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EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is made as of the 7th day of May, 2020, 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”) and shall be effective as of June 3rd, 2020 (the “Effective Date”).
RECITALS
WHEREAS, the Company and the Executive wish to enter into this Agreement relating to the employment of Executive by 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 Strategy Officer and Executive also shall serve as the Chief Strategy 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 shall perform such other duties as they 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 of 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 June 3, 2022, unless the Executive’s employment is terminated earlier pursuant to Section 7 or Section 8.  Thereafter, the Agreement will automatically renew for one or more additional 12-month periods (each a “Renewal Term”), unless on or before March 31, 2022 (or 
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March 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.  For the avoidance of doubt, this Agreement will become null and void if Executive does not become an employee of the Company on the Effective Date.
3.Base Salary.  The Company will pay the Executive an annual base salary (“Base Salary”) of $200,000 during each calendar year 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) or (b) pursuant to any incentive compensation program adopted by the Company from time to time.
a.Cash Bonus.  For each calendar year, the Executive will be eligible to receive up to 15% of his Base Salary as incentive compensation in the form of a cash bonus.  The actual percentage 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.
b.Restricted Stock Units.  For 2020 calendar year performance period and for each performance period thereafter, the Executive will be eligible to receive up to 15% of his Base Salary in the form of restricted stock units or such other equity awards as may be issued pursuant to the Global Water Resources, Inc. 2020 Omnibus Incentive Compensation Plan (the “Incentive Plan”).  The actual number of restricted stock units or other equity will be based on the Executive satisfying the performance goals established by the Board (or the Compensation Committee) pursuant to the Incentive Plan.  All equity awards shall be subject to the terms and conditions of the Incentive Plan and any award agreement issued pursuant to the Incentive Plan.
C.    Restricted Stock.  Executive shall receive a sign-on restricted stock grant of 30,000 shares.  The sign-on restricted stock grant shall have a grant date of [June 4, 2020].  The sign-on restricted stock grant shall vest as follows: 5,000 shares of the restricted stock shall vest on [June 4, 2021]; 10,000 shares of the restricted stock shall vest on [June 4, 2022] and 
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15,000 shares of the restricted stock shall vest on [June 4, 2023].  The restricted stock grant shall be subject to the terms and conditions contained in the award agreement and the Incentive Plan.  In addition, subject to approval by the Compensation Committee, Executive shall be eligible for future equity grants and other long-term incentives, in the discretion of the Compensation Committee.
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.
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 two (2) 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 such termination 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 
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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 (A) one (1) times the Executive’s current Base Salary as of the Date of Termination, and (B) two (2) 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 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).
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e.Definitions.  For purposes of this Agreement:
(i)“Cause” shall be defined as: (a) the misappropriation (or attempted misappropriation) of any of the Company's funds or property; (b) the conviction of, or the entering of a guilty plea or a plea of no contest with respect to a felony; (c) repeated willful and significant neglect of duties; (d) acts of material dishonesty toward the Company; (e) violation of any material written policy with respect to the Company's business or operations including but not limited to those related to Company’s personnel, customers, and visitors; (f) violation of the Company’s confidentiality, non-solicitation, and Non-competition Agreement; (g) violation of the duty of loyalty to the Company; (h) repeated significant deficiencies with respect to performance objectives assigned by the Chief Executive Officer of the Company; or (i) Executive's material breach of this Agreement (after notice and an opportunity to cure.
(ii)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(iii)“Code” means the Internal Revenue Code of 1986, as amended.
(iv)“Date of Termination” shall mean (a) if this Agreement is terminated as a result of the Executive’s death, the date of the Executive’s death, (b) if 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 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.
(v)“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.  
(vi)“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 
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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 fully corrected such event.
(vii)“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 Section 7(B), Section 7(D) or Section 8(B) unless the Executive executes (and does not revoke) a legal release (“Release Agreement”), in the form and substance reasonably requested by the Company, in which the Executive releases the Company and its affiliates, directors, officers, employees, agents, and others affiliated with the Company, from any and all claims, including claims relating to the Executive’s employment with the Company and the termination of the Executive’s employment.  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(B), Section 7(D) 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 
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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 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 a (1) 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) four (4) 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 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. 
b.For purposes of this Agreement, “Change of Control” shall mean a “change in the ownership or effective control of a corporation,” or a “change in the ownership of 
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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 “change in the effective control,” “50 percent” shall be used instead of “30 percent” and for purposes of determining a “substantial portion of the assets of the corporation,” “85 percent” shall be used instead of “40 percent.”  
c.The following limitations apply to payments pursuant to this Section 8.
(i)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 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”).
(ii)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).
(iii)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.
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.
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 
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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.
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.
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.
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.
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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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 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.
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 
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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 or 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 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 
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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.  
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 
    12

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.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.
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 
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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:  Chief Executive Officer
 Facsimile:  (623) 518-4100

if to the Executive:    Christopher D. Krygier
                    13521 West Medlock Drive
                    Litchfield Park, Arizona 85340
                    chriskrygier@gmail.com

20.Dispute Resolution.  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 including, but not limited, any such dispute relating to the breach or alleged breach of any representation, warranty, agreement, or covenant under this Agreement or the termination of employment hereunder, 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”).  Notwithstanding the foregoing, this Section 20 shall not bar or prevent either party from seeking temporary or preliminary injunctive relief with respect to any patent, trademark, copyright, trade secrets claims or claims for breaches of Sections 9-14 of this Agreement.  The parties agree that before the proceeding to arbitration that they will mediate their disputes before a mediator selected by the parties or among a list of mediators approved by the AAA for the state of Arizona.  Any arbitration shall be conducted by arbitrators approved by the AAA for the state of Arizona or any other arbitrator mutually acceptable to the Company and the Executive.  All arbitrations of such disputes, controversies, or claims shall be conducted by a single arbitrator.  If the parties cannot agree on an arbitrator or mediator, then one shall be drawn by lots from a list of AAA approved arbitrators and mediators.  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 have the authority to permit the parties to conduct discovery, decide dispositive motions, including motions for summary judgments, and may award damages to the prevailing party consistent with applicable law.  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.  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 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, 13 and 14.
    14

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.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:    President and CEO 

EXECUTIVE:

/s/ Christopher D. Krygier             

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
    16

        

EXHIBIT A
Executive Job Description

Chief Strategy Officer
Our chief strategy officer, also known as a CSO, will be responsible for 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 CSO has the following job duties:
•Acquisitions (target identification, negotiations, financing, diligence, and consolidation)
•Oversight of Certificate of Convenience & Necessity permits, existing and new
•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-1ex_231493.htm

Exhibit 10.12

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is made as of this 21st day of October, 2018, by and between AGS, LLC, a Delaware limited liability company (“AGS” or the “Company”), Victor Gallo (“Executive”). The Company desires to continue employment with Executive and the Executive accepts employment on the following terms and conditions. This Agreement supersedes and replaces any previous agreements, express or implied, between the parties concerning employment including but not limited to Employment Agreement dated January 20, 2010, First Amendment to January 20, 2010 Employment Agreement dated August 18, 2011, Second Amendment to January 20, 2010 Employment Agreement dated March 18, 2013, and Third Amendment to January 20, 2010 Employment Agreement dated June 25, 2014.

 

1.         EMPLOYMENT AND DUTIES OF EXECUTIVE

 

1.1         Employment. The Company agrees to employ Executive in the position of General Counsel. Executive agrees to perform those responsibilities assigned by the Company and render services necessary to protect and advance the best interests of the Company.

 

1.2         Performance of Duties. Executive agrees to perform Executive’s duties and obligations well and faithfully and to the utmost of Executive’s ability. Executive agrees to devote full business time, attention, skill and effort to the performance of the duties and responsibilities the Company may assign from time to time. Executive will also comply with all Company rules, regulations and policies.

 

1.3         Conflict of Interest. Executive may not, during the term of employment, engage in any other activity, if it conflicts or interferes with or adversely affects in any material respect the performance or discharge of Executive's duties and responsibilities. Executive agrees that he will not engage in any other gainful employment, business or activity without the written consent of the Company.

 

2.         AT-WILL EMPLOYMENT

 

Executive is employed at will. That means Executive may leave the employ of the Company, and the Company may terminate Executive’s employment at any time, for any reason, with or without cause. Executive understands and agrees that there are no express or implied agreements to the contrary and that this Section cannot be amended or altered by any practice or oral statement made to Executive. This Section may only be altered by a written instrument signed by Executive and the Company specifically referring to this section of the Agreement.

 

3.         COMPENSATION

 

3.1         Base Salary.         During employment, the Company agrees to pay Executive, as compensation for all services to be rendered a base salary of $306,000.00 per employment year (“Base Salary”). The Base Salary will be paid in substantially equal payments pursuant to the payroll practices of the Company, less deductions or amounts required by law, deductions for contributions for benefits, and other deductions authorized by Executive. The Base Salary will be prorated for the month in which employment commences or terminates, and for any employment year less than twelve (12) months in duration. The Base Salary will be reviewed by the Company and may be increased from time to time by the Company in its absolute discretion. Executive’s Base Salary may only be decreased if a Company-wide decrease is implemented for all senior leadership positions and in such an event may only be decreased by the same proportion used for all senior leaders.

 

 

4.         BONUS AND BENEFITS

 

4.1         Bonus. Executive is eligible to participate in the Company’s Management Incentive Plan (“Plan”) at the C-Suite level subject to the terms and conditions specified in the Plan document. The Company’s Chief Executive Officer will have the sole discretion to set Executive’s annual target bonus under the Plan but in no event will it be set at less than 75% of Base Salary if 100% of target is achieved. The Company maintains the absolute discretion to prospectively modify, amend or eliminate the Plan. Bonus eligibility under the Plan is dependent on active employment status at the time of bonus payout.

 

4.2         Benefits. Executive will receive vacation, health, dental, and other benefits under the established plans and programs of the Company to the extent Executive is eligible for participation based on applicable eligibility criteria determined by the Company for all senior leadership positions. The Company maintains the absolute discretion to modify, amend or eliminate all employee benefits plans and programs.

 

4.3         Stock Options/Equity.         Nothing in this Agreement is intended to alter, amend, or diminish any rights Executive currently has under any plan or agreement relating to stock or stock options previously granted to Executive.

 

5.         SEVERANCE OBLIGATION UPON TERMINATION OF EMPLOYMENT

 

5.1         Termination for Cause, Death, Disability, or due to a Voluntary Resignation without Good Reason. If Executive's employment is terminated for Cause, as defined in Section 5.3 of this Agreement, terminates due to the death or disability of Executive or terminates due to a voluntary resignation of Executive without Good Reason, as defined in Section 5.4 of this Agreement, Executive will be entitled to receive only the unpaid portion of Base Salary accrued to the termination date and all of Executive's rights to compensation under this Agreement will terminate as of that termination date. “Disability” shall mean the absence of Executive from Executive’s duties with the Company on a full-time basis for 90 business days within a one-year period as a result of incapacity due to physical or mental illness that is determined to be permanent by a physician selected by the Company or its insurers who is also reasonably acceptable to Executive or Executive’s legal representative.

 

5.2         Termination Without Cause or Resignation for Good Reason. Notwithstanding that Executive remains an at-will employee of the Company at all times, if the Company terminates Executive’s employment without Cause or Executive resigns employment for Good Reason, Executive will be entitled to receive the unpaid portion of Base Salary accrued to the termination date. In addition, subject to the signing by Executive of a general release of all claims against the Company in a form and manner satisfactory to the Company (which must be signed by Executive and become irrevocable on or prior to the 60th day following Executive’s termination of employment) and subject to Executive’s compliance with post-termination obligations and restrictive covenants set forth in Section 6 of this Agreement (including its subparts), Executive will be entitled to receive severance pay equal to Executive’s Base Salary over an eighteen (18) month severance period (meaning 150% of Executive’s Base Salary) which shall be paid in substantially equal payments over 18 months pursuant to the payroll practices of the Company, along with the pro-rated Managerial Bonus Plan payment for the year in which Executive is terminated at the same time that the Company pays all employees their annual bonuses (collectively the “Severance Payment”).

 

5.3         Definition of Cause. “Cause” shall mean the Executive’s termination of employment based upon any one of the following, as determined in good faith by the Company or the Board of Directors (the “Board”): (i) illegal fraudulent conduct, (ii) conviction of or plea of “guilty” or “no contest” to any crime constituting a felony or other crime involving dishonesty, breach of trust, moral turpitude or physical harm to any person, (iii) a determination by the Company or the Board that the Executive’s involvement with the Company would have a negative impact on the Company’s ability to receive or retain any licenses, (iv) being found unsuitable for, or having been denied, a gaming license, or having such license revoked by a gaming regulatory authority in any jurisdiction in which the Company or any of its subsidiaries or affiliates conducts operations, (v) willful or material misrepresentation to the Company or to members of the Board relating to the business, assets or operations of the Company, (vi) refusal to take any action that is consistent with the Executive’s obligations and responsibilities hereunder as reasonably directed by the Company or the Board, if such refusal is not cured within five days of written notice from the Company or the Board, or (vii) material breach of any agreement with the Company and its affiliates, which material breach has not been cured within 30 days written notice from the Company or the Board.

 

5.4          Definition of Good Reason.         “Good Reason” means a material diminution of Executive’s duties, title, reporting structure, or Base Salary; provided, that, Executive may not terminate employment for Good Reason unless Executive provides written notice to the Company within 90 days after the Executive’s first having knowledge of the Good Reason event, and the company has not cured such event within 30 days of receiving such notice.

 

6.         RESTRICTIVE COVENANTS

 

6.1         Confidentiality; Work Product. The term “Confidential Information” as used in this Agreement means all information disclosed, before or after the execution of this Agreement, by Company to Executive, as well as any information to which Executive has access or that is learned, generated or created by Executive, whether alone or jointly with others. Confidential Information includes, but is not limited to: (i) source code and programming information, including proprietary wireless and portable computer technology software; (ii) licensing and purchasing agreements; (iii) client lists and other client data, supplier lists, pricing information and fee schedules; (iv) employment, management and consulting agreements and other organization information; (v) trade secrets and other proprietary business and management methods; (vi) competitive analysis and strategies; (vii) all other technical, marketing, operational, economic, business, management, or financial knowledge, information or data of any nature whatsoever relating to the business of Company, which has been or may hereafter be learned, generated, created, or otherwise obtained by Executive, alone or jointly with others, whether in written, electronic, oral, or any other form; and (viii) any extracts therefrom. Confidential Information shall not include: (i) information that at the time of disclosure is publicly available, or information which later becomes publicly available through no act or omission of the Executive; (ii) information that Executive independently developed without the use of Company’s Confidential Information; or (iii) information disclosed to Executive by a third party not in violation of any obligations of confidentiality to the Company. Executive agrees to only use Confidential Information for the purpose of performing his duties for the company within the course and scope of employment and will make no use or disclosure of the confidential Information, in whole or in part, for any other purpose. Executive agrees to keep confidential all Confidential Information and to preserve the confidential and proprietary nature of the Confidential Information at all times. In the event that Executive is requested or required by subpoena or court order to disclose any Confidential Information, it is agreed that Executive will provide immediate notice of such request to Company and will use reasonable efforts to resist disclosure, until an appropriate protected order may be sought, or a waiver of compliance with the provisions of this Agreement granted. Upon the termination of Executive’s employment with Company for any reason, Executive shall return all Confidential Information and Company property in his possession including, without limitation, all originals, copies, translations, notes, or any other form of said material, without retaining any copy of duplicates thereof, and promptly to delete or destroy any and all written, printed, electronic or other material or information derived from the Confidential Information.

 

6.2         Work for Hire. Executive understands and agrees that, to the extent permitted by law, all work, papers, reports, documentation, drawings, images, product ideas, service ideas, photographs, negatives, tapes and masters thereof, computer programs including their source code and object code, prototypes and other materials (collectively, “Work Product”), including without limitation, any and all such Work Product generated and maintained on any form of electronic media, that Executive generates, either alone or jointly with others, during employment with Company will be considered a “work made for hire,” and ownership of any and all copyrights in any all such Work Product will belong to the Company. In the event that any portion of the Work Product should be deemed not to be a “work made for hire” for any reason, Executive hereby assigns, conveys, transfers and grants, and agrees to assign, convey, transfer and grant to Company all of Executive’s right, title, and interest in and to the Work Product and any copyright therein, and agrees to cooperate with Company in the execution of appropriate instruments assigning and evidencing such ownership rights. Executive hereby waives any claim or right under “droit moral” or moral rights to object to Company’s copyright in or use of the Work Product. Any Work Product not generally known to the public shall be deemed Confidential Information and shall be subject to the use and disclosure restrictions herein.

 

6.3         Inventions. Executive hereby assigns and agrees to assign to Company all of Executive’s right, title, and interest in and to any discoveries, inventions and improvements (each an “Invention,” and collectively, “Inventions”), whether patentable or not, that Executive makes, conceives or suggests, either alone or jointly with others, while employed by Company. Any Invention that was made, conceived or suggested by Executive, either solely or jointly with others, within one (1) year following termination of employment with Company and that pertains to any Confidential Information or business activity of Company will be irrebuttably presumed to have been made, conceived or suggested in the course of Executive’s employment and with the use of the time, materials or facilities of Company. Any Invention not generally known to the public shall be deemed Confidential Information and shall be subject to the use and disclosure restriction herein.

 

6.4         Non-competition. While employed by the Company and for the Restricted Period, Executive shall not (a) provide services that are the same as or similar in function or purpose to the services Executive provided to the Company during the Covered Period; or (b) provide such other services that are otherwise likely or probable to result in the use or disclosure of Confidential Information; to a business whose products and services include products and services offered by the Company during the Covered Period (a “Competitive Business”) within any jurisdiction or marketing area in which the Company or any of its subsidiaries is doing business or has invested and established good will in demonstrating an intent to do business during the Covered Period. Executives’ ownership of securities of 2% or less of any publicly traded class of securities of a public company shall not violate this Section. The “Restricted Period” shall be the eighteen-month period following the date of Executive’s termination of employment with Company. The “Covered Period” means the six (6) month period of time immediately preceding the termination of Executive’s employment with Company. Nothing in this Agreement shall be interpreted to restrict the right of Executive to practice law after termination of the employment relationship.

 

6.5         Non-solicitation. During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit for employment any individual who is then an employee of the Company or its subsidiaries or who was an employee of the Company or its subsidiaries within the Covered Period (a “Covered Employee”), or (ii) contract for, hire or employ any Covered Employee earning at least $100,000 in annualized base compensation as of the Covered Employee’s most recent date of employment with the Company. During the Restricted Period, the Executive shall also not take any action that could reasonably be expected to have the effect of encouraging or inducing any employee, representative, officer or director of the Company or any of its subsidiaries to cease his or her relationship with the Company or any of its subsidiaries for any reason. In addition, during the Restricted Period, the Executive shall not, with respect to providing services to a Competitive Business, solicit for business of, any person or entity who is or was a customer of the Company or potential customer with whom the Company had initiated contact, during the Covered Period.

 

6.6         Nondisparagement. At all times during Executive’s employment and thereafter, Executive shall refrain from all conduct, verbal or otherwise, that disparages or damages the reputation, goodwill, or standing in the community of Apollo Management VIII, LP (“Apollo”), the Company or any of their respective affiliates.

 

6.7         Remedies. The parties agree that the provision of this Section 6, including its subparts (the “Covenants”) have been specifically negotiated by sophisticated parties. Executive acknowledges and agrees that the Covenants are reasonable in light of all of the circumstances, are sufficiently limited to protect the legitimate interests of the Company and its affiliates, impose no undue hardship on Executive, and are not injurious to the public, and further acknowledges and agrees that Executive’s breach of the Covenants will cause the Company irreparable harm, which cannot be adequately compensated by money damages, and that if the Company elects to prevent Executive from breaching such provisions by obtaining an injunction against Executive, there is a reasonable probability of the Company’s eventual success on the merits. Accordingly, Executive consents and agrees that if the Executive commits any such beach or threatens to commit any breach, the Company shall be entitled to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting any bond or other security and without the necessity of proof of actual damages, in addition to, and not in lieu of, such other remedies as may be available to the Company for such breach, including the recovery of money damages. In the event that the Covenants shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time, over too great a geographical area, or by reason of being too extensive or vague in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical areas as to which they may be enforceable and/or to the maximum extent in all other respects as to which they be enforceable, all as determined by such court in such action.

 

6.8         Acknowledgements. Executive acknowledges and agrees that nothing in this Agreement shall prohibit the Executive from reporting possible violations of federal or state law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the U.S. Equal Employment Opportunity Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. The Executive does not need the prior authorization of the Company to make any such reports or disclosures and the Executive is not required to notify the Company that the Executive has made such reports or disclosures. Notwithstanding anything to the contrary contained herein, the Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of Confidential Information that 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 is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the Company’s Confidential Information to the Executive’s attorney and use the Confidential Information in the court proceeding if the Executive (A) files any document containing the trade secret under seal; and (B) does not disclose the Confidential Information, except pursuant to court order.

 

6.9         Survival. The provision of this Section 6 and all of its subparts shall survive termination of employment for any reason.

 

7.         ARBITRATION

 

The parties agree to resolve any disputes through arbitration in Las Vegas, Nevada. This Section is governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq., and applies to any dispute brought by either party arising out of or related to Executive’s employment including termination of the employment. This Section is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law. The following claims are excluded from coverage by this Section: (1) claims for breach of Section 6, including any of its subparts, seeking specific performance of or injunctive relief; (2) claims that, as a matter of law, may not be subject to mandatory arbitration; and (3) claims that may be adjudicated in small claims court.

 

Executive specifically acknowledges this provision requires the arbitration of disputes between Executive and the Company and affirmatively agrees to be bound by this provision.

 

__/s/ V.G. Executive’s initials

 

8.         ATTORNEY FEES

 

The prevailing party is entitled to an award of attorney fees for litigation or arbitration to enforce this Agreement.

 

9.         SURVIVAL

 

The provisions of Sections 6, 7, and 10 will survive termination of this Agreement and remain enforceable.

 

 

 

10.         SEVERABILITY

 

The invalidity or unenforceability of any provision of this Agreement will in no way affect the validity or enforceability of any other provisions or subparts.

 

11.         ASSIGNMENT AND SUCCESSORS

 

Neither this Agreement nor any of Executive’s rights or duties may be assigned or delegated by Executive. This Agreement is not assignable by the Company without the consent of Executive, except to a successor in interest or a subsidiary of the Company.

 

12.         ENTIRE AGREEMENT, WAIVER AND OTHER

 

Except as set forth herein, this Agreement contains the entire agreement of the parties and supersedes all previous agreements written or oral, express or implied, covering the subject matter. No waiver or modification of any of the provisions of this Agreement will be valid unless in writing and signed by the party granting the waiver or modification. This Agreement may not be supplemented except by an instrument in writing signed by both parties.

 

13.         GOVERNING LAW AND VENUE

 

This Agreement will be governed by and construed in accordance with the laws of the State of Nevada. Any legal suit, action or proceeding setting forth claims excluded from coverage by Section 7 arising out of or relating to this Agreement or Executive’s employment with Company shall be instituted in the courts of (including federal courts located in) Clark County, Nevada, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

 

14.           SECTION 409A    

 

For purposes of this Agreement, “Section 409A” means Section 409A of the Code, and the Treasury Regulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect from time to time.  The parties intend that any amounts payable hereunder that could constitute “deferred compensation” within the meaning of Section 409A will be compliant with Section 409A or exempt from Section 409A.  

 

14.1         Notwithstanding anything in this Agreement to the contrary, the following special rule shall apply, if and to the extent required by Section 409A, in the event that (i) Executive is deemed to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) (as determined in accordance with the methodology established by the Company as in effect on the date of Executive’s “separation from service” (within the meaning of Treasury Regulations Section 1.409A-1(h)), (ii) amounts or benefits under this Agreement or any other program, plan or arrangement of the Company or a controlled group affiliate thereof are due or payable on account of separation from service and (iii) Executive is employed by a public company or a controlled group affiliate thereof:  no payments hereunder that are “deferred compensation” subject to Section 409A shall be made to Executive prior to the date that is six (6) months after the date of Executive’s separation from service or, if earlier, ten (10) days following Executive’s date of death; following any applicable six (6)-month delay, all such delayed payments, plus Interest based on the applicable rate as of the date payment would have been made but for the Section 409A delay, will be paid in a single lump sum on the earliest permissible payment date.  

 

14.2         Any payment or benefit due or payable on account of Executive’s separation from service that represents a “deferral of compensation” within the meaning of Section 409A shall commence to be paid or provided to Executive sixty-one (61) days following Executive’s separation from service; provided that Executive executes, if required by Section 5.2, the release described therein, within sixty (60) days following his “separation from service.”  Each payment made under this Agreement (including each separate installment payment in the case of a series of installment payments) shall be deemed to be a separate payment for purposes of Section 409A.  Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulations §§ 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Section 409A, and shall be paid under any such exception to the maximum extent permitted.  For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferred compensation” subject to Section 409A, references to “termination of employment,” “termination,” or words and phrases of similar import, shall be deemed to refer to Executive’s “separation from service” as defined in Section 409A, and shall be interpreted and applied in a manner that is consistent with the requirements of Section 409A.  In no event may Executive, directly or indirectly, designate the calendar year of any payment under this Agreement.

 

14.3         Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is eligible for exemption from Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Executive’s “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Executive’s “separation from service” occurs.  To the extent any indemnification payment, expense reimbursement, or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such indemnification payment or expenses eligible for reimbursement, or the provision of any in-kind benefit, in one (1) calendar year shall not affect the indemnification payment or provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any lifetime or other aggregate limitation applicable to medical expenses), and in no event shall any indemnification payment or expenses be reimbursed after the last day of the calendar year following the calendar year in which Executive incurred such indemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

 

DATED: December 13, 2018                                                                                                                                                                                  AGS, LLC

 

 

                                                                                                                                                                                           By:           /s/ David Lopez          

                                                                                                                                                                                                      David Lopez, CEO

 

 

                                                                                                                                                                                                       EXECUTIVE

 

DATED: December 13, 2018

                                                                                                                                                                                                       /s/ Victor Gallo              

                                                                                                                                                                                                      Victor Gallo

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