provided Executive complies with the release requirements of Section 7(F), the Executive will be entitled to (1) a cash payment equal to the sum of 3.6 times the Executive’s current Base Salary as of the date of the Change of Control (the “Cash Payment”) and (2) except as otherwise provided in an award agreement, any equity or stock based awards previously granted to the Executive will become fully vested and exercisable and all restrictions on restricted awards will lapse. The Cash Payment shall be made in a single lump sum payment within 60 days of the date of the Executive’s Separation from Service. To the extent that any disputes arise involving the terms and conditions of this Agreement (or the termination of the Executive’s employment) following a Change of Control, the Executive shall be entitled to reimbursement by the Company for his reasonable attorneys’ fees and other legal fees and expenses incurred in connection with contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for under this Agreement. Any such fees and expenses shall be reimbursed by the Company as they are incurred. All reimbursements will be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. The amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. Executive may not elect to receive cash or any other benefit in lieu of the reimbursement of legal fees and expenses provided by this Section 8(A). If Executive is entitled to a payment pursuant to this Section 8, the Executive shall be ineligible for any payment due pursuant to Section 7.
B.For purposes of this Agreement, “Change of Control” shall mean (i) a “change in the ownership or effective control of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “change in the effective control,” “50 percent” shall be used instead of “30 percent,” (ii) a “change in the ownership of a substantial portion of the assets of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “substantial portion of the assets of the corporation,” “85 percent” shall be used instead of “40 percent,” or (iii) individuals who, as of the Effective Date of this Agreement constitute the Board and individuals whose election or nomination for election as a member of the Board of Directors was approved by the directors then in office (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Exchange Act) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent
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Director (unless specifically deemed to be an Incumbent Director by a vote of at least a majority of the Incumbent Directors before the date of the appointment or election). Notwithstanding the foregoing, any payment that is subject to Section 409A of the Code that is to be made upon a Change of Control shall only be made upon an event that constitutes a change in ownership or control as described in Treasury Regulation 1.409A-3(i)(5).
C.The following limitations apply to payments pursuant to this Section 8.
(1)Section 4999 of the Code imposes an excise tax (currently 20%) on an employee if the total payments and certain other benefits received by the employee due to a “change in control” (which for this purpose, has the meaning ascribed to it in Section 280G of the Code and the related regulations) exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company the payments and benefits to which Executive will be entitled pursuant to Section 8 or any other arrangement between the Company and the Executive will be limited so that the sum of such payments and benefits, when combined with all other “payments in the nature of compensation” (as that term is defined in Section 280G of the Code and related regulations), the receipt of which is contingent on a change in control, will not exceed an amount equal to the maximum amount that can be payable without the imposition of the Section 4999 excise tax (which maximum amount is referred to below as the “Capped Benefit”).
(2)The limitation described in Section 8(D)(1) will not apply if the Executive’s “Uncapped Benefit” minus the Section 4999 excise taxes exceeds the Executive’s Capped Benefit. For this purpose, an Executive’s “Uncapped Benefit” is equal to the total payments to which the Executive will be entitled pursuant to this Agreement, or otherwise, without regard to the limitation described in Section 8(D)(1).
(3)If the Company believes that Section 8(D)(1) may result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive as soon as possible. The Company will then, at its expense, retain a “Consultant” (which shall be a certified public accounting firm and/or a firm of recognized executive compensation consultants working with a law firm or certified public accounting firm) to provide a determination concerning whether the Executive’s total payments and benefits under this Agreement or otherwise will result in the imposition of the Section 4999 excise tax and, if so, whether the Executive is subject to the limitations of Section 8(D)(1) or, alternatively, whether the exception described in Section 8(D)(2) applies.
(4)If the Company believes that the limitations of Section 8(D)(1) are applicable, it will nonetheless make payments to the Executive, at the times described in Section 8, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid if due after the opinions called for above have been received.
(5)If the amount paid to the Executive by the Company is ultimately determined by the Internal Revenue Service to have exceeded the limitations of this Section 8(D), the Executive must repay the excess promptly on demand of the Company. If it is ultimately determined by the Consultant or the Internal Revenue Service that a greater payment
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should have been made to the Executive, the Company shall pay the Executive the amount of the deficiency, together with interest thereon from the date such amount should have been paid to the date of such payment so that the Executive will have received or be entitled to receive the maximum amount to which the Executive is entitled under the Agreement. For purposes of this Section 8, the applicable interest rate shall be the Bank of America, Arizona prime rate from the date the amounts described in the preceding sentence should have been paid to the Executive.
(6)As a general rule, the Consultant’s determination shall be binding on the Executive and the Company. Section 280G and the excise tax rules of Section 4999, however, are complex and uncertain and, as a result, the Internal Revenue Service may disagree with the Consultant’s conclusions. If the Internal Revenue Service determines that the Capped Benefit is actually lower than calculated by the Consultant, the Capped Benefit will be recalculated by the Consultant. Any payment over that revised Capped Benefit will then be repaid by the Executive to Company. If the Internal Revenue Service determines that the actual Capped Benefit exceeds the amount calculated by the Consultant, the Company shall pay the Executive any shortage.
(7)The Company has the right to challenge any determinations made by the Internal Revenue Service. If the Company agrees to indemnify an Executive from any taxes, interest and penalties that may be imposed upon the Executive (including any taxes, interest and penalties on the amounts paid pursuant to the Company’s indemnification agreement), the Executive must cooperate fully with the Company in connection with any such challenge. The Company shall bear all costs associated with the challenge of any determination made by the Internal Revenue Service and the Company shall control all such challenges.
(8)Executive must notify the Company in writing of any claim or determination by the Internal Revenue Service that, if upheld, would result in the payment of excise taxes. Such notice shall be given as soon as possible but in no event later than 15 days following the Executive’s receipt of notice of the Internal Revenue Service’s position.
(9)In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 8(D) shall be of no further force or effect. Moreover, if the provisions of Sections 280G and 4999 of the Code do not apply to impose the excise tax on payments under this Agreement, then the provisions of this Section 8(D) shall not apply.
9.Non-Solicitation.
A.The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Clients to withdraw, curtail, cancel, or decrease the level of their business with the Company or request that they do business with any Competing Business. The Company’s Clients are any person or entity: (i) for whom Executive, at any time during the 12-month period prior to the time the Executive’s employment
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with the Company terminates, provided Company’s Services and with whom Executive had material contact; (ii) about whom Executive had Confidential Information; and/or (iii) with respect to whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, held supervisory, managerial, and/or oversight responsibilities for the provision of Company’s services.
B.The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Prospective Clients (defined as any person or entity who both (i) has been directly solicited to become a customer of the Company, and (ii) with whom Executive had material contact or about whom Executive has knowledge of such solicitation, within the 12-month period prior to the time Executive’s employment with the Company terminates) to forgo doing business with the Company or request that such prospective customer or client do business with any Competing Business.
C.The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly hire or solicit for employment for any other business entity other than the Company (whether as an employee, consultant, independent contractor, or otherwise) any person who is, or within the six (6)-month period preceding the date of such activity was, an employee, independent contractor or the like of the Company or any of its subsidiaries, unless Company gives its written consent to such offer of employment. Nothing herein shall prevent Executive, directly, or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers, Internet postings, etc.) directed at the public at large (as opposed to directed specifically at the Company’s employees, contractors or the like that have the effect of inducing or influencing any of the Company’s employees, contractors, or the like to terminate their employment or business relationship with the Company.
D.The covenants set forth in this Section 9 and in Section 10 will survive the Executive’s termination of employment under Section 7.
10.Non-Disclosure of Confidential Information.
A.It is understood that in the course of the Executive’s employment with the Company, the Executive will become acquainted with Company Confidential Information (as defined below). The Executive recognizes that Company Confidential Information has been developed or acquired at great expense, is proprietary to the Company, and is and shall remain the exclusive property of the Company. Accordingly, the Executive agrees that he will not disclose to others, copy, make any use of, or remove from the Company’s premises any Company Confidential Information, except as the Executive’s duties may specifically require, without the express written consent of the Company, during the Executive’s employment with the Company and thereafter until such time as Company Confidential Information becomes generally known, or readily ascertainable by proper means by persons unrelated to the Company.
B.Upon any termination of employment, the Executive shall promptly deliver to the Company the originals and all copies of any and all materials, documents, notes, manuals, or lists containing or embodying Company Confidential Information, or relating
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directly or indirectly to the business of the Company, in the possession or control of the Executive.
C.“Company Confidential Information” shall mean confidential, proprietary information or trade secrets of the Company and its subsidiaries and affiliates including without limitation the following: (i) customer lists and customer information as compiled by the Company; (ii) the Company’s internal practices and procedures; (iii) the Company’s financial condition and financial results of operation; (iv) supply of materials information, including sources and costs, and current and prospective projects; (v) strategic planning, manufacturing, engineering, purchasing, finance, marketing, promotion, distribution, and selling activities; (vi) all other information which the Executive has a reasonable basis to consider confidential or which is treated by the Company as confidential; and (vii) all information having independent economic value to the Company that is not generally known to, and not readily ascertainable by proper means by, persons who can obtain economic value from its disclosure or use. Notwithstanding the foregoing provisions, the following shall not be considered “Company Confidential Information”: (1) the general skills of the Executive; (2) information generally known by senior management executives within the Company’s industry; (3) persons, entities, contacts or relationships of the Executive that are also generally known in the industry; and (4) information which becomes available on a non-confidential basis from a source other than the Executive which source is not prohibited from disclosing such confidential information by legal, contractual or other obligation.
D.Nothing in this Agreement shall prevent Executive from the disclosure of Confidential Information that: (A) is made: (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In the event that Executive files a lawsuit alleging retaliation by the Company for reporting a suspected violation of law, Executive may disclose Confidential Information related to the suspected violation of law or alleged retaliation to Executive’s attorney and use that Information in the court proceeding if Executive’s attorney: files any document containing Confidential Information under seal; and does not disclose the Confidential Information, except pursuant to court order. Executive understands and acknowledges that the Company provides this notice in compliance with the Defend Trade Secrets Act of 2016.
11.Waiver of Intellectual Property and Moral Rights. The Executive agrees that any and all ideas, concepts, processes, discoveries, improvements and inventions conceived, discovered, made, designed, researched or developed by the Executive either solely or jointly with others, during the Executive’s employment with the Company and for the six (6) months thereafter, which relate to the Company’s business or resulting from any work the Executive does for the Company (collectively the “Intellectual Property”), are the Intellectual Property of the Company. The Executive hereby irrevocably assigns and grants to the Company all his right, title and interest in and to such Intellectual Property (including any moral rights thereto). The Executive agrees to deliver to the Company all papers, documents, files, electronic data or media, reasonably requested by the Company in connection therewith. Without limiting the foregoing, the Executive acknowledges that any and all Intellectual Property, and any and all
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other property of the Company protectable by patent, copyright or trade secret law, developed in whole or in part by the Executive in connection with the performance of services to the Company as an employee, are the sole property of the Company.
12.Return of Company Property Following Termination. The Executive agrees that following the termination of his employment for any reason, he will promptly return all property of the Company, its affiliates and any divisions thereof he may have managed that is then in or thereafter comes into his possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing, as well as any materials or equipment supplied by the Company to the Executive.
13.Cooperation; No Disparagement. During the one (1)-year period following the Executive’s Date of Termination, the Executive agrees to provide reasonable assistance to the Company (including assistance with litigation matters), upon the Company’s request, concerning the Executive’s previous employment responsibilities and functions with the Company. Additionally, at all times after the Executive’s employment with the Company has terminated, the Company and the Executive agree to refrain from making any disparaging or derogatory remarks, statements and/or publications regarding the other, the Company’s employees or its services. In consideration for such cooperation, the Company shall compensate the Executive for the time the Executive spends on such cooperative efforts (at an hourly rate based on the Executive’s total compensation during the year preceding the Date of Termination) and the Company shall reimburse the Executive for his reasonable out-of-pocket expenses the Executive incurs in connection with such cooperative efforts.
14.Non-Competition. The Executive agrees that during his employment by the Company hereunder and for a period of one (1) year thereafter, he will not (except on behalf of or with the prior written consent of the Company), within the State of Arizona either engage in or carry on any activities of the type conducted, authorized, offered, or provided to Company, whether directly or indirectly, on his own behalf or in the service or on behalf of others, as a member of a limited liability company, partner of a partnership, or as a stockholder, investor, officer, director, trustee, or as an employee, agent, associate, consultant or in any other capacity in the water and wastewater utility business (“Competing Business”). This restriction shall not be interpreted to apply to businesses, including other regulated utilities that are not providing, considering providing, or involved in the water and/or wastewater utility business. This restriction shall not apply to the Executive working for a non-competitive state agency or municipal provider, or for a general contractor whose company solely constructs utility infrastructure on behalf of municipalities and utilities or a consulting firm providing utility regulatory, finance, lobbying or similar services, as long as for the one (1) year period Executive is not providing services for a direct Competing Business. The parties intend that the covenants contained in this Section 14 shall be deemed to be a series of separate covenants one for each county in the State of Arizona and except for geographic coverage, each such separate covenant shall be identical to the covenants contained in this Section 14. This restriction shall not apply if the Executive resigns with Good Reason or is terminated without Cause.
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15.Reasonableness of Restrictions, Equitable Relief, and Severability.
A.The Executive hereby agrees that the period of time and geographic scope provided for in the restrictions set forth herein do not impose an undue burden on Executive and are reasonable in subject matter and duration and necessary to protect the Company and its successors and assigns in the use and employment of the goodwill of the business conducted by the Company and to protect the Company’s legitimate business interests. The Executive further agrees that damages cannot compensate the Company in the event of a violation of Sections 9-14 and that, if such violation should occur, injunctive relief shall be essential for the protection of the Company and its successors and assigns. Accordingly, the Executive hereby covenants and agrees that, in the event any of the provisions of Sections 9-14 shall be violated or breached, the Company shall be entitled to obtain injunctive relief against the party or parties violating such covenants, without bond but upon due notice, in addition to such further or other relief as may be available at equity or law. Obtainment of such an injunction by the Company shall not be considered an election of remedies or a waiver of any right to assert any other remedies which the Company has at law or in equity. No waiver of any breach or violation hereof shall be implied from forbearance or failure by the Company to take action thereof. The prevailing party in any litigation, arbitration or similar dispute resolution proceeding to enforce this provision will recover any and all reasonable costs and expenses, including attorneys’ fees.
B.If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any applicable law, then such provision will be deemed severed and this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties will be construed and enforced accordingly. Thereafter, the parties shall promptly and in good faith negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement.
16.Clawback Policy. The Executive acknowledges and agrees that any incentive compensation payable to the Executive pursuant to Section 4(A), any Restricted Shares granted to the Executive pursuant to Section 4(B), and any other incentive-based compensation the Executive may receive pursuant to this Agreement (collectively “Incentive-Based Compensation”) is subject to the provisions of the Company’s Clawback Policy (the “Policy”), as such Policy may be amended from time to time. As such, the Executive agrees to repay the Company or permit the Company to recoup any or all of such Incentive-Based Compensation to the extent that the Board (or its designee), in its sole and absolute discretion, determines that such repayment or recoupment is required under the terms of the Policy.
17.Assignment. The Executive acknowledges that the services to be rendered by him are unique and personal in nature. Accordingly, the Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with or transferring all or substantially all of its assets to, another corporation or entity that assumes this Agreement and all obligations and undertakings hereunder. Upon such consolidation, merger or transfer of assets and assumption, the term “Company” as used herein shall mean such other corporation or entity, as appropriate, and this Agreement shall continue in full force and effect.
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18.Entire Agreement; Amendment; Waivers. This Agreement embodies the complete agreement of the parties hereto with respect to the subject matter hereof and supersedes any prior written, or prior or contemporaneous oral, understandings or agreements between the parties that may have related in any way to the subject matter hereof. This Agreement may be amended only in writing executed by the Company and the Executive. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants will not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement will not operate as a waiver of any other breach or default.
19.Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the internal laws, and not the law of conflicts, of the State of Arizona.
20.Notices. Any notice required or permitted under this Agreement must be in writing and will be deemed to have been given when delivered personally or by overnight courier service or three days after being sent by mail, postage prepaid, at the address indicated below or to such changed address as such person may subsequently give such notice of:
if to the Company: Global Water Resources, Inc.
21410 North 19th Avenue, Suite 220
Phoenix, AZ 85027
Attention: Board of Directors
Facsimile: (623) 518-4100
if to the Executive: at the address then shown in the Executive’s employment records
21.Dispute Resolution. Except as otherwise provided in Section 10(D), any dispute, controversy, or claim, whether contractual or non-contractual, between the parties hereto arising directly or indirectly out of or connected with this Agreement, relating to the breach or alleged breach of any representation, warranty, agreement, or covenant under this Agreement, unless mutually settled by the parties hereto, shall be resolved by binding arbitration in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”). The parties agree that before proceeding to arbitration that they will mediate their disputes before the AAA by a mediator approved by the AAA. Any arbitration shall be conducted by arbitrators approved by the AAA and mutually acceptable to the Company and the Executive. All such disputes, controversies, or claims shall be conducted by a single arbitrator, unless the dispute involves more than $50,000 in the aggregate in which case the arbitration shall be conducted by a panel of three arbitrators. If the parties hereto are unable to agree on the mediator or the arbitrator(s), then the AAA shall select the arbitrator(s). The resolution of the dispute by the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitrator(s) shall award damages to the prevailing party. The arbitration award shall be in writing and shall include a statement of the reasons for the award. The arbitration shall be held in the Phoenix/Scottsdale metropolitan area. The Company shall pay all AAA, mediation, and arbitrator’s fees and costs. Except as otherwise
15
provided in this Agreement, the arbitrator(s) shall award reasonable attorneys’ fees and costs to the prevailing party.
22.Withholding; Release; No Duplication of Benefits. All of the Executive’s compensation under this Agreement will be subject to deduction and withholding authorized or required by applicable law. The Company’s obligation to make any post-termination payments hereunder (other than salary payments and expense reimbursements through a given Date of Termination), shall be subject to receipt by the Company from the Executive of the Release Agreement described by Section 7(F), and compliance by the Executive with the covenants set forth in Sections 9, 10, 12, 13 and 14.
23.Successors and Assigns. This Agreement is solely for the benefit of the parties and their respective successors, assigns, heirs and legatees. Nothing herein shall be construed to provide any right to any other entity or individual.
24.Each Party the Drafter. This Agreement and the provisions contained in it will not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.
25.Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.
26.Execution of Agreement. This Agreement may be executed via facsimile, .pdf or similar electronic transmission and in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written.
COMPANY:
GLOBAL WATER RESOURCES, INC.,
By: /s/ Ron Fleming
Name: Ron Fleming
Title: Chairman, President, and Chief Executive Officer
EXECUTIVE:
/s/ Christopher D. Krygier
Christopher D. Krygier
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT – CHRISTOPHER D. KRYGIER]
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EXHIBIT A
Executive Job Description
Chief Operating Officer
Our Chief Operating Officer, also known as a COO, will be responsible for operations, engineering, environmental compliance, customer service, Arizona Corporation Commission regulatory matters and business development including business growth, acquisition management, and generally for creating and implementing short-term and long-term strategic goals and change management activities for the Company based on regional and public water company competitive markets. The COO has the following job duties:
•Direct responsibility over the VP & General Manager and/or Sr. Director, Operations and all related departments and personnel within the utility operations organizational chart
•Direct responsibility over the Executive Vice President - Engineering, Construction, and Environmental Quality and all related departments and personnel
•Oversee related company operations and employee productivity, building a highly inclusive culture that ensures team members can thrive and that organizational goals are met
•Collaborate with CEO and CFO in setting and driving organizational vision, operations strategy, and hiring levels
•Translate strategy into actionable steps for growth, implementing organization-wide goal setting, performance management, and annual operations planning
•Ensure compliance with national and local utility regulations, and take appropriate action when necessary
•Analyze internal operations and identify areas for process enhancement
•Implement business strategies and plans that align with the short- and long-term objectives developed in tandem with CEO and CFO
•Manage capital investments and expenses aggressively to ensure that the company achieves investor targets for growth and profitability
•Prepare detailed updates and forecasts
•Build and maintain trusting relationships with key customers, clients, partners, and stakeholders
•Oversight of all ACC matters including rate cases, regulatory compliance, CCN permits, strategy, etc.
•Acquisitions (target identification, negotiations, financing, diligence and consolidation)
•Developing new business ventures, water and wastewater related
•Collaborating with other executives for strategic initiatives
•Communicating organizational goals
•Determining areas of improvement or growth
•Managing marketing research initiatives and teams
•Analyzing competitors and data
A-1
EXHIBIT B
Form of Release
This Release and Waiver of Claims (“Release”) is entered into and delivered to Global Water Resources, Inc., a Delaware corporation (the “Company”), as of this [●] day of __________, 202[_], by __________________ (the “Executive”).
Reference is made to the Employment Agreement dated as of August 12, 2026 (the “Employment Agreement”), by and among the Company, and the Executive. Capitalized terms used herein without definition will have the meanings assigned to them in the Employment Agreement, a copy of which is attached hereto.
1.Release.
(a)General Waiver and Release by the Executive. In consideration of the parties’ respective obligations under the Employment Agreement in connection with and following the Executive’s termination of employment with the Company, and subject to the limitations set forth in Section 2 hereof, the Executive, on behalf of Executive and Executive’s heirs, executors, administrators, beneficiaries, personal representatives, and assigns, does hereby release, waive and forever discharge the Company, and its current, former and future shareholders, affiliates, direct and indirect parents, subsidiaries, predecessors, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “Company Parties”), from any and all claims, actions, causes of action, suits, costs, controversies, judgments, decrees, verdicts, damages, liabilities, attorneys’ fees, covenants, contracts, and agreements that the Executive may have against the Company Parties, or in the future may possess based on events occurring during the term of the Executive’s employment with the Company arising out of the Executive’s employment relationship with or service as an employee, officer or director of the Company and the Company’s subsidiaries and affiliates or the termination of such relationship or service, including any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date the Executive signs this Release, including, but not limited to, any claims arising under the following laws as amended: Fair Labor Standards Act of 1938 29 U.S.C. §§ 201 et seq.; Title VII of the Civil Rights Act of 1964 42 U.S.C. 2000e et seq.; the Rehabilitation Act of 1973, 29 U.S.C. §§ 701 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq.; the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Civil Rights Act of 1991, 42 U.S.C. § 1981a; the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.; the Family Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq.; the Equal Pay Act of 1963, 29 U.S.C. §§ 206 et seq.; the Workers Adjustment and Retraining Notification Act of 1988, 29 U.S.C. §§ 2101 et seq.; the Immigration Reform and Control Act, 8 U.S.C. § 1101 et seq.; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.; the Sarbanes-Oxley Act of 2002; False Claims Act; the Fair Credit Reporting Act; the Consolidated Omnibus Budget Reconciliation Act (COBRA); Arizona Employment Protection Act; Arizona Civil Rights Act; Arizona wage payment and paid sick leave laws; and the anti-retaliation portion of the Arizona workers compensation law; or any other federal, state or local law or any foreign jurisdiction, whether such claim arises under statute, common law or in equity, and whether or not the Executive is currently aware of the existence of such claim, damage, action or cause of action, suit or demand (collectively, including claims, actions and causes of action set forth in
B-1
Section 1(b) below, the “Claims”). The Executive also does forever release, discharge and waive any right the Executive may have to recover in any proceeding brought by any federal, state or local agency against the Company Parties, respectively, to enforce any laws. Each of the parties hereto agrees that the value received or to be received in the future as described in the Employment Agreement will be in full satisfaction of any and all claims, actions or causes of action for payment or other benefits of any kind that the Executive may have against the Company Parties.
(b)ADEA Release. In further recognition of the above, the Executive hereby releases and forever discharges each of the Company Parties from any and all claims, actions and causes of action that he may have as of the date he signs and delivers to the Company this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”).
2.Limitations.
(a)No Impact on Obligations Under the Employment Agreement or Other Agreements. The releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive or the Company Parties with respect to their respective rights and obligations set forth in the Employment Agreement. In particular, and without limiting the generality of the preceding sentence, the Executive does not waive or release any claim he might now or in the future have to be paid or receive the payments and benefits provided for in Sections 7 or 8 of the Employment Agreement, and the Company Parties do not waive or release any claim they might now or in the future have under Sections 9-14 of the Employment Agreement. In addition, the releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive of (i) his entitlement to vested accrued compensation and benefits under the Company’s applicable plans and arrangements and (ii) his rights as an equity stakeholder in the Company.
(b)No Impact on Indemnification Rights. The releases contained herein do not, are not intended to, and will not be interpreted to serve as a release or waiver by the Executive with respect to any indemnification rights or directors’ and officers’ liability insurance policy (“D&O coverage”) he may have and such indemnification rights and D&O coverage will not be effected, modified or extinguished by the Executive’s execution of this Release.
3.No Pending Litigation.
The Executive represents and agrees that he has not filed, and will not file, any action, complaint, charge, grievance or arbitration against any Company Party, except that such agreement will not apply to any claim based on any matter which, pursuant to Section 2, is excluded from the scope of this Release.
4.Acknowledgment.
The Executive acknowledges and confirms that (a) the Release does not bar claims that arise after the execution of the Release; (b) the consideration under this Release he is receiving is in addition to anything of value to which he was already entitled before he received the
B-2
Employment Agreement which provides consideration conditioned upon the execution of this Release; (c) he has been advised in writing by the Company in connection with his resignation to consult with an attorney of his choice prior to signing this Release and to have such attorney explain to him the terms of the Release, including, without limitation, the terms relating to his release of Claims arising under ADEA; (d) he has read this Release carefully and completely and understands each of the terms hereof; and (e) he was given not less than twenty-one (21) days [or forty-five (45) days, if applicable] to consider the terms of the Release and to consult with an attorney of his choosing with respect thereto; and (f) that for a period of seven (7) days following his signing of this Agreement, he will have the option to revoke this Agreement in accordance with the terms set forth in Section 6 below.
5.Successors.
The rights and obligations under this Agreement will inure to any and all successors of the Company.
6.Revocation.
The Executive have the right to revoke this Release during the seven (7)-day period commencing immediately following the date he signs and delivers this Agreement to the Company (the “Revocation Period”). The period will expire at 5:00 p.m., Mountain Time, on the last day of the seven (7)-day period; provided, however, that if such seventh (7th) day is not a business day, the period will extend to 5:00 p.m. on the next succeeding business day. In the event of any such revocation by the Executive, the obligations of the Company under this Release will terminate and be of no further force and effect as of the date of such revocation. No such revocation by the Executive will be effective unless it is in writing and signed by the Executive and received by a representative of the Company prior to the expiration of the Revocation Period. Executive understands and agrees that if he timely revokes this Release he forfeits any consideration provided for under the Employment Agreement conditioned upon this Release.
7.Clawback Policy.
The Executive acknowledges and agrees that the terms of this Release do not alter the Executive’s obligations or the Company’s rights under Section 16 of the Employment Agreement.
8.Counterparts.
This Release may be executed in two (2) or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
B-3
IN WITNESS WHEREOF, the parties have caused this Release to be executed, as of the day and year first above written.
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
ACCEPTED AND AGREED: | |||||
GLOBAL WATER RESOURCES, INC. | |||||
Name: | |||||
Title: | |||||
B-4
Exhibit 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (hereinafter, this “Agreement”) is effective as of the 12th day of August, 2026 (the “Effective Date”), and is made by and between Global Water Resources, Inc., a Delaware corporation (the “Company”), and Robert J. Kuta, an individual and resident of the State of Arizona (the “Executive”).
RECITALS
WHEREAS, the Company desires to continue to employ the Executive to serve as the Executive Vice President - Engineering, Construction, and Environmental Quality of the Company, and the Executive desires to continue such employment; and
WHEREAS, the Company and the Executive previously entered into an employment agreement dated as of December 31, 2024 (the “Superseded Agreement”); and
WHEREAS, the parties desire to enter into this Agreement to replace the Superseded Agreement and to set forth the terms and conditions of the Executive’s employment with the Company.
AGREEMENT
NOW THEREFORE, in consideration of the covenants and mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the representations, covenants and mutual agreements contained herein, the Company and the Executive agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Executive as its Executive Vice President - Engineering, Construction, and Environmental Quality and Executive also shall serve as the Executive Vice President - Engineering, Construction, and Environmental Quality of Global Water, LLC and all regulated utility subsidiaries of the Company. The Executive agrees to diligently perform the duties associated with such positions, including (without limitation) those duties listed on Exhibit A attached hereto. The Executive shall perform his duties primarily at the Company’s headquarters located in Phoenix, Arizona. The Executive will report to the Company’s Chief Operating Officer. The Executive will devote substantially all of his business time, attention and energies to the business of the Company and its affiliates and will comply with the policies and guidelines established by the Company from time to time applicable to its senior management executives. During the term of this Agreement, the Executive shall not, without the Company’s prior written consent, be a director, officer, employee, consultant or advisor of or to any person, firm, association, syndicate, partnership, trust or corporation engaged in, concerned with or interested in a business substantially similar to the business of the Company or its affiliates. Notwithstanding the foregoing, the Executive may: (a) serve on civic or charitable or not-for-profit industry-related organizations; (b) engage in charitable, civic, educational, professional community and/or industry activities without remuneration therefore; (c) manage personal and family investments; and, (d) purchase securities in any corporation whose securities are regularly
Exhibit 10.6
traded on a public stock exchange, provided that such purchase shall not result in the Executive beneficially owning five percent (5%) or more of the equity securities of any business in competition with the Company or its affiliates at any time.
2. Term. The Executive will be employed under this Agreement from the Effective Date until December 31, 2027, unless the Executive’s employment is terminated earlier in accordance with Section 7 or Section 8 hereof. Thereafter, the Agreement and Executive’s employment will automatically renew for one or more additional twelve-month periods (each a “Renewal Term”), unless on or before December 31, 2027 (or December 31st during the year of the then current Renewal Term, as applicable), either the Executive or the Company notifies the other party in writing that it wishes to terminate employment under this Agreement at the end of the term then in effect.
3. Base Salary. For calendar year 2026, the Company will pay the Executive an annual base salary (“Base Salary”) of two hundred ninety-two thousand five hundred dollars and no cents ($292,500), and for calendar year 2027, Company will pay a Base Salary of three hundred three thousand seven hundred fifty dollars and no cents ($303,750) for each year thereafter during the term of this Agreement. The Board of Directors of the Company (the “Board”) or its compensation committee (the “Compensation Committee”) may review the Base Salary on an annual basis to determine, in its sole and absolute discretion, whether any increases are appropriate based on a combination of factors, which shall include (without limitation) the Executive’s achievement of specified performance objectives and/or the amount of compensation paid to the Executive’s peers at other, similarly situated public companies. The Base Salary may not be reduced without the Executive’s consent, unless such reduction is pursuant to a base salary reduction for substantially all of the Company’s officers and such reduction in Executive’s Base Salary is to the same extent and up to the same percentage as other officers of the Company. The Base Salary will be payable in accordance with the payroll practices of the Company in effect from time to time and will be subject to customary withholding for applicable taxes and other deductions.
4. Incentive Compensation. In addition to Executive’s Base Salary, the Executive may be entitled to annual incentive compensation as determined (a) in the discretion of the Board (or the Compensation Committee); (b) pursuant to any incentive compensation program adopted by the Company from time to time, and (c) as set forth herein.
A. Cash Bonus. For each calendar year ending December 31, 2026 and 2027 (and any years thereafter), the Executive will be eligible to receive up to 11.11% of his Base Salary as incentive compensation in the form of a cash bonus. The actual percentage awarded shall be determined annually by the Board (or the Compensation Committee) based on the Executive satisfying the performance goals established by the Board (or the Compensation Committee). If the Executive is entitled to receive a cash bonus, such bonus shall be paid at such time as cash bonuses are otherwise payable to all employees under the incentive compensation program, but in no event later than March 15 of the year following the year in which the right to the cash bonus, if any, becomes vested.
5. Reimbursement of Business Expenses. The Executive shall be entitled to reimbursement of reasonable and customary business expenses, including for all authorized
2
Exhibit 10.6
travel and all out-of-pocket expenses incurred by the Executive as authorized by the Company in the performance of his duties. The Executive shall furnish any statements, receipts, invoices, and other documentation that the Company requires in accordance with Company policy.
6. Other Benefits. The Company will provide to the Executive such fringe and other benefits as are regularly provided by the Company to members of its senior management team, including participation in the Company’s welfare plans (e.g., health, medical, dental, vision, etc.) and other benefit programs (e.g., profit-sharing, long-term incentive compensation, retirement, investment, life and disability insurance, etc.) in effect from time to time, in each case to the extent that the Executive is eligible for participation under the terms of such plans or programs. The Executive shall be entitled to four (4) weeks of paid vacation per year, which vacation shall be paid at a rate equal to the Executive’s then current Base Salary. The Executive may take such vacation at such time(s) as the Executive and the Company shall mutually agree to, acting reasonably.
7. Termination of Employment.
A. Voluntary Resignation by Executive without Good Reason. The Executive may voluntarily terminate his employment with the Company at any time by giving four (4) weeks advance written notice to the Company (which notice period the Company may waive in whole or in part in its sole discretion). If such voluntary termination is without Good Reason (as defined below), then (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination (as defined below) and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs; and (iii) the Company shall not pay or reimburse the Executive for COBRA (as defined below) premiums for the period that the Company is required to offer COBRA coverage as a matter of law. For the avoidance of doubt, any unvested equity-based awards shall be forfeited.
B. Voluntary Resignation by Executive with Good Reason; Termination without Cause by the Company. If the Executive terminates his employment with the Company with Good Reason, or if the Company terminates the Executive’s employment without Cause, including by providing the notice of non-renewal referenced in Section 2, provided Executive complies with the release requirements of Section 7(F), then: (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; (ii) no incentive compensation shall be payable for the year in which the termination occurs, unless the termination of employment occurs during the last six (6) months of the Company’s fiscal year, in which case the Executive will be paid a pro rata bonus based upon the Company’s performance for the fiscal year payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program; (iii) if Executive timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s Separation from Service until the earliest of: (A) 12 months following the date of Executive’s Separation from Service; (B) the date on which the Executive becomes
3
Exhibit 10.6
employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company; or, (C) the date the Executive is no longer eligible to receive COBRA continuation coverage; (iv) notwithstanding the provisions in the Incentive Plan or award agreement to the contrary, any equity awards previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse; and (v) the Company will pay the Executive an amount equal to the sum of (A) one (1) times the Executive’s current Base Salary as of the Date of Termination, and (B) one (1) times the maximum cash bonus that the Executive could have earned in the year of the Date of Termination. Unless otherwise provided in this Agreement, this amount shall be paid in a lump-sum payment within 60 days following the Executive’s Separation from Service.
C. Termination for Cause by the Company. If the Company terminates the Executive’s employment for Cause, then, (i) the Company will be obligated to pay the Executive’s then current Base Salary through the Date of Termination and any incentive compensation earned in previous years but not yet paid; and (ii) no incentive compensation shall be payable for the year in which the termination occurs. For the avoidance of doubt, any unvested equity-based awards shall be forfeited.
D. Death or Disability. If Executive dies or becomes Disabled, then the Company will be obligated to pay the Executive’s then current Base Salary through the date of death or the effective date of Disability and any incentive compensation earned in previous years but not yet paid. If Executive dies or becomes Disabled, provided Executive complies with the release requirements of Section 7(F), the Executive (or the Executive’s beneficiary) also shall receive (i) a pro-rated amount of the Executive’s actual incentive compensation for the year, payable at such time as incentive compensation is otherwise payable to employees under the incentive compensation program, (ii) if Executive or Executive’s qualified beneficiary timely and properly elects continuation coverage under COBRA, the Company shall reimburse Executive or Executive’s qualified beneficiary for the COBRA premiums for the level of coverage that the Executive had elected prior to the Executive’s death or Disability until the earliest of (A) 18 months following the date of Executive’s death or Disability, (B) the date on which the Executive or the Executive’s qualified beneficiary becomes employed by any other employer that provides health insurance coverage, regardless of whether such coverage is comparable to the coverage provided by the Company, or (C) the date the Executive or his qualified beneficiary is no longer eligible to receive COBRA continuation coverage; and (iii) notwithstanding the provisions in the Incentive Plan or award agreement to the contrary, any equity based awards previously granted will become fully vested and exercisable and all restrictions on restricted awards will lapse and, to the extent permitted under the applicable plan’s governing documents, the Executive (or one or more of the Executive’s designated beneficiaries) shall have a period of one (1) year from the effective date of Death or Disability to exercise any options (or if shorter, the expiration date of the option).
E. Definitions. For purposes of this Agreement:
4
Exhibit 10.6
(1) “For Cause” shall occur if the Executive (a) has engaged in malfeasance, willful or gross misconduct, or willful dishonesty that materially harms the Company, its reputation or its stockholders; (b) is convicted of a felony that is materially detrimental to the Company, its reputation, or the Company’s stockholders; (c) is convicted of or enters a plea of nolo contendere to a felony that materially damages the Company’s financial condition or reputation or to a crime involving fraud; (d) is in material violation of the Company’s ethics/policy code or employment policies, including willful breach of duty of loyalty in connection with the Company’s business; (e) willfully fails to perform his duties under this Agreement after written notice by the Company and a reasonable opportunity to cure; or (f) impedes, interferes or fails to reasonably cooperate with an investigation authorized by the Company or fails to follow a legal and proper Company directive. For purposes hereof, no act, or failure to act, by the Executive will be considered “willful” unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company. No action shall be deemed Cause hereunder if undertaken by the Executive at the direction of the Board or upon following the advice of counsel to the Company or any of its affiliates. For the avoidance of doubt, poor performance shall not, by itself, constitute Cause hereunder. The Executive shall not be terminated for Cause (other than pursuant to clauses (b) or (c) of the preceding sentence due to conviction or entering a plea of nolo contendere) unless he is first given notice by the Board of its intention to terminate him for Cause and provided a period of at least thirty (30) days to cure (if capable of cure) the event or events alleged to constitute Cause hereunder.
(2) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(3) “Code” means the Internal Revenue Code of 1986, as amended.
(4) “Date of Termination” shall mean (a) if employment under this Agreement is terminated as a result of the Executive’s death, the date of the Executive’s death, (b) if employment under this Agreement is terminated by the Executive, the last day of his employment with the Company, (c) if this Agreement is terminated as a result of the Executive’s Disability, the effective date of the Disability, (d) if employment under this Agreement is terminated by the Company for Cause, the date a final determination is provided to the Executive by the Company, or (e) if this Agreement is terminated by the Company without Cause, the date notice of termination is given to the Executive by the Company.
(5) “Disability” shall mean if, by reason of any medically determinable physical or mental impairment which actually hinders the Executive’s ability to perform his job and which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Executive is receiving income replacement benefits for a period of not less than six (6) months under an accident and health plan established by the Company for
5
Exhibit 10.6
its employees. The effective date of Executive’s Disability is the last day of the sixth month on which the Executive receives the income replacement benefits.
(6) “Good Reason” shall mean a Separation from Service within two (2) years following the occurrence of one or more of the following circumstances without Executive’s express consent: (a) a material diminution in the Executive’s authority, duties or responsibilities, (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report; (c) a material diminution in Executive’s Base Salary not consented to as required under Section 3; (d) a material change in the geographic location of Executive’s principal office; or (e) any other action or inaction that constitutes a material breach by the Company of this Agreement. Executive must provide written notice to Company of the existence of the Good Reason condition described in clauses (a) – (e) above within ninety (90) days of the Executive’s knowledge of the existence of the condition. Notwithstanding anything to the contrary, an event described in clauses (a) – (e) above will not constitute Good Reason if, within thirty (30) days after Executive gives Company notice of the occurrence or existence of an event that Executive believes constitutes Good Reason, Company has cured (if capable of cure) the event or events alleged to constitute Good Reason hereunder.
(7) “Separation from Service” shall mean either (a) termination of the Executive’s employment with Company and all affiliates of the Company, or (b) a permanent reduction in the level of bona fide services the Executive provides to the Company and all affiliates to an amount that is 20% or less of the average level of bona fide services the Executive provided to the Company in the immediately preceding 36 months, with the level of bona fide service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii). Solely for purposes of determining whether the Executive has a Separation from Service, the Executive’s employment relationship is treated as continuing while the Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Executive’s period of leave exceeds six (6) months and the Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6)-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
F. Release Agreement. Notwithstanding anything to the contrary herein, no payment shall be made under this Section 7 or Section 8(B) unless the Executive executes (and does not revoke) a release (“Release Agreement”), substantially in the form and substance attached hereto as Exhibit B. The Release Agreement shall be provided to the Executive within five (5) days following the Executive’s Separation from Service. The
6
Exhibit 10.6
Release Agreement must be executed and returned to the Company within the applicable twenty-one (21) day or forty-five (45) day time period as described in the Release Agreement and it must not be revoked by the Executive within the seven (7) day revocation period described in the Release Agreement. Notwithstanding anything in this Section 7 or Section 8(B) to the contrary, if the applicable consideration period, plus the seven-day revocation period, spans two calendar years, the first payment to which Executive is entitled shall be made to the Executive in the second calendar year.
G. Compliance with Section 409A of the Code. The Company believes that the payments due pursuant to this Agreement qualify for the short-term deferral exception or the separation pay exception to Section 409A as set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding anything to the contrary in this Agreement, if the Company determines that neither the short-term deferral exception, separation pay exception nor any other exception to Section 409A applies to the payments due pursuant to this Agreement, to the extent any payments are due on the Executive’s Separation from Service and if Executive is a “specified employee” (as defined in Treasury Regulation Section 1.409A-1(i)) at the time of Executive’s Separation from Service, then such payments shall be paid on the first business day following the expiration of the six-month period following the Executive’s Separation from Service along with accrued interest at the Bank of America, Arizona prime rate determined as of the date of the payment. This Agreement shall be operated in compliance with Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an applicable exception. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code. Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. The reimbursement of the COBRA premiums provided for in the Agreement shall be paid to Executive on the fifth day of the month immediately following the month in which Executive timely remits the premium payment. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by this Agreement.
8. Change of Control Fee.
A. If within twenty-four (24) months following a Change of Control of the Company, the Executive terminates his employment with the Company with Good Reason, or the Company terminates the Executive’s employment without Cause, provided Executive complies with the release requirements of Section 7(F), the Executive will be entitled to (1) a cash payment equal to the sum of (i) two (2) times the Executive’s current Base Salary as of the date of the Change of Control, and (ii) two (2) times the maximum cash bonus that the Executive could have earned in the year of the Change of Control (collectively, the “Cash Payments”) and (2) except as otherwise provided in an award agreement, any equity or stock based awards previously granted to the Executive will become fully vested and exercisable and all restrictions on restricted awards will lapse. The Cash Payments shall be made in a single lump sum payment within 60 days of the date of the Executive’s Separation from Service. To the extent that any
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Exhibit 10.6
disputes arise involving the terms and conditions of this Agreement (or the termination of the Executive’s employment) following a Change of Control, the Executive shall be entitled to reimbursement by the Company for his reasonable attorneys’ fees and other legal fees and expenses incurred in connection with contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for under this Agreement. Any such fees and expenses shall be reimbursed by the Company as they are incurred. All reimbursements will be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. The amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. Executive may not elect to receive cash or any other benefit in lieu of the reimbursement of legal fees and expenses provided by this Section 8(A). If Executive is entitled to a payment pursuant to this Section 8, the Executive shall be ineligible for any payment due pursuant to Section 7.
B. For purposes of this Agreement, “Change of Control” shall mean (i) a “change in the ownership or effective control of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “change in the effective control,” “50 percent” shall be used instead of “30 percent,” (ii) a “change in the ownership of a substantial portion of the assets of a corporation” within the meaning of Code Section 409A (treating the Company as the relevant corporation) provided, however, that for purposes of determining a “substantial portion of the assets of the corporation,” “85 percent” shall be used instead of “40 percent,” or (iii) individuals who, as of the Effective Date of this Agreement constitute the Board and individuals whose election or nomination for election as a member of the Board of Directors was approved by the directors then in office (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Exchange Act) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director (unless specifically deemed to be an Incumbent Director by a vote of at least a majority of the Incumbent Directors before the date of the appointment or election). Notwithstanding the foregoing, any payment that is subject to Section 409A of the Code that is to be made upon a Change of Control shall only be made upon an event that constitutes a change in ownership or control as described in Treasury Regulation 1.409A-3(i)(5).
C. The following limitations apply to payments pursuant to this Section 8:
(1) Section 4999 of the Code imposes an excise tax (currently 20%) on an employee if the total payments and certain other benefits received by the employee due to a “change in control”) (which for this purpose, has the meaning ascribed to it in Section 280G of the Code and the related regulations) exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company) the payments and benefits to which Executive will be entitled pursuant to Section 8 will be limited so that the sum of such payments
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Exhibit 10.6
and benefits, when combined with all other “payments in the nature of compensation” (as that term is defined in Section 280G of the Code and related regulations), the receipt of which is contingent on a change in control, will not exceed an amount equal to the maximum amount that can be payable without the imposition of the Section 4999 excise tax (which maximum amount is referred to below as the “Capped Benefit”).
(2) The limitation described in Section 8(D)(1) will not apply if the Executive’s “Uncapped Benefit” minus the Section 4999 excise taxes exceeds the Executive’s Capped Benefit. For this purpose, an Executive’s “Uncapped Benefit” is equal to the total payments to which the Executive will be entitled pursuant to this Agreement, or otherwise, without regard to the limitation described in Section 8(D)(1).
(3) If the Company believes that Section 8(D)(1) may result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive as soon as possible. The Company will then, at its expense, retain a “Consultant” (which shall be a certified public accounting firm and/or a firm of recognized executive compensation consultants working with a law firm or certified public accounting firm) to provide a determination concerning whether the Executive’s total payments and benefits under this Agreement or otherwise will result in the imposition of the Section 4999 excise tax and, if so, whether the Executive is subject to the limitations of Section 8(D)(1) or, alternatively, whether the exception described in Section 8(D)(2) applies
(4) If the Company believes that the limitations of Section 8(D)(1) are applicable, it will nonetheless make payments to the Executive, at the times described in Section 8, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid if due after the opinions called for above have been received.
(5) If the amount paid to the Executive by the Company is ultimately determined by the Internal Revenue Service to have exceeded the limitations of this Section 8(D), the Executive must repay the excess promptly on demand of the Company. If it is ultimately determined by the Consultant or the Internal Revenue Service that a greater payment should have been made to the Executive, the Company shall pay the Executive the amount of the deficiency, together with interest thereon from the date such amount should have been paid to the date of such payment so that the Executive will have received or be entitled to receive the maximum amount to which the Executive is entitled under the Agreement. For purposes of this Section 8, the applicable interest rate shall be the Bank of America, Arizona prime rate from the date the amounts described in the preceding sentence should have been paid to the Executive.
(6) As a general rule, the Consultant’s determination shall be binding on the Executive and the Company. Section 280G and the excise tax rules of
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Exhibit 10.6
Section 4999, however, are complex and uncertain and, as a result, the Internal Revenue Service may disagree with the Consultant’s conclusions. If the Internal Revenue Service determines that the Capped Benefit is actually lower than calculated by the Consultant, the Capped Benefit will be recalculated by the Consultant. Any payment over that revised Capped Benefit will then be repaid by the Executive to Company. If the Internal Revenue Service determines that the actual Capped Benefit exceeds the amount calculated by the Consultant, the Company shall pay the Executive any shortage.
(7) The Company has the right to challenge any determinations made by the Internal Revenue Service. If the Company agrees to indemnify an Executive from any taxes, interest and penalties that may be imposed upon the Executive (including any taxes, interest and penalties on the amounts paid pursuant to the Company’s indemnification agreement), the Executive must cooperate fully with the Company in connection with any such challenge. The Company shall bear all costs associated with the challenge of any determination made by the Internal Revenue Service and the Company shall control all such challenges.
(8) Executive must notify the Company in writing of any claim or determination by the Internal Revenue Service that, if upheld, would result in the payment of excise taxes. Such notice shall be given as soon as possible but in no event later than 15 days following the Executive’s receipt of notice of the Internal Revenue Service’s position.
(9) In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 8(D) shall be of no further force or effect. Moreover, if the provisions of Sections 280G and 4999 of the Code do not apply to impose the excise tax on payments under this Agreement, then the provisions of this Section 8(D) shall not apply.
9. Non-Solicitation.
A. The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Clients to withdraw, curtail, cancel, or decrease the level of their business with the Company or request that they do business with any Competing Business. The Company’s Clients are any person or entity: (i) for whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, provided Company’s Services and with whom Executive had material contact; (ii) about whom Executive had Confidential Information; and/or (iii) with respect to whom Executive, at any time during the 12-month period prior to the time the Executive’s employment with the Company terminates, held supervisory, managerial, and/or oversight responsibilities for the provision of Company’s services.
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Exhibit 10.6
B. The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s Prospective Clients (defined as any person or entity who both (i) has been directly solicited to become a customer of the Company, and (ii) with whom Executive had material contact or about whom Executive has knowledge of such solicitation, within the 12-month period prior to the time Executive’s employment with the Company terminates) to forgo doing business with the Company or request that such prospective customer or client do business with any Competing Business.
C. The Executive hereby covenants and agrees that for a period of one (1) year from the Date of Termination, Executive will not directly or indirectly hire or solicit for employment for any other business entity other than the Company (whether as an employee, consultant, independent contractor, or otherwise) any person who is, or within the six (6)-month period preceding the date of such activity was, an employee, independent contractor or the like of the Company or any of its subsidiaries, unless Company gives its written consent to such offer of employment. Nothing herein shall prevent Executive, directly, or indirectly through the use of agents, employees or other representatives, from placing general advertisements in any widely-distributed media (such as newspapers, Internet postings, etc.) directed at the public at large (as opposed to directed specifically at the Company’s employees, contractors or the like that have the effect of inducing or influencing any of the Company’s employees, contractors, or the like to terminate their employment or business relationship with the Company.
D. The covenants set forth in this Section 9 and in Section 10 will survive the Executive’s termination of employment under Section 7.
10. Non-Disclosure of Confidential Information.
A. It is understood that in the course of the Executive’s employment with the Company, the Executive will become acquainted with Company Confidential Information (as defined below). The Executive recognizes that Company Confidential Information has been developed or acquired at great expense, is proprietary to the Company, and is and shall remain the exclusive property of the Company. Accordingly, the Executive agrees that he will not disclose to others, copy, make any use of, or remove from the Company’s premises any Company Confidential Information, except as the Executive’s duties may specifically require, without the express written consent of the Company, during the Executive’s employment with the Company and thereafter until such time as Company Confidential Information becomes generally known, or readily ascertainable by proper means by persons unrelated to the Company.
B. Upon any termination of employment, the Executive shall promptly deliver to the Company the originals and all copies of any and all materials, documents, notes, manuals, or lists containing or embodying Company Confidential Information, or relating directly or indirectly to the business of the Company, in the possession or control of the Executive.
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Exhibit 10.6
C. “Company Confidential Information” shall mean confidential, proprietary information or trade secrets of the Company and its subsidiaries and affiliates including without limitation the following: (i) customer lists and customer information as compiled by the Company; (ii) the Company’s internal practices and procedures; (iii) the Company’s financial condition and financial results of operation; (iv) supply of materials information, including sources and costs, and current and prospective projects; (v) strategic planning, manufacturing, engineering, purchasing, finance, marketing, promotion, distribution, and selling activities; (vi) all other information which the Executive has a reasonable basis to consider confidential or which is treated by the Company as confidential; and (vii) all information having independent economic value to the Company that is not generally known to, and not readily ascertainable by proper means by, persons who can obtain economic value from its disclosure or use. Notwithstanding the foregoing provisions, the following shall not be considered “Company Confidential Information”: (1) the general skills of the Executive; (2) information generally known by senior management executives within the Company’s industry; (3) persons, entities, contacts or relationships of the Executive that are also generally known in the industry; and (4) information which becomes available on a non-confidential basis from a source other than the Executive which source is not prohibited from disclosing such confidential information by legal, contractual or other obligation.
D. Nothing in this Agreement shall prevent Executive from the disclosure of Confidential Information that: (A) is made: (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In the event that Executive files a lawsuit alleging retaliation by the Company for reporting a suspected violation of law, Executive may disclose Confidential Information related to the suspected violation of law or alleged retaliation to Executive’s attorney and use that Information in the court proceeding if Executive’s attorney: files any document containing Confidential Information under seal; and does not disclose the Confidential Information, except pursuant to court order. Executive understands and acknowledges that the Company provides this notice in compliance with the Defend Trade Secrets Act of 2016.
11. Waiver of Intellectual Property and Moral Rights. The Executive agrees that any and all ideas, concepts, processes, discoveries, improvements and inventions conceived, discovered, made, designed, researched or developed by the Executive either solely or jointly with others, during the Executive’s employment with the Company and for the six (6) months thereafter, which relate to the Company’s business or resulting from any work the Executive does for the Company (collectively the “Intellectual Property”), are the Intellectual Property of the Company. The Executive hereby irrevocably assigns and grants to the Company all his right, title and interest in and to such Intellectual Property (including any moral rights thereto). The Executive agrees to deliver to the Company all papers, documents, files, electronic data or media, reasonably requested by the Company in connection therewith. Without limiting the foregoing, the Executive acknowledges that any and all Intellectual Property, and any and all other property of the Company protectable by patent, copyright or trade secret law, developed in
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Exhibit 10.6
whole or in part by the Executive in connection with the performance of services to the Company as an employee, are the sole property of the Company.
12. Return of Company Property Following Termination. The Executive agrees that following the termination of his employment for any reason, he will promptly return all property of the Company, its affiliates and any divisions thereof he may have managed that is then in or thereafter comes into his possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing, as well as any materials or equipment supplied by the Company to the Executive.
13. Cooperation; No Disparagement. During the one (1)-year period following the Executive’s Date of Termination, the Executive agrees to provide reasonable assistance to the Company (including assistance with litigation matters), upon the Company’s request, concerning the Executive’s previous employment responsibilities and functions with the Company. Additionally, at all times after the Executive’s employment with the Company has terminated, the Company and the Executive agree to refrain from making any disparaging or derogatory remarks, statements and/or publications regarding the other, the Company’s employees or its services. In consideration for such cooperation, the Company shall compensate the Executive for the time the Executive spends on such cooperative efforts (at an hourly rate based on the Executive’s total compensation during the year preceding the Date of Termination) and the Company shall reimburse the Executive for his reasonable out-of-pocket expenses the Executive incurs in connection with such cooperative efforts.
14. Non-Competition. The Executive agrees that during his employment by the Company hereunder and for a period of one (1) year thereafter, he will not (except on behalf of or with the prior written consent of the Company), within the State of Arizona either engage in or carry on any activities of the type conducted, authorized, offered, or provided to Company, whether directly or indirectly, on his own behalf or in the service or on behalf of others, as a member of a limited liability company, partner of a partnership, or as a stockholder, investor, officer, director, trustee, or as an employee, agent, associate, consultant or in any other capacity in the water and wastewater utility business (“Competing Business”). This restriction shall not be interpreted to apply to businesses, including other regulated utilities that are not providing, considering providing, or involved in the water and/or wastewater utility business. This restriction shall not apply to the Executive working for a non-competitive state agency or municipal provider, or for a general contractor whose company solely constructs utility infrastructure on behalf of municipalities and utilities or a consulting firm providing utility regulatory, finance, lobbying or similar services, as long as for the one (1) year period Executive is not providing services for a direct Competing Business. The Parties intend that the covenants contained in this Section 14 shall be deemed to be a series of separate covenants one for each county in the State of Arizona and except for geographic coverage, each such separate covenant shall be identical to the covenants contained in this Section 14. This restriction shall not apply if the Executive resigns with Good Reason or is terminated without Cause.
15. Reasonableness of Restrictions, Equitable Relief, and Severability.
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Exhibit 10.6
A. The Executive hereby agrees that the period of time and geographic scope provided for in the restrictions set forth herein do not impose an undue burden on Executive and are reasonable in subject matter and duration and necessary to protect the Company and its successors and assigns in the use and employment of the goodwill of the business conducted by the Company and to protect the Company’s legitimate business interests. The Executive further agrees that damages cannot compensate the Company in the event of a violation of Sections 9 through 14 and that, if such violation should occur, injunctive relief shall be essential for the protection of the Company and its successors and assigns. Accordingly, the Executive hereby covenants and agrees that, in the event any of the provisions of Sections 9 through 14 shall be violated or breached, the Company shall be entitled to obtain injunctive relief against the party or Parties violating such covenants, without bond but upon due notice, in addition to such further or other relief as may be available at equity or law. Obtainment of such an injunction by the Company shall not be considered an election of remedies or a waiver of any right to assert any other remedies which the Company has at law or in equity. No waiver of any breach or violation hereof shall be implied from the forbearance or failure by the Company to take any action thereupon. The prevailing party in any litigation, arbitration or similar dispute resolution proceeding to enforce this provision will recover any and all reasonable costs and expenses, including attorneys’ fees.
B. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any applicable law, then such provision will be deemed severed and this Agreement will be construed as if not containing the provision held to be invalid, and the rights and obligations of the Parties will be construed and enforced accordingly. Thereafter, the Parties shall promptly and in good faith negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement.
16. Assignment. The Executive acknowledges that the services to be rendered by him are unique and personal in nature. Accordingly, the Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation or entity that assumes this Agreement and all obligations and undertakings hereunder. Upon such consolidation, merger or transfer of assets and assumption, the term “Company” as used herein shall mean such other corporation or entity, as appropriate, and this Agreement shall continue in full force and effect.
17. Entire Agreement; Amendment; Waivers. This Agreement embodies the complete agreement of the Parties hereto with respect to the subject matter hereof and supersedes any prior written, or prior or contemporaneous oral, understandings or agreements between the Parties that may have related in any way to the subject matter hereof. This Agreement may be amended only in writing executed by the Company and the Executive. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants will not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement will not operate as a waiver of any other breach or default.
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Exhibit 10.6
18. Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the internal laws, and not the law of conflicts, of the State of Arizona.
19. Notices. Any notice required or permitted under this Agreement must be in writing and will be deemed to have been given when delivered personally or by overnight courier service or three days after being sent by mail, postage prepaid, at the address indicated below or to such changed address as such person may subsequently give such notice of:
If to the Company: Global Water Resources, Inc.
21410 N 19th Avenue, Suite 220
Phoenix, AZ 85027
Attention: Board of Directors
Fax: (623) 518-4100
If to the Executive: The address then shown in the Executive’s employment records on file with Company
20. Dispute Resolution. Except as otherwise provided in Section 10(D), any dispute, controversy, or claim, whether contractual or non-contractual, between the Parties hereto arising directly or indirectly out of or connected with this Agreement, relating to the breach or alleged breach of any representation, warranty, agreement, or covenant under this Agreement, unless mutually settled by the Parties hereto, shall be resolved by binding arbitration in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”). The Parties agree that before proceeding to arbitration that they will mediate their disputes before the AAA by a mediator approved by the AAA. Any arbitration shall be conducted by arbitrators approved by the AAA and mutually acceptable to the Company and the Executive. All such disputes, controversies, or claims shall be conducted by a single arbitrator, unless the dispute involves more than $50,000 in the aggregate in which case the arbitration shall be conducted by a panel of three arbitrators. If the Parties hereto are unable to agree on the mediator or the arbitrator(s), then the AAA shall select the arbitrator(s). The resolution of the dispute by the arbitrator(s) shall be final, binding, unappealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitrator(s) shall award damages to the prevailing party. The arbitration award shall be in writing and shall include a statement of the reasons for the award. The arbitration shall be held in the Phoenix/Scottsdale metropolitan area. The Company shall pay all AAA, mediation, and arbitrator’s fees and costs. Except as otherwise provided in this Agreement, the arbitrator(s) shall award reasonable attorneys’ fees and costs to the prevailing party.
21. Withholding; Release; No Duplication of Benefits. All of the Executive’s compensation under this Agreement will be subject to deduction and withholding as authorized or required by applicable law. The Company’s obligation to make any post-termination payments hereunder (other than salary payments and expense reimbursements through a given Date of Termination), shall be subject to receipt by the Company from the Executive of the Release Agreement described by Section 7(F), and compliance by the Executive with the covenants set forth in Sections 9, 10, 12, 13 and 14.
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Exhibit 10.6
22. Successors and Assigns. This Agreement is solely for the benefit of the Parties and their respective successors, assigns, heirs and legatees. Nothing herein shall be construed to provide any right to any other entity or individual.
23. Each Party the Drafter. This Agreement and the provisions contained in it will not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.
24. Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.
25. Electronic Execution; Counterparts. This Agreement may be executed via facsimile, .pdf or similar electronic transmission and in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.] | ||
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Exhibit 10.6
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the Effective Date hereof.
“COMPANY”:
GLOBAL WATER RESOURCES, INC.
By: /s/ Ron Fleming
Ron Fleming
Chairman, President, and Chief Executive Officer
Date: August 12, 2026
“EXECUTIVE”:
ROBERT J. KUTA
By: /s/ Robert J. Kuta
Robert J. Kuta
Date: August 12, 2026
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Exhibit 10.6
EXHIBIT A
Executive Job Description
Job Title: Executive Vice President of Engineering, Construction, and Environmental Quality | ||
Department: Engineering, Construction and Environmental Quality
Supervisor: Chief Executive Officer
FLSA Classification: Exempt
Location: Phoenix, Arizona 85027
About Global Water Resources, Inc.: | ||
Global Water Resources, Inc. is a leading water resource management company that owns and operates 32 systems which provide water, wastewater, and recycled water services. The company’s service areas are located primarily in growth corridors around metropolitan Phoenix. Global Water recycles over 1 billion gallons of water annually.
The company has been recognized for its highly effective implementation of Total Water Management (TWM). TWM is an integrated approach to managing the entire water cycle that involves owning and operating water, wastewater, and recycled water utilities within the same geographic area in order to maximize the beneficial use of recycled water. It enables smart water management programs such as remote metering infrastructure and other advanced technologies, rate designs, and incentives that result in real conservation. TWM helps protect water supplies in water-scarce areas experiencing population growth.
Global Water has received numerous industry awards, including national recognition as a ‘Utility of the Future Today’ for its superior water reuse practices by a national consortium of water and conservation organizations led by the Water Environment Federation (WEF). The company also received Cityworks’ Excellence in Departmental Practice Award for demonstrating leadership and creativity in applying public asset management strategies to daily operations and long-term planning.
In addition to competitive wages and an excellent benefits package, you will have the opportunity to join an outstanding and incredibly talented team committed to the values of internal and external exceptional service. Global Water supports the growth and development of our employees. We are looking for individuals that are creative, motivated, and dedicated. If you are interested, send your resume to [email protected]. Please reference the position title in the subject line of your emails.
Opportunity
The EVP Engineering, Construction and Environmental Quality plans and directs all aspects of the Company’s Engineering, Construction and Environmental Departments through divisional management teams that may be led by vice-presidents, directors and/or senior managers.
A-1
Exhibit 10.6
Through this multi-faceted structure, the EVP provides oversight of long-term strategy, master-planning, contracting, financial reporting and timely and successful execution of all capital improvements projects for the Company’s water and wastewater utility systems, including the municipal and industrial divisions, and accountability for the end-to-end management and regulatory compliance of water and wastewater services.
This is a “working executive” role, requiring routine interaction with the entire C-Suite to ensure alignment and integration across all company departments and initiatives. This position works with others in the organization to enable growth and build long-term relationships with external development partners and federal, state and local governments. The Engineering and Construction job scope will be instrumental in assembling, organizing, and overseeing a team of internal design and construction experts and external resources delivering projects in diverse applications, including large, high growth areas and small utility systems. This position supports the operations in the safe, efficient, and compliant operation of water and wastewater utilities and to ensure efficient integration of new infrastructure into Operations. The successful execution of environmental quality responsibilities of the EVP role is paramount in allowing for Total Water Management and protecting public health and the environment. The EVP Reports directly to the Chief Executive Officer and is responsible for the: 1) formulation and execution of annualized and multi-year capital programs, on time and within budget; and 2) development and execution of strategic and tactical environmental programs that assure the safe, compliant and efficient management of water and wastewater utility services that align with corporate strategy.
Primary Duties
•Provide strategic leadership to the Engineering, Construction and Environmental Quality Departments and across the organization for all related stakeholders and initiatives.
•Develop and continually update an extensive 5-year Capital Improvement Plan for all utilities, for both the municipal and industrial divisions.
•Manage financial and personnel resources to implement the current year Capital Improvement Plan and budget across all departments, report status monthly to the Executive Team and quarterly to the Board of Directors.
•Build effective teams and the capacity to estimate, scope, design, plan, organize, construct, and implement projects in a timely manner.
•Ensure productive and positive relationships with internal staff and third parties to create an environment of appreciation and positivity while being able to have tough and direct conversations.
•Plan and execute through the internal team and outside services, all activities necessary to ensure compliance with federal, state, and local regulatory agency-required guidelines and permitting requirements.
•Fosters strong relationship building with regulators to provide for mutual success through enhanced communication and understanding.
A-2
Exhibit 10.6
•Ensure regular communications and report significant project related issues with Executive Leadership, other internal team members (e.g., Finance, Accounting, Legal) in a timely manner.
•Promote the highest level of professionalism and ethics.
Knowledge, Skills, and Abilities
•Minimum 10 years in similar role with a bachelor’s degree in relevant field or equivalent education and experience in management, communications, planning, budgeting, and constructing water and wastewater infrastructure in a highly technical, regulated, and fast-paced environment.
•Strong leader and presence across the organization and with external stakeholders.
•Ability to manage risk, balancing the goals of quality, time, and budget.
•Manage successful projects; meet client expectations and timelines.
•Strong ability to manage, motivate and delegate to a team of professionals including direct reports, internal cross-departmental peers, and external consultants/contractors.
•Strong inclination towards advanced technological systems.
•Experience with SCADA and advanced treatment systems.
•Ability to function effectively in fast-paced and occasionally high-pressure environments.
•Experience in a physical, field working environment.
•Strong computer skills, including proficiency with Microsoft Office (including Word, Excel, and PowerPoint). Experience with ESRI and Cityworks is helpful.
Essential Job Functions
Basic Skills: Identify complex problems and review related information to develop and evaluate options and implement solutions. Use logic and reasoning to solve problems. Assess the performance of yourself, other individuals, or organizations to make improvements or take corrective action. Understands written communication and work-related documents such as design plans, specifications, and technical documentation. Written and verbal communication skills to effectively convey information as appropriate for the needs of the audience in reports, presentations, and public speaking. Able to persuade others to change their minds or behavior; brings others together to reconcile differences. Able to cope with pressure and deadlines, difficult situations and hard conversations.
Social Skills: Able to act in a respectful, knowledgeable, and professional manner with employees and external partners at all levels. Able to engage in regular interaction involving exchange and receipt of complex information. Adjusts own actions in relation to others’ actions. Works to reconcile differences, actively looking for ways to help people and Global Water be successful. Maintains professionalism in the face of deadlines; exhibits good listening, negotiation, persuasion, and critical thinking skills. Manages confidential information with discretion and trustworthiness.
A-3
Exhibit 10.6
Physical Demands: Sitting for extended periods; prolonged periods of time with repetitive motions of hands and fingers; close vision, distance vision and ability to adjust focus; climb stairs, navigate uneven terrain; use fingers to grasp and move small objects; ability to hear and recognize sounds; able to react quickly using hands, fingers, or feet; able to utilize personal protective equipment as appropriate for safety. The employee must occasionally lift and/or move up to thirty pounds. Work is performed in an office and outdoors where the employee may be exposed to noise from construction site heavy equipment and inclement weather.
Core Values: Applicant must understand, identify with, and adhere to the Global Water Core Values:
•Believe in the Mission and Each Other
•Be Disciplined: People, Thought, Action
•Take Ownership
•Maintain a Positive Attitude
General: Must have satisfactory outcome of drug testing, criminal record checks, motor vehicle record, and employment records prior to starting employment.
Licenses: Must have a valid Arizona Driver’s License.
Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.
Global Water Resources, Inc. is an equal opportunity employer.
A-4
Exhibit 10.6
EXHIBIT B
Form of Release and Waiver of Claims
This Release and Waiver of Claims (hereinafter, this “Release”) is made effective as of __________ ___, 202__ by Robert J. Kuta, an individual and resident of the State of Arizona (the “Executive”), and is delivered thereby to Global Water Resources, Inc., a Delaware corporation (the “Company”).
1. Reference is made to that certain Employment Agreement dated August 12, 2026 (the “Employment Agreement”), made by and between the Company and the Executive. Capitalized terms used herein without definition will have the meanings assigned to them in the Employment Agreement, a copy of which is attached hereto.
2. Release.
(a) General Waiver and Release by the Executive. In consideration of the Parties’ respective obligations under the Employment Agreement in connection with and following the Executive’s termination of employment with the Company, and subject to the limitations set forth in Section 2 hereof, the Executive, on behalf of Executive and Executive’s heirs, executors, administrators, beneficiaries, personal representatives, and assigns, does hereby release, waive and forever discharge the Company, and its current, former and future shareholders, affiliates, direct and indirect parents, subsidiaries, predecessors, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “Company Parties”), from any and all claims, actions, causes of action, suits, costs, controversies, judgments, decrees, verdicts, damages, liabilities, attorneys’ fees, covenants, contracts, and agreements that the Executive may have against the Company Parties, or in the future may possess based on events occurring during the term of the Executive’s employment with the Company arising out of the Executive’s employment relationship with or service as an employee, officer or director of the Company and the Company’s subsidiaries and affiliates or the termination of such relationship or service, including any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date the Executive signs this Release, including, but not limited to, any claims arising under the following laws as amended: Fair Labor Standards Act of 1938 29 U.S.C. §§ 201 et seq.; Title VII of the Civil Rights Act of 1964 42 U.S.C. 2000e et seq.; the Rehabilitation Act of 1973, 29 U.S.C. §§ 701 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq.; the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Civil Rights Act of 1991, 42 U.S.C. § 1981a; the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.; the Family Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq.; the Equal Pay Act of 1963, 29 U.S.C. §§ 206 et seq.; the Workers Adjustment and Retraining Notification Act of 1988, 29 U.S.C. §§ 2101 et seq.; the Immigration Reform and Control Act, 8 U.S.C. § 1101 et seq.; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.; the Sarbanes-Oxley Act of 2002; False Claims Act; the Fair Credit Reporting Act; the Consolidated Omnibus Budget Reconciliation Act (COBRA); Arizona Employment Protection Act; Arizona Civil Rights Act; Arizona wage payment and paid sick leave laws; and the anti-retaliation portion of the Arizona workers compensation law; or any other federal, state or local law or any foreign jurisdiction,
B-1
Exhibit 10.6
whether such claim arises under statute, common law or in equity, and whether or not the Executive is currently aware of the existence of such claim, damage, action or cause of action, suit or demand (collectively, including claims, actions and causes of action set forth in Section 1(b) below, the “Claims”). The Executive also does forever release, discharge and waive any right the Executive may have to recover in any proceeding brought by any federal, state or local agency against the Company Parties, respectively, to enforce any laws. Each of the Parties hereto agrees that the value received or to be received in the future as described in the Employment Agreement will be in full satisfaction of any and all claims, actions or causes of action for payment or other benefits of any kind that the Executive may have against the Company Parties.
(b) ADEA Release. In further recognition of the above, the Executive hereby releases and forever discharges each of the Company Parties from any and all claims, actions and causes of action that he may have as of the date he signs and delivers to the Company this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”).
2. Limitations.
(a) No Impact on Obligations Under the Employment Agreement or Other Agreements. The releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive or the Company Parties with respect to their respective rights and obligations set forth in the Employment Agreement. In particular, and without limiting the generality of the preceding sentence, the Executive does not waive or release any claim he might now or in the future have to be paid or receive the payments and benefits provided for in Sections 7 or 8 of the Employment Agreement, and the Company Parties do not waive or release any claim they might now or in the future have under Sections 9-14 of the Employment Agreement. In addition, the releases contained herein do not, are not intended to and will not be interpreted to serve as a release or waiver by the Executive of (i) his entitlement to vested accrued compensation and benefits under the Company’s applicable plans and arrangements and (ii) his rights as an equity stakeholder in the Company.
(b) No Impact on Indemnification Rights. The releases contained herein do not, are not intended to, and will not be interpreted to serve as a release or waiver by the Executive with respect to any indemnification rights or directors’ and officers’ liability insurance policy (“D&O Coverage”) he may have and such indemnification rights and D&O Coverage will not be effected, modified or extinguished by the Executive’s execution of this Release.
3. No Pending Litigation. The Executive represents and agrees that he has not filed, and will not file, any action, complaint, charge, grievance or arbitration against any Company Party, except that such agreement will not apply to any claim based on any matter which, pursuant to Section 2, is excluded from the scope of this Release.
B-2
Exhibit 10.6
4. Acknowledgment. The Executive hereby acknowledges and confirms that: (a) the Release does not bar claims that arise after the execution of the Release; (b) the consideration under this Release he is receiving is in addition to anything of value to which he was already entitled before he received the Employment Agreement which provides consideration conditioned upon the execution of this Release; (c) he has been advised in writing by the Company in connection with his resignation to consult with an attorney of his choice prior to signing this Release and to have such attorney explain to him the terms of the Release, including, without limitation, the terms relating to his release of Claims arising under ADEA; (d) he has read this Release carefully and completely and understands each of the terms hereof; and (e) he was given not less than twenty-one (21) days [or forty-five (45) days, if applicable] to consider the terms of the Release and to consult with an attorney of his choosing with respect thereto; and (f) that for a period of seven (7) days following his signing of this Agreement, he will have the option to revoke this Agreement in accordance with the terms set forth in Section 6 below.
5. Successors. The rights and obligations under this Agreement will inure to any and all successors of the Company.
6. Revocation. The Executive have the right to revoke this Release during the seven (7)-day period commencing immediately following the date he signs and delivers this Agreement to the Company (the “Revocation Period”). The period will expire at 5:00 p.m., Mountain Time, on the last day of the seven (7)-day period; provided, however, that if such seventh (7th) day is not a business day, the period will extend to 5:00 p.m. on the next succeeding business day. In the event of any such revocation by the Executive, the obligations of the Company under this Release will terminate and be of no further force and effect as of the date of such revocation. No such revocation by the Executive will be effective unless it is in writing and signed by the Executive and received by a representative of the Company prior to the expiration of the Revocation Period. Executive understands and agrees that if he timely revokes this Release he forfeits any consideration provided for under the Employment Agreement conditioned upon this Release.
7. Counterparts. This Release may be executed in two (2) or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the duly Parties have caused this Release to be executed as of the Effective Date.
“COMPANY”:
GLOBAL WATER RESOURCES, INC.
By: | |||||
Ron Fleming | |||||
B-3
Exhibit 10.6
Chairman, President, and Chief Executive Officer | |||||
Date: | ____________________________ | ||||
“EXECUTIVE”:
By: | |||||
Robert J. Kuta | |||||
Date: | ____________________________ | ||||
ROBERT J. KUTA
B-4
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Ron L. Fleming, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Global Water Resources, Inc.; | ||||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||||
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||||
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||||
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |||||||
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |||||||
Date: August 12, 2026
| By: | /s/ Ron L. Fleming | ||||||||||
| Ron L. Fleming | |||||||||||
| President, Chief Executive Officer and Chairman of the Board | |||||||||||
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Michael J. Liebman, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Global Water Resources, Inc.; | ||||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||||
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||||
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||||
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |||||||
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |||||||
Date: August 12, 2026
| By: | /s/ Michael J. Liebman | ||||||||||
| Michael J. Liebman | |||||||||||
| Chief Financial Officer and Corporate Secretary | |||||||||||
EXHIBIT 32.1
Certification of Chief Executive Officer and Chief Financial Officer
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Global Water Resources, Inc. (the “Company”) for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ron L. Fleming, as Chief Executive Officer of the Company, and Michael J. Liebman, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||||
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | ||||
| By: | /s/ Ron L. Fleming | ||||||||||
| Ron L. Fleming | |||||||||||
| President, Chief Executive Officer and Chairman of the Board | |||||||||||
| Date: August 12, 2026 | |||||||||||
| By: | /s/ Michael J. Liebman | ||||||||||
| Michael J. Liebman | |||||||||||
| Chief Financial Officer and Corporate Secretary | |||||||||||
| Date: August 12, 2026 | |||||||||||