Document:

exv10w40

Exhibit 10.40

February 14, 2011

Mr. Gonzalo G. Pique

c/o Energy Recovery, Inc.

1717 Doolittle Drive

San Leandro, CA. 94577

Via Email: ggpique@energyrecovery.com

     Re: Resignation Acceptance and Separation Package

Dear G.G.,

As Chairman of the Compensation Committee of the Board of Directors of Energy Recovery, Inc., I am
writing to accept your resignation as president and chief executive officer of Energy Recovery,
Inc. (“Company” or “ERI”) effective February 15, 2011, in order to reduce your responsibilities
with the Company in prelude to retirement. As you know, your successor, Thomas S. Rooney, Jr.,
will join ERI as its new president and chief executive officer on February 16, 2011.

As we have agreed, you will remain an employee through May 13, 2011 to assist with the leadership
transition. Through that date, you will continue to receive your current salary at the base annual
rate of $350,000 and standard Company benefits. You will remain on the Board of Directors through
June 10, 2011, the end of your current term. At the conclusion of your employment, you will be
engaged on a consulting basis, as an advisor to the Board of Directors, through April 15, 2013. As
a consultant, you will receive an annual fee of $25,000 and your stock options will continue to
vest.

In addition, on February 10, 2011, the Compensation Committee of the Company’s Board of Directors
approved cash retirement compensation for you in the total amount of $565,000, in exchange for your
execution of the Company’s standard form of employee release agreement within twenty-one (21) days
of your termination date. This cash retirement compensation will be paid in two installments. You
will receive the first payment in the amount of $240,000 ten days after the Company’s receipt of
your signed, unrevoked release agreement. You will receive the second payment of $325,000 on
February 15, 2012. In the event of a “Change in Control,” as that term is defined in the Energy
Recovery Inc. Change in Control Severance Plan, the consummation of which anticipated to occur
prior to the first and/or second payment, and the successor entity does not agree to assume the
obligation to pay any unpaid amount of the cash retirement compensation, then such unpaid amount
will be paid by ERI prior to the Change in Control event.

Please accept these separation and retirement terms and benefits by signing this letter below and
returning the signed copy to the Company’s Human Resources Department.

We truly thank you for your significant and lasting contributions to ERI and wish you all the best.

Sincerely,

/s/ Arve Hanstveit

Arve Hanstveit,

Chairman of the Compensation Committee of the

Board of Directors of Energy Recovery, Inc.

	 	 	 	 	 

	Acceptance:

	 	/s/ G.G. Pique
 

	 	 
	 

	 	G. G. Piqueexv10w1

Exhibit 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of the 10th day of March,
2011, is by and among PAA NATURAL GAS STORAGE, L.P. (“Borrower”), BANK OF AMERICA, N.A., as
Administrative Agent, and the Lenders party hereto.

W I T N E S S E T H:

     WHEREAS, Borrower, Administrative Agent and Lenders entered into that certain Credit Agreement
dated as of April 7, 2010 (the “Original Agreement”) for the purposes and consideration therein
expressed;

     WHEREAS, on February 9, 2011, Borrower completed the Southern Pines Acquisition (as herein
defined), and in connection therewith, expanded its ownership of underground natural gas storage
facilities; and

     WHEREAS, in furtherance of such acquisition, Borrower, Administrative Agent and Lenders desire
to amend the Original Agreement for the purposes described herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained herein and in the Original Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as
follows:

ARTICLE I. — Definitions and References

     § 1.1. Terms Defined in the Original Agreement. Unless the context otherwise requires
or unless otherwise expressly defined herein, the terms defined in the Original Agreement shall
have the same meanings whenever used in this Amendment.

     § 1.2. Other Defined Terms. Unless the context otherwise requires, the following
terms when used in this Amendment shall have the meanings assigned to them in this § 1.2.

          “Amendment” means this First Amendment to Credit Agreement.

          “Credit Agreement” means the Original Agreement as amended hereby.

          “Southern Pines Acquisition” means Borrower’s acquisition of all of the Equity
Interests of Southern Pines.

     “Southern Pines” means SG Resources Mississippi, L.L.C., a Delaware limited
liability company, which owns and operates an underground natural gas storage facility
located in Greene County, Mississippi and, as of the date of the Southern Pines Acquisition,
extending into Mobile County, Alabama.

 

 

ARTICLE II. — Amendments

     § 2.1. Definitions.

     (a) Clause (a) of the definition of “Consolidated EBITDA” set forth in Section 1.01 of the
Original Agreement is hereby amended by redesignating subclause “(v)” of such clause (a) as
subclause “(vi)” and inserting a new subclause (v) immediately prior thereto, to read as follows:

(v) any acquisition-related expenses deducted from Consolidated Net Income and associated
with (A) closed acquisitions or (B) any other potential acquisitions that have not been
abandoned (minus any acquisition-related expenses covered by clause (B) that relate to (x)
potential acquisitions that have since been abandoned or (y) potential acquisitions that
have not been consummated within one year following the date such expense was incurred
(except that if the potential acquisition is the subject of a pending purchase and sale
agreement as of such one-year date, such one-year period of time shall be extended until the
first to occur of the termination of such purchase and sale agreement or the first day
following the closing of the acquisition contemplated by such purchase and sale agreement),

     (b) The reference to “the Bluewater Storage Facility or the Pine Prairie Storage Facility” set
forth in the parenthetical set forth in the exception at the end of the definition of “Principal
Property” set forth in Section 1.01 of the Original Agreement is hereby amended to refer instead to
“the Bluewater Storage Facility, the Pine Prairie Storage Facility or the Southern Pines Storage
Facility”.

     (c) The reference to “the Bluewater Storage Facility, the Pine Prairie Storage Facility” set
forth in the definition of “Storage Facilities” set forth in Section 1.01 of the Original Agreement
is hereby amended to refer instead to “the Bluewater Storage Facility, the Pine Prairie Storage
Facility, the Southern Pines Storage Facility,”.

     (d) Section 1.01 of the Original Agreement is hereby amended by adding a new definition of
“Southern Pines Storage Facility”, to read as follows:

     “Southern Pines Storage Facility” means the natural gas storage facility owned
by SG Resources Mississippi, L.L.C. and located in Greene County, Mississippi and, as of the
date of the acquisition of SG Resources Mississippi, L.L.C. by the Borrower, extending into
Mobile County, Alabama, which facility includes certain buildings, equipment, compressors,
structures and pipelines located on a salt-dome storage cavern.

     § 2.2. New Cavern EBITDA Adjustment. As of the effectiveness of the Southern Pines
Acquisition, the reference to “the Pine Prairie Storage Facility” in the definition of “New Cavern
EBITDA Adjustment” in Section 7.11(b) of the Original Agreement is hereby amended to refer instead
to “the Pine Prairie Storage Facility or the Southern Pines Storage Facility”.

     § 2.3. Material Project EBITDA Adjustment. The reference to “following the Commercial
Operation Date of a Material Project” in clause (B) of the second paragraph following Section
7.11(b) of the Original Agreement is hereby amended to refer instead to “following the Commercial
Operation Date of a Material Project (other than any project for

2

 

which New Cavern EBITDA Adjustments following the Commercial Operation Date thereof are to be
determined in accordance with the foregoing paragraph)”.

     § 2.4. Southern Pines Acquisition Period. With respect to Borrower’s election of an
Acquisition Period with respect to the Southern Pines Acquisition, Lenders hereby (i) agree that
such Acquisition Period shall end on September 30, 2011 (or such earlier termination date as
Borrower may elect in accordance with clause (c) of the definition of Acquisition Period),
notwithstanding Borrower’s receipt of proceeds of a Specified Equity Offering prior to such date,
and (ii) waive the application of clause (b) of the definition of Acquisition Period with respect
to the Southern Pines Acquisition.

ARTICLE III. — Conditions of Effectiveness

     § 3.1. Effective Date. This Amendment shall become effective as of the date first
written above, when and only when

     (i) Administrative Agent shall have received, at Administrative Agent’s office a
counterpart of this Amendment executed and delivered by Borrower and Required Lenders; and

     (ii) Administrative Agent shall have additionally received all of the following
documents, each document (unless otherwise indicated) being dated the date of receipt
thereof by Administrative Agent, duly authorized, executed and delivered, and in form and
substance satisfactory to Administrative Agent:

          Supporting Documents. Such supporting documents as Administrative Agent may
reasonably request.

ARTICLE IV. — Representations and Warranties

     § 4.1. Representations and Warranties of Borrower. In order to induce Administrative
Agent and Lenders to enter into this Amendment, Borrower represents and warrants to Administrative
Agent and each Lender that:

     (a) The representations and warranties of the Borrower contained in Article V of the
Credit Agreement or any other Loan Document, or which are contained in any document furnished by or
at the request of the Borrower or any Subsidiary at any time under or in connection herewith or
therewith, are true and correct in all material respects on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier date, and except
that the representations and warranties contained in subsections (a) and (b) of Section
5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement.

     (b) No Default has occurred and is continuing.

     (c) Borrower has all requisite corporate or equivalent power and authority and all requisite
governmental licenses, authorizations, consents and approvals to execute, deliver and perform its
obligations under this Amendment.

3

 

     (d) The execution, delivery and performance by Borrower of this Amendment have been duly
authorized by all necessary corporate or other organizational action, and do not and will not (a)
violate (i) the terms of its Organization Documents, (ii) any order, injunction, writ or decree of
any Governmental Authority or any arbitral award to which it or its property is subject, or (iii)
any provision of Law applicable to it; (b) result in the acceleration of any Indebtedness owed by
it; or (c) result in any breach of, or a default under, or the creation of any consensual Lien
under, any material Contractual Obligation to which such Person is a party or to which its
properties are bound.

     (e) No approval, consent, exemption or authorization of, or other action by, or notice to, or
filing with, any Governmental Authority or any other Person is required to be made or obtained by
Borrower pursuant to the provisions of any material Law applicable to it as a condition to its
execution, delivery or performance of this Amendment.

     (f) This Amendment has been duly executed and delivered by Borrower. This Amendment
constitutes a legal, valid and binding obligation of Borrower, enforceable against it in accordance
with its terms.

ARTICLE V. — Miscellaneous

     § 5.1. Ratification of Agreements. The Original Agreement, as hereby amended, is
hereby ratified and confirmed in all respects. The Loan Documents, as they may be amended or
affected by this Amendment, are hereby ratified and confirmed in all respects by Borrower. Any
reference to the Credit Agreement in any Loan Document shall be deemed to refer to this Amendment
also. The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of Administrative Agent or any
Lender under the Credit Agreement or any other Loan Document nor constitute a waiver of any
provision of the Credit Agreement or any other Loan Document.

     § 5.2. Survival of Agreements. All representations, warranties, covenants and
agreements of Borrower shall survive the execution and delivery of this Amendment and the
performance hereof, including without limitation the making or granting of each Loan, and shall
further survive until all of the Obligations under the Credit Agreement are paid in full. All
statements and agreements contained in any certificate or instrument delivered by Borrower
hereunder or under the Credit Agreement to Administrative Agent or any Lender shall be deemed to
constitute representations and warranties by, or agreements and covenants of, Borrower under this
Amendment and under the Credit Agreement.

     § 5.3. Loan Documents. This Amendment is a Loan Document, and all provisions in the
Credit Agreement pertaining to Loan Documents apply hereto.

     § 5.4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

     § 5.5. Counterparts. This Amendment may be separately executed in counterparts and by
the different parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same Amendment. Delivery of an executed signature page by

4

 

facsimile or other electronic transmission shall be effective as delivery of a manual executed
counterpart.

     § 5.6. ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.

5

 

     IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.

	 	 	 	 	 
	BORROWER:               	PAA NATURAL GAS STORAGE, L.P.

By: PNGS GP LLC, its general partner

 	 
	 	By:  	/s/
Al Swanson 	 
	 	 	Name:  	Al Swanson 	 
	 	 	Title:  	Senior Vice President and
Chief Financial Officer 	 
	 
	 	

BANK OF AMERICA, N.A.,

as Administrative Agent

 	 
	 	By:  	/s/
Bridgett J. Manduk 	 
	 	 	Name:  	Bridgett J. Manduk 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	

BANK OF AMERICA, N.A., as a Lender

 	 
	 	By:  	/s/
Christen A. Lacey 	 
	 	 	Name:  	Christen A. Lacey 	 
	 	 	Title:  	Director 	 
	 

Signature Page to

First Amendment to PNGS Credit Agreement

 

 

	 	 	 	 	 
	 	DNB NOR BANK ASA, as a Lender

 	 
	 	By:  	/s/
Kristin Riise 	 
	 	 	Name:  	Kristin Riise 	 
	 	 	Title:  	First Vice President 	 
	 
	 	By:  	/s/
Geshu Sugandh

 	 
	 	 	Name:  	Geshu Sugandh 	 
	 	 	Title:  	Vice President 	 
	 	

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/
Mark Oberreuter 	 
	 	 	Name:  	Mark Oberreuter 	 
	 	 	Title:  	AVP 	 
	 
	 	UBS LOAN FINANCE LLC, as a Lender

 	 
	 	By:  	/s/
Mary E. Evans 	 
	 	 	Name:  	Mary E. Evans 	 
	 	 	Title:  	Associate Director 	 
	 	 	 
	 	By:  	/s/
Irja R. Otsa

 	 
	 	 	Name:  	Irja R. Otsa 	 
	 	 	Title:  	Associate Director 	 
	 	

CITIBANK, N.A., as a Lender

 	 
	 	By:  	/s/
John F. Miller 	 
	 	 	Name:  	John F. Miller 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 
	 	BARCLAYS BANK PLC, as a Lender

 	 
	 	By:  	/s/
Allen Huang 	 
	 	 	Name:  	Allen Huang 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	JPMORGAN CHASE BANK, as a Lender

 	 
	 	By:  	/s/
Stephanie Balette 	 
	 	 	Name:  	Stephanie Balette 	 
	 	 	Title:  	Authorized Officer 	 
	 

Signature Page to

First Amendment to PNGS Credit Agreement

 

 

	 	 	 	 	 
	 	BNP PARIBAS, as a Lender

 	 
	 	By:  	/s/
Greg Smothers 	 
	 	 	Name:  	Greg Smothers 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	By:  	/s/
Juan Carlos Sandoval
 	 
	 	 	Name:  	Juan Carlos Sandoval 	 
	 	 	Title:  	Vice President 	 
	 
	 	SUNTRUST BANK, as a Lender

 	 
	 	By:  	/s/
Andrew Johnson 	 
	 	 	Name:  	Andrew Johnson 	 
	 	 	Title:  	Director 	 
	 
	 	MIZUHO CORPORATE BANK, LTD.,

as a Lender

 	 
	 	By:  	/s/
Leon Mo 	 
	 	 	Name:  	Leon Mo 	 
	 	 	Title:  	Authorized Signatory 	 
	 	

SUMITOMO MITSUI BANKING CORPORATION, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ING CAPITAL LLC, as a Lender

 	 
	 	By:  	/s/
Cheryl Labelle 	 
	 	 	Name:  	Cheryl Labelle 	 
	 	 	Title:  	Managing Director 	 
	 
	 	SOCIETE GENERALE, as a Lender

 	 
	 	By:  	/s/
Chung-Taek Oh 	 
	 	 	Name:  	Chung-Taek Oh 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	By:  	/s/
Barbara Paulsen
 	 
	 	 	Name:  	Barbara Paulsen 	 
	 	 	Title:  	managing Director 	 
	 

Signature Page to

First Amendment to PNGS Credit Agreement

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as a Lender

 	 
	 	By:  	/s/
John C. Lozano 	 
	 	 	Name:  	John C. Lozano 	 
	 	 	Title:  	Vice President 	 
	 
	 	ROYAL BANK OF CANADA, as a Lender

 	 
	 	By:  	/s/
Jim Allred 	 
	 	 	Name:  	Jim Allred 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	COMERICA BANK, as a Lender

 	 
	 	By:  	/s/
Justin Crawford 	 
	 	 	Name:  	Justin Crawford 	 
	 	 	Title:  	Vice President 	 
	 
	 	COMPASS BANK, as a Lender

 	 
	 	By:  	/s/
Ian Payne 	 
	 	 	Name:  	Ian Payne 	 
	 	 	Title:  	Vice President 	 
	 
	 	REGIONS BANK, as a Lender

 	 
	 	By:  	/s/
William R. Brown 	 
	 	 	Name:  	William R. Brown 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	NATIXIS, as a Lender

 	 
	 	By:  	/s/
Daniel Payer 	 
	 	 	Name:  	Daniel Payer 	 
	 	 	Title:  	Managing Director 	 
	 	 	 
	 	By:  	/s/
Louis P. Laville, III 	 
	 	 	Name:  	Louis P. Laville, III 	 
	 	 	Title:  	Managing Director 	 
	 
	 	RAYMOND JAMES BANK, FSB, as a Lender

 	 
	 	By:  	/s/
Garrett McKinnon 	 
	 	 	Name:  	Garrett McKinnon 	 
	 	 	Title:  	Senior Vice President 	 
	 

Signature Page to

First Amendment to PNGS Credit Agreement

 

 

	 	 	 	 	 
	 	MORGAN STANLEY BANK, N.A., as a Lender

 	 
	 	By:  	/s/
John Durland 	 
	 	 	Name:  	John Durland 	 
	 	 	Title:  	Authorized Signatory 	 
	 

Signature Page to

First Amendment to PNGS Credit Agreement

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