Document:

exv10w10w1

 

Exhibit 10.10.1

AMENDMENT TO EXECUTIVE EMPLOYEE AGREEMENT DATED

February 25, 2008

     This AMENDMENT TO THE EXECUTIVE EMPLOYMENT AGREEMENT dated July 1, 2006 (“Amendment”) is
made as of July 1, 2008 (“Amendment Effective Date”) by and between Energy Recovery Inc., a
Delaware corporation, with its principal offices at 1908 Doolittle Drive, San Leandro, CA
94577 (the “Company”) and Terrill Sandlin, an individual (the “Executive”) (together, the
“Parties”).

     Pursuant to Article 5.11 of the Executive Employment Agreement, the Parties hereby amend
that Agreement as follows:

Article 1.2. The Parties amend and replace Article 1.2 to read as follows:

Term. The term of Executive’s employment is hereby extended through
December 31, 2008. Thereafter, the Executive Employment Agreement, as
amended, shall automatically terminate and Executive’s employment with the
Company will become “at will.” “At will” employment means that either the
Company or Executive may terminate Executive’s employment at any time with
or without cause and with or without notice. Such at-will employment cannot
be changed except by a writing signed by the Executive and a duly authorized
executive or Board member of the Company.

Article 2.1(a). The Parties amend and replace Article 2.1(a) to read as follows:

Base Salary. Effective as of January 1, 2008, Executive’s base
salary will be $11,916.67 per month ($143,000 per annum), less any
deductions required by law, which shall continue to be paid in accordance
with the Company’s normal and customary payroll practices, but no less
frequently than monthly. The Executive’s base salary shall be reviewed
annually and may be reasonably adjusted in the sole discretion of the
Company.

Article 2.1(b). The Parties amend and replace Article 2.1(b) to read as follows:

Annual Bonus.

(i) The Executive shall be eligible to participate in the Company’s annual
bonus program and shall be eligible to earn an annual bonus in an amount not
to exceed one (1) times Executive’s base salary. If the Executive is
eligible to earn an annual cash bonus, the exact amount of the Executive’s
annual cash bonus, if any, shall be determined by the Company pursuant to the
attainment of performance goals as set forth in the attached performance
matrix prepared by the Company.

 

 

(ii) Notwithstanding Article 2. l(b)(i) to the contrary, however, in the event
that the scheduled IPO is not consummated through no fault of the Executive, as
determined by the Board (with the recusal by the Executive from such Board
determination, as necessary) in good faith, although the Executive may not be
eligible to receive any annual cash bonus in 2008, all of the Executive’s stock
options granted under Executive’s 2006 Equity Compensation Grant pursuant to
Article 2.1(c) of Executive’s Executive Employment Agreement shall immediately
and fully vest effective as of December 31, 2008.

Article 3.1(a)(iv). The Parties amend and replace Article 3.1(a)(iv) to read as
follows:

Executive’s violation of the Company’s Code of Conduct, if any, and as amended
from time to time, confidentiality obligations to the Company or
misappropriation of Company assets; or

Article 3.2(e)(i)(D). The Parties amend and replace Article 3.2(e)(i)(D) to read as
follows:

any material reduction, limitation or failure to pay or provide any of the
compensation provided to the Executive under Article 2.1 of this Agreement or any
other agreement or understanding between the Executive and the Company, or
pursuant to the Company’s policies and past practices, as of the date immediately
prior to the Change in Control; or

Article 3.2(e)(ii). The Parties add Article 3.2(e)(ii){E) as follows:

“Change in Control,” as defined above, shall not in any instance be
construed to include the Company’s IPO or any event occurring in connection
with or as a result of the Company’s IPO.

All other terms contained in the Executive Employment Agreement shall continue in full force and
effect.

WITNESS, the execution of this Amendment as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	“Executive”	 	 	 	“Company”
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Energy Recovery Inc.
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Terrill Sandlin

 

Terrill Sandlin	 	 	 	By:	 	/s/ G.G. Pique
 

Title: President and CEO

 

 

	 	 	 
	TO:

	 	Terry Sandlin
	FROM:

	 	GG Pique
	DATE:

	 	March 3, 2008
	SUBJECT:

	 	2008 Performance Bonus
	 

ERI will pay a maximum of 30% of base salary at the end of the year for exceeding the
following performance objectives:

	1)	 	Work with Production team to improve morale
	 
	2)	 	Get San Leandro plant and vendor structure ready to ship $60M in 2008
	 
	3)	 	Implement formal disaster contingency plan. Work with City officials.
	 
	4)	 	Harden IT security

The actual amount payable will be based on a subjective appraisal of each performance objective per
the following rating schedule:

	 	 	 
	100%

	 	Exceeded objective
	75%

	 	Met objective
	50%

	 	Met objective late or incompletely
	25%

	 	Substantially initiated effort to meet objective
	0%

	 	Did not meet objective

	 	 	 	 	 	 	 	 	 
	/s/ G.G. Pique

	 	 	 	 	 	/s/ Terry Sandlin
	 	3/12/08
	 	 	 	 	 
	G.G. Pique

	 	Date
	 	 	 	Terry Sandlin
	 	Dateexv10w11

 

Exhibit 10.11

EXECUTIVE EMPLOYEE AGREEMENT

     This
EXECUTIVE EMPLOYEE AGREEMENT (the “Agreement”) is made and
entered into as of July 1, 2006, by and
between Energy Recovery Inc., a Delaware corporation, with its principal offices at 1908 Doolittle
Drive, San Leandro, CA 94577 (the “Company”), and Maria Elena Ross, an individual (the “Executive”).

RECITALS

     A. WHEREAS, the Company is in the business of designing and manufacturing energy recovery
devices.

     B. WHEREAS, Executive has been serving as Corporate HR Director of ERI (ERI HR Director) of
the Company, and the Company desires to continue its relationship with Executive as its Corporate
HR Director, and Executive desires to provide his services to the Company on all of the
terms and conditions herein set forth.

     C. WHEREAS, The Company desires to provide Executive with a compensation plan in
recognition of Executive’s valuable skills and services.

     NOW,
THEREFORE, in consideration of the mutual covenants and conditions herein
contained, the parties hereto agree as follows:

ARTICLE I. EMPLOYMENT

     1.1
Employment. The Company hereby employs Executive as its Corporate HR Director,
and Executive hereby accepts such engagements with the Company, in accordance with and subject to
all of the terms, conditions, and covenants set forth in this Agreement.

     1.2 Term. The terms of this Agreement shall commence on the date that this Agreement
is fully executed (the “Effective Date”)and, unless terminated earlier in accordance with the terms
of Article IV hereof, shall continue for a period of two years ending 24 calendar months from the
Effective Date (the “Term of Agreement). The Agreement, thereafter, shall automatically terminate
and Executive’s employment with the Company will become “at will.” “At will” employment means
that the either the Company or Executive may terminate Executive’s employment with or without cause
and with or without notice.

     1.3 Scope of Executive’s Duties. Executive shall be the Corporate HR Director of the
Company, reporting to the President and CEO of the Company (CEO). Executive shall have such
duties, responsibilities and authority as shall be consistent with that position and will operate
within such established guidelines, plans, or policies as may be established or approved by the CEO
and the company Board of Directors from time to time.

ARTICLE II. COMPENSATION AND BENEFITS

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     2.1 Compensation.

          (a)
Base Salary. Executive shall be paid a base salary of $10,833 per month
($130,000 per annum), less any deductions required by law, which
shall be paid in accordance with the Company’s normal and customary payroll practices, but no less frequently than monthly.
The Executive’s base salary shall be reviewed annually and may
be reasonably adjusted in the sole discretion
of the Company.

          (b) Annual Bonus. The Executive shall be eligible to participate in the Company’s
annual bonus program and shall be eligible to earn an annual bonus in an amount not to exceed (1)
times his base salary. The exact amount of the Executive’s
annual bonus, if any, shall be determined
by the Company pursuant to the attainment of performance goals as set forth in the matrix.

          (c) Equity Compensation. Contingent on the Executive’s Continued employment on the
date of grant, Company intends to grant the Executive stock options
to purchase an additional thirty
thousand (30,000) shares of the Company’s Common Stock, to be arranged under, and subject to the
terms of, Company’s 2006 Equity Compensation Plan or, at the discretion of the Company, any such
subsequent equity compensation plan that may be adopted, as well as the terms and conditions of the
stock option agreement (which will be provided to the Executive as soon as practicable after the
grant date). Any additional terms governing the options
(i.e., vesting, conditions to exercise, etc.)
shall be set forth in the applicable option agreement. The foregoing
is not intended to preclude the Company,
in its discretion, from making any additional awards of stock options or other types of equity
compensation to the Executive.

     2.2 Reimbursable Expenses. Upon submission of expense reports to the extent necessary
to substantiate the Company’s federal income tax deductions for such expenses under the Internal
Revenue Code of 1986 (as amended) and the Regulations thereunder (the “Code”) and subject to such
expense report approval procedures as may be established by the Board, the Company shall reimburse
Executive for all reasonable business expenses incurred and submitted in the performance of his
duties hereunder on behalf of the Company.

     2.3 Fringe Benefits.

          (a) Executive and Executive’s dependents shall be
permitted to participate in all group health, medical, hospital, dental, prescription, vision,
long-term disability and other insurance plans which the Company establish for its executive
employees and such other employee benefits or plans as the Company may establish for its employees
generally, and which may be modified from time to time. Upon implementation of the Company’s new
executive life insurance program, the Executive shall receive, if insurable under usual underwriting standards, term life
insurance coverage on the Executive’s life, payable to whomever the Executive directs, in an amount
equal to one (1) time the Executive’s base salary, subject to any cap imposed by the insurer,
provided that Executive completes the required statement and application and that Executive’s
physical condition does not prevent Executive from qualifying for such insurance under reasonable terms and conditions. In the
interim, the Company shall reimburse the Executive’s monthly premium for such coverage during the
term of this agreement, Executive shall be eligible to participate in any tax-qualified retirement
plan sponsored by the Company, equity compensation plan, or deferred compensation plan, if any,
pursuant

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to the
terms of such plans, as the same may be modified from time to time,
to the extent such plans are offered to other officers of employees of the Company.

     2.4 Vacations. Executive shall earn annual vacations in accordance with the Company’s
standard policy. Once the Executive has accrued the maximum of two (2) times the accrual rate cap
applicable to the Executive as set forth in the standard policy, Executive shall be ineligible to
earn further vacation until Executive has used vacation, at which
time Executive may begin to accrue vacation
again.

     2.5
Taxes. The Executive acknowledges that he is responsible for all taxes
relating to his Compensation and except for those taxes for which the Company is obligated to pay
under applicable law or regulation, Executive agrees that the Company may withhold from
Executive’s cash compensations any amounts that the Company is required to withhold by law or
regulation.

     ARTICLE
III. TERMINATION AND COMPENSATION UPON TERMINATION

     3.1 Termination will be deemed to occur as follows:

          (a) Termination
for Good Cause by the Company.The Company may terminate this Agreement
immediately for “Good Cause” upon written notice to Executive, the date of which shall specify the
effective date of the termination. For purposes of this Agreement, “Good Cause” shall mean:

               (i) Executive’s performance of any act for which, if Executive were
prosecuted, would constitute a felony or misdemeanor;

               (ii) Executive’s
failure to carry out Executive’s material duties;

               (iii) Executive’s dishonesty towards or fraud upon the Company which is
injurious to the Company;

               (iv) Executive’s violation of confidentiality obligations to the Company or misappropriation
of Company assets; or

               (v) Executive’s death or inability to carry out Executive’s duties with reasonable
accommodation, if any, unless prohibited by law.

     (b) Voluntary Termination by the Executive. The Executive may terminate this
Agreement at any time by providing the Company with thirty (30) days written notice. The effective
date of the termination shall be the date specified in the notice. In the event of such a
termination, the parties agree to act in good faith towards one another during any notice
period.

     (c) Notice of Termination. Any termination by the Company for Good Cause or by Executive shall
be communicated by Notice of Termination to the other party hereto.
For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall indicate
the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis of termination of Executive’s employment under the
provision so indicated.

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     3.2 Compensation Upon Termination. Upon termination of this Agreement by either
party, Executive shall be entitled to receive the following payments:

          (a) Termination By the Company for Good Cause. Upon termination of this Agreement
for “Good Cause” as defined under the provisions of
Section 3.l(a) above, Executive shall be paid,
in a lump sum, any and all base salary due and owing through the date of termination, plus an
amount equal to earned but unused vacation through the date of termination and reimbursement of all
reasonable expenses, plus any earned but unpaid and undeferred bonus
attributable to the year that ends immediately before the year in which the Executive’s termination occurs. No pay
continuance or other benefits will be provided.

          (b) Termination By the Company Without Good Cause. Upon termination of this
Agreement by the Company without “Good Cause” as defined
under the provisions of Section 3.1(a)
above, Executive shall be entitled to the following severance benefits:

               (i) payment, in a lump sum, of any and all base salary due and owing to him through the date of
termination, plus an amount equal to his earned but unused vacation through the
date of termination, reimbursement for all reasonable expenses and any earned but unpaid and
undeferred bonus attributable to the year that ends immediately before the year in which the
Executive’s termination occurs; and

               (ii) subject to the provisions of Section 5.1 below, payment, in a lump sum of an amount
equal to fifty percent (50%) of Executive’s current annual base salary, less deductions
required by law.

               (iii) immediate vesting of all unvested equity compensation held by the Executive as of the
date of termination.

               (iv) if the Executive ( including, if applicable, the Executive’s spouse and
dependents) timely elects to continue Executive’s medical, dental, and vision benefits under COBRA
then, contingent upon the Executive paying his portion of the monthly COBRA premium, the
Company shall pay its share of the monthly premium (if any) under COBRA to the same extent it pays
for coverage for an active employee until the earliest of (a) the end of the twelve (12) month
period that commences with the Executive’s termination of employment or (b) the Executive becomes
eligible for group medical, dental, and vision coverage through another employer. As a condition of
the Company paying a pro rata portion of the monthly premium for a portion of the Executive’s
continuation coverage period the Executive will be required to notify the Company upon becoming
eligible for group medical, dental and vision benefits from another employer during such twelve
(12) month period. At the end of any Company-paid period of COBRA coverage, the Executive may, at
his own expense, continue COBRA coverage for the remainder of the period for which the Executive is
eligible.

     The
payments provided for in Section 3.2(a) or 3.2(b)(i) and (ii) or 3.2(d), as applicable, shall be paid on the
date immediately following the Executive’s termination. All such payments will be subject to
applicable payroll or other taxes required to be withheld by the Company. However, in the event it
is determined that the Executive is a “Specified Employee” as defined in Section 409A(a)(2)(B)(i)
of the Code any payment to be made under this Agreement that is “nonqualified

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deferred compensation” subject to Section 409A of the Code shall be delayed for six months
following the Executive’s termination of employment.

          (c) Payments to Executive hereunder shall be considered severance pay in consideration of
past service and continued service after the date of this Agreement
and Executive shall not be required to
mitigate the amount of any payment provided for in this Section 3.2 by seeking alternative employment or
otherwise, and, with the exception of COBRA payments, the amount of any payment
provided for in this Section 3.2 shall not be reduced by any compensation earned by Executive as
the result of employment by another employer after the date of termination, or otherwise.

          (d)
Voluntary Termination by Executive. If Executive voluntarily resigns or
terminates this Agreement, Executive shall be paid, in a lump sum, any and all base salary due
and owing to him through the date of termination and an amount equal to his earned but unused
vacation through the date of termination, plus any earned but unpaid
and undeferred bonus
attributable to the year that ends immediately before the year in
which the Executive’s termination
occurs. Executive, his family, or his estate shall be entitled to other benefits to the extent
permitted by law, contract, or the terms of any benefit plan or program.

          (e)
Termination Pursuant to a Change of Control. If upon or at any
time during the Term of Agreement there is a “Termination Event”, as defined below, that occurs
within one (1) year following a “Change in Control”,
as defined below, Executive shall be treated
as if Executive had been terminated by the Company Without Good Cause
pursuant to Section 3.2(b) and in addition to the
severance benefits described therein shall be entitled to receive an additional Change in
Control amount equal to fifty percent (50%) of the Executive’s current annual base salary. The Change in
Control amount shall be paid at the same time and in the same manner as the Executive’s severance
payments pursuant to Section 3.2(b)(ii).

               (i) A Termination Event shall mean the occurrence of any one or more of the following, but
shall not include Executive’s termination due to death or disability:

                    A. the termination or material breach of this Agreement by the
Company;

                    B. the failure by the Company to obtain the assumption of this Agreement by any successor to
the Company or any assignee of all or substantially all of the Company’s assets;

                    C. any material diminishment in the title, position, duties,
responsibility or status that the Executive had with the Company immediately prior to the
Change in Control;

                    D. any reduction, limitation or failure to pay or provide any of the compensation provided
to the Executive under Section 2.1 of this Agreement or any
other agreement or understanding
between the Executive and the Company, or pursuant to the Company’s
policies and past practices, as of the date immediately prior to the Change in Control; or

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               E. any requirement that the Executive relocate more than 30 miles from his place of
employment as of the date immediately prior to the Change in Control.

         (ii) Change in Control shall mean any of the following, occurring during the term of the
Executive’s employment or employment relationship with the
Company:

         A. an acquisition by an individual, an entity or a group (excluding
the Company, an employee benefit plan of the Company, or a corporation controlled
Company’s shareholders) of fifty percent (50%) or more of the Company’s then-outstading common
stock or voting securities;

         B. a change in composition of the Board occurring within a rolling twelve-month
period, as a result of which fewer than a majority of the director are Incumbent Directors
(“Incumbent Directors” shall mean directors who either (x) are member of the Board as of
the Executive Date or (y) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or
nomination, but shall not include an individual not otherwise an Incumbent Director whose
election or nomination is in connection with an actual or threatened proxy contest (relating to the
election of directors to the Board));

         C. consummation
of a complete liquidation or dissolution of the Company, or a merger,
consolidation or sale of all or substantially all of the Company’s
then-existing
assets (collectively, a “Business Combination”), other than a Business Combination (x) in which
the stockholders of the Company immediately prior to the Business Combination
receive fifty percent
(50%) or more of the voting stock resulting from the Business Combination, (y) at least a
majority of
the board of directors of the corporation resulting from the Business Combination were Incumbent
Directors and (z) after which no individual, entity or group (excluding any corporation resulting
from
the Business Combination or any employee benefit plan of such corporation or if the Company owns
fifty percent (50%) or more of the stock of the corporation resulting from the Business Combination
who did not own such stock immediately before the Business Combination; or

         E.
Change in the ownership of a substantial portion of a Company’s
assets. A change in the ownership of a substantial portion of the Company’s assets occurs on the
date that any individual or group of individuals acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such individual or group of
individuals) assets from the Company that have a total gross fair market value equal to or more
than forty percent (40%) of the total gross fair market value of all of the assets of the
Company immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the value of the
assets of the Company, or the value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.

         (iii) To the extent that any or all of the payments and benefits provided for in this Agreement,
either alone or in conjunction with other compensatory payments, would give rise to a “parachute
payment ” under Sections 280G and 4999 of the Code (collectively, the “Parachute Rules”):

         A. If the Company so requests at a time when the Company’s securities,are not “readily tradable” (as defined in the Parachute Rules), the Company shall be

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permitted to solicit a shareholder vote or written consent to approve the parachute payment in
order to avoid characterization as a parachute payment under the Parachute Rules. In that event, the
Executive agrees, to the extent required by the Parachute Rules then in effect and without further
consent documentation, to waive and cancel all rights or parachute
payments in connection with the Change
of Control to the extent that shareholder approval is not obtained in accordance with the
Parachute Rules.

     B. Unless shareholder approval has avoided application of the Parachute Rules, the Company
shall reduce and cancel, and the Executive hereby waives, the parachute payment to the minimum
extent necessary to equal one dollar less than the amount which would result in any compensatory
payments being subject to the excise tax imposed by Section 4999 of the Code and such that the
Executive receives only the amount of such payment which would not constitute an “excess
parachute payment” under the Parachute Rules.

     C. Notwithstanding clauses A and B above,the Executive may elect
not to subject a payment or benefit to stockholder approval and to insted receive either (i)
the full amount of any parachute payment or (ii) 2.99 times the
Executive’s “ base amount” (as such term is
defined under the Parachute Rules), whichever of the foregoing
amounts (after taking into
account any applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the
Code) results in the receipt by the Executive, on an after - tax basis, of the greater payment
provided
that (a) the acquiring person in the Change of Control,in its
sole discretion does
not object thereto and
does not impose on the Company or its shareholder any added cost, price reduction, or other
detriment therefrom (economic or otherwise as determined in the Company’s sole discretion), and
(b) the
Executive deposits at least three (3) business days prior to consummation of the Change of Control
with a party designated by the Company a cash sum sufficient the discretion of the Company to fund
all withholding payments that may arise in connection with the Executive’s parachute payments from
any source.

     D. In no event shall the Company be required to gross up any
payment or benefit to the Executive to avoid the effects of the Parachute Rules or to pay any
regular or excise taxes arising therefrom. Unless the Company and the Executive otherwise agree in
writing, any parachute payment calculation
shall be made in writing by independent pubic accounts agreed to by the Company and the
Executive, whose calculations shall be conclusive and binding upon the Company and the Executive
for all purposes. The Company and the Executive shall furnish to the accountants such information
and documents as the accountants may reasonably request in order to make a parachute payment
determination.

ARTICLE
IV. NONCOMPETITION AND NONSOLICITATION

     4.1 Noncompetition During Employment. Executive agrees that, during the term hereof,
Executive will devote his full productive time and best efforts to the performance of his
duties
hereunder pursunt to the supervision and direction of the Company’s Board of Directors or its
designee. Executive further agrees, as a condition to the performance by the Company of each and
all of its obligations hereunder, that so long as Executive is employed by the Company, Executive
will not directly or indirectly render services of any nature to otherwise become employed by or
otherwise
participate or engage in any other business without the
Company’s prior written consent. Nothing herein
contained shall be deemed to preclude Executive from having outside
personal investments and involvement
with appropriate community and charitable activities, or from devoting a reasonable

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amount of time to such matters, provided that this shall in no manner interfere with or derogate
from Executive’s work for the Company.

     4.2 Non-solicitation.

          (a) Executive agrees that during Executive’s employment and for a period of two (2) years
after the termination of this Agreement for any reason, in the United
States or any other
equivalent geographical subdivision in foreign jurisdictions in which
the Company does business Executive shall
not, in competition with the Company or any subsidiary or affiliates:

               (i)
directly call upon or solicit any of the customers of the company or any subsidiary that
were or became customers during the term of Executive’s
employment (as used herein “customer” shall mean any person or company as listed as such on the books of the Company or any
affiliates); or

               (ii) induce or attempt to induce any employee, agent,or consultant of the
Company or any subsidiary or affiliates to terminate his or her association with the Company or
any subsidiary or affiliates.

          (b) The
Company and Executive agree that the provisions of this Section 4.2 contain
restrictions that are not greater than necessary to protect the interests of the Company. In the
event of the breach or threatened breach by Executive of this Section 4.2, the Company, in
addition to all other remedies available to it at law or in
equity,will be entitled to seek injunctive relief
and/or specific performance to enforce this Section 4.2.

ARTICLE
V. MISCELLANEOUS PROVISIONS

     5.1 General Release. Any other provision of this Agreement notwithstanding,
Section 3.2(b)(ii)-(iv) above shall not apply unless Executive has executed a general
release of all known and unknown claims that Executive may then have against the Company or
persons affiliated with the Company and has expressly agreed in writing not to prosecute any legal
action or other proceeding based on any of such claims.

     5.2 Confidential Proprietary Information and Inventions Assignment Agreement.
Concurrent with execution of this Agreement, Executive acknowledges receipt of an executed copy
of the Company’s standard Confidential Information and Inventions Assignment_Agreement, signed by
Executive on May 19,2005,which shall be incorporated herein.

     5.3 Fees and Expenses. The Company shall pay all legal fees and related expenses for
counsel incurred by Executive as a result of preparation of and negotiation of the terms of
Executive’s employment.

     5.4
Irrevocable Arbitration of Disputes.

          (a) You and the Company agree that any dispute, controversy or claim arising hereunder or in
any way related to your employment or termination of employment with
the Company or this Agreement, its
interpretation, enforceability, or applicability, that cannot be resolved by mutual

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agreement of the parties (the “arbitrable claims”) shall be submitted to binding arbitration. The
parties agree that arbitration is the parties’ only recourse for such claims and hereby waive the
right to pursue such claims in any other forum, unless otherwise provided by law. Any court action
involving a dispute which is not subject to arbitration shall be stayed pending arbitration of
arbitrable disputes.

          (b) You and the Company agree that the arbitrator shall have the authority to issue
provisional relief.
You and the Company further agree that each has the right, pursuant to California Code of Civil
Procedure section 1281.8, to apply to a court for a provisional remedy in connection with an arbitrable dispute so as to prevent the arbitration from being rendered ineffective.

          (c) Any demand for arbitration shall be in writing and must be communicated to the other
party prior to the expiration of the applicable statute of limitations.

          (d) The arbitration shall be administered by JAMS pursuant to its Employment
Arbitration Rules and Procedures. The arbitration shall be conducted in San Diego by a former or
retired judge or attorney with at least 10 years experience in employment — related disputes, or a
non-attorney with like experience in the area of dispute, who shall have the power to hear motions,
control discovery, conduct hearings and otherwise do all that is necessary to resolve the
matter. The parties must mutually agree on the arbitrator. If the parties cannot agree on the arbitrator after their best efforts, an arbitrator will be selected from JAMS pursuant to its
Epmployment Arbitration Rules and Procedures, The Company shall pay the costs of the arbitrator’s fees.

          (e) The arbitration will be decided upon a written decision of the arbitrator stating
the essential findings and conclusions upon which the award is based. The arbitrator shall have the
authority to award damages, if any, to the extent that they are available under applicable law(s).
The arbitration award shall be final and binding, and may be entered as a judgment in any court
having competent jurisdiction. Either party may seek review pursuant to California Code of Civil Procedure
section 1286, et seq.

          (f) It is expressly understood that the parties have chosen arbitration to avoid the
burdens, costs and publicity of a court proceeding, and the arbitrator is expected to handle all
aspects
of the matter, including discovery and any hearings, in such a way as to minimize the expense,
time, burden and publicity of the process, while assuring a fair and just result. In particular, the
parties expect that the arbitrator will limit discovery by controlling the amount of discovery
that may be taken (e.g., the number of depositions or interrogatories) and by restricting the scope
of discovery only to
those matters clearly relevent to the dispute. However, at a minimum, each party will be
entitled to at least one (1) deposition and shall have access to essential documents and witnesses as determined
by the arbitrator.

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          (g) The provisions of this Section shall survive the expiration or termination of the
Agreement, and shall be binding upon the parties.

THE PARTIES HAVE READ SECTION 5.4 AND IRREVOCABLY AGREE TO ARBITRATE ANY DISPUTE IDENTIFIED ABOVE.

	 	 	 	 	 	 
	 	/s/ M E Ross	 (Executive)
	/s/ GGP	 Company)]	 
	 	 	
	 	 	 

     5.5 Settlement of Claims. The Company’s obligation to make the payments provided
for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or others.

     5.6 Legal Representatives. Upon the death or disability of Executive, any payments
due under this Agreement shall be paid to Executive’s legal representatives.

     5.7 Notices. Any notice or other communication given here under or in connection
herewith shall be sufficiently given if in writing and (a) sent by certified mail or overnight courier,
postage or delivery costs prepaid and return receipt requested, (b) sent by facsimile transmission, or (c)
delivered
personally, to the parties hereto at the following addresses or to such addresses as the parties
may from
time to time provide in accordance herewith:

	 	 	 
	If to the Company:
	 	 
	 

	 	Energy Recovery Inc.
	 

	 	1908 Doolittle Drive
	 

	 	San Leandro, CA 94577
	 

	 	Fax: (510) 483-7371
	 

	 	Attention: Gonzalo G Pique
	 
	 	 
	If to Executive:

	 	Maria Elena Ross
	 

	 	141 Cavendish Court
	 

	 	Brentwood, CA 94513
	 

	 	925-513 7558

Such notice shall be deemed givin on the date on which personally served or, if by mail on the
fifth (5th) day after being posted on the date of actual receipt, whichever is earlier, or if by
facsimile
transaction with confirmation of receipt, one (1) business day after the time sent or the
time of actual receipt, whichever is earlier.

     5.8  Compliance with Section 409A of the Code. It is the intent of this Agreement that no payment to the Executive shall result in
nonqualified deferred compensation within the meaning of Section 409A of the Code. However, in the
event that all, or a portion, of the payments set forth in this Agreement meet the definition of
nonqualified deferred compensation, the Company intends that such payments be made in a manner
that complies with Section 409A of the Code. The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify
this Agreement as may be necessary to ensure all benefits provided under this Agreement are made in a manner that qualifies for exemption from or complies with Section 409A of

10

 

the Code, provided, however, that the Company makes no representations that the benefits provided
under this Agreement will be exempt from Section 409A of the Code and makes no undertakings
to preclude Section 409A of the Code from applying to the
benefits provided under this Agreement.

     5.9 Severability. If any term, provision, covenant, or condition of this Agreement is
held to be invalid, void, or unenforceable, the remainder of the provisions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated
thereby.

     5.10 Survival. Sections 4.2, 5.2, and 5.4 shall survive the termination of this
Agreement.

     5.11
Entire Agreement; Employment Amendments; Waiver. This Agreement, together with
all stock option agreements and/or stock repurchase agreements and any other equity grants, and
the Confidential Proprietary Information and Inventions Assignment
Agreement
agreement
between the parties hereto concerning the subject matter hereof and
supersedes and replaces
all prior or
contemporaneous agreements or understandings between the parties This
agreement may not be
amended or modified in any manner, except by an instrument in writing signed by the Executive and
the Company or as otherwise provided in Section 5.8. Failure
of either party
to enforce any of
the provisions of this Agreement or any rights with respect thereto or failure to exercise any
election provided for herein shall in no way be considered to be a
waiver of such
provisions, rights, or elections
or in any way effect the validity of this Agreement. The failure of either party to exercise any
of said provisions, rights, or elections shall not preclude or prejudice such party from later
enforcing or
exercising the same or other provisions, rights, or

elections which
it may have under this
Agreement.

     5.12 Governing Law. This Agreement shall be governed by and construed in all respects
in accordance with the laws of the State of California. With the exception of “arbitrable claims” as
defined in Section 5.4, the federal courts and/ or state courts of the State of California, County
of Alameda shall have exclusive jurisdiction to adjudicate any dispute arising out of this
Agreement and/or employment relationship or termination thereof and Executive consents to such
jurisdiction and venue

     5.13 Attorneys’ Fees. In the event of any action for the breach of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs, and expenses incurred in
connection with such action.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above
written.

	 	 	 	 	 	 	 
	“Executive”

	 	 	 	“Company”	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ MariaElena Ross	 	By:	 	/s/ G.G. Pique
	 

	 	 
	 	 	 	 
	Title:

	 	Executive Director, HR
	 	Title:	 	President

11

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