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EXHIBIT 10.21
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement"), made and entered into the 30th
day of November, 1999 ("Date of Execution"), is between AZURIX CORP.
("Company"), a Delaware corporation, having its offices in Houston, Texas, and
XXXX XXXXXXX ("Xx. Xxxxxxx"), an individual, residing in the United Kingdom.
WITNESSETH:
WHEREAS, the Company and Xx. Xxxxxxx have entered into an Executive
Employment Agreement effective as of September 15, 1998 (the "Employment
Agreement");
WHEREAS, the Company and Xx. Xxxxxxx have agreed that Xx. Xxxxxxx'x
employment with the Company will terminate;
WHEREAS, the Company and Xx. Xxxxxxx have agreed upon the terms and
conditions under which Xx. Xxxxxxx'x employment with the Company will terminate;
and
NOW, THEREFORE, for and in consideration of the recitals and covenants
herein set forth, the parties agree as follows:
1. Employment. Xx. Xxxxxxx termination of employment with the Company shall be
effective on November 30, 1999 ("Termination Date"). Upon the execution of this
Agreement, Xx. Xxxxxxx shall resign as an officer of the various subsidiaries
and affiliated companies of the Company in which he holds office; however, until
the Termination Date, Xx. Xxxxxxx will continue to perform the duties reasonably
assigned to him by the Company in connection with the Company's business and
such other matters as the Company may reasonably request. Unless otherwise
requested by the Company, Xx. Xxxxxxx will perform such services from his
residence or such other location or locations (other than offices of the
Company) as he selects.
2. Consideration. Xx. Xxxxxxx shall be paid by Company the following:
a. a monthly payment in the amount of $41,000.00 beginning December
31, 1999 and ending August 31, 2001 and a payment of $20,500.00
to be paid on September 14, 2001 (for the period beginning
September 1, 2001 and ending September 14, 2001), for a total of
$881,500.00;
b. a monthly housing payment in the amount of $8,456.59 beginning
December 1, 1999 and ending August 31,2001 and a payment of
$4,228.61 to be paid on September 14, 2001 (for the period
beginning September 1, 2001 and ending September 14, 2001), for a
total of $181,817.00;
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c. an additional monthly payment in the amount of $39,534.51
beginning December 31, 1999 and ending August 31, 2001 and a
payment of $19,767.29 to be paid on September 14, 2001 (for the
period beginning September 1, 2001 and ending September 14,
2001), for a total of $849,992.00;
d. schooling and bus expenses reimbursement in an amount not to
exceed $83,787.00, to be paid by Company as billed by the school
for Xx. Xxxxxxx' children in elementary or secondary school; and
e. Company agrees to pack and ship a twenty-ft. container of
household goods from London, United Kingdom to a location in the
United States of America within the next six (6) months the cost
of which shall not exceed $10,000.00; and
f. Company agrees to sell to Xx. Xxxxxxx the leased vehicle which he
used during this employment at the December 31, 1999 Lease Buyout
Value provided Xx. Xxxxxxx makes a payment to Azurix Corp. equal
to the Lease Buyout Value no later than January 15, 2000.
3. Severance Pay. Xx. Xxxxxxx waives and the Company shall not be required to
pay, any severance pay or severance benefits, that otherwise would be payable
under the Company's Severance Pay Plan, except as provided for in this
Agreement, in connection with the termination of Xx. Xxxxxxx'x employment. The
consideration and remuneration provided for under this Agreement are in lieu of
and take the place of any severance pay or severance benefit that otherwise
would be payable under the Company's Severance Pay Plan, which Xx. Xxxxxxx
forfeits.
4. Employee Benefits.
a. Except as otherwise provided in Section 3, Xx. Xxxxxxx shall be
entitled to receive benefits earned by and payable to him under
all employee benefit plans and compensation plans in which he
participated or was covered by during his employment with
Company, according to the terms and provisions thereof.
Specifically, and without limiting the generality of the
foregoing, Xx. Xxxxxxx shall continue his rights under any stock
option agreements as if he were involuntarily terminated on the
Termination Date as provided by each of the plan documents.
Further, Xx. Xxxxxxx shall receive a payment of all of his
accrued and unused vacation for the calendar year 1999, which
totals 15 days for a total payment of $20,500.00;
b. Company agrees to tax equalize the Consideration, including stock
option income up to 100,000.00, pursuant to the Company's tax
equalization policy provided Xx. Xxxxxxx remains in the United
Kingdom. Payment of United Kingdom and United States of America
taxes shall be in the same manner as during the term of the
Employment Agreement. Inherent in the tax equalization is Xx.
Xxxxxxx' payment
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of Hypothetical Tax on the Consideration noted in Sections 2.a.
and 2.c. Company's responsibility through tax equalization is for
the payment of United Kingdom and United States of America income
taxes owed in excess of Xx. Xxxxxxx'x Hypothetical Tax as
described in Section 2a and 2c. In the event of any revisions of
Xx. Xxxxxxx' tax return(s) by the governments of the United
States or the United Kingdom, the tax equalization calculation
will be updated, and payments made to Xx. Xxxxxxx or Company (by
Company of Xx. Xxxxxxx, respectively), depending on revisions to
the return(s).
c. Company shall provide tax assistance to Xx. Xxxxxxx for the
Consideration and other compensation related to Xx. Xxxxxxx'x
employment and this Agreement through Price Waterhouse Coopers,
LLP, or any other firm at Company's discretion. Further, Company
agrees to pay any interest and/or late payment penalties, if
applicable.
5 Post-Employment Non-Competition Obligations.
5.1 As part of the consideration for the compensation and benefits to be paid to
Xx. Xxxxxxx hereunder, in keeping with Xx. Xxxxxxx'x duties as a fiduciary and
in order to protect the Company's interests in the confidential information of
the Company and the business relationships developed by Xx. Xxxxxxx with the
clients and potential clients of the Company; and as an additional incentive for
Company to enter into this Agreement, Company and Xx. Xxxxxxx agree to the
non-competition provisions of this Article 5. Xx. Xxxxxxx agrees that during the
period of Xx. Xxxxxxx'x non-competition obligations hereunder, Xx. Xxxxxxx will
not, directly or indirectly for Xx. Xxxxxxx or for others, in any geographic
area or market where Company or Enron or any of their affiliated companies are
conducting any business as of the date of termination of the employment
relationship or have during the previous twelve months conducted any business:
(i) engage in any business competitive with the water business
conducted by Company;
(ii) render advice or services to, or otherwise assist, any other
person, associations, or entity who is engaged, directly or
indirectly , in any business competitively with the water
business conducted by the Company; or
(iii) induce any employee of Company or Enron or their affiliates to
terminate his or her employment with Company, or their
affiliates, or hire or assist in the hiring of any such employee
by person, association, or entity not affiliated with Enron.
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These non-competition obligations shall extend until September 14, 2001.
Notwithstanding the foregoing, Xx. Xxxxxxx may assist or participate in the
currently proposed sale of Azurix International's portfolio of projects to an
entity in which Xxxxx Xxxxxxxx, or others at the discretion of the Company, acts
as a lead investor or manager.
5.2 Remedy for Breach of Contract. The parties agree that in the event there is
any breach or asserted breach of the terms, covenants or conditions of this
Agreement, the remedy of the parties hereto shall be in law and in equity and
injunctive relief shall lie for the enforcement of or relief from any provisions
of this Agreement. If any remedy or relief is sought and obtained by any party
against one of the other parties pursuant to this Section 5.2, the other party
shall, in addition to the remedy of relief so obtained, be liable to the party
seeking such remedy or relief for the expenses incurred by such party in
successfully obtaining such remedy or relief, including the fees and expenses of
such successful party's counsel.
5.3 It is expressly understood and agreed that Company and Xx. Xxxxxxx consider
the restrictions contained in this Article 5 to be reasonable and necessary to
protect the proprietary information of Company. Nevertheless, if any of the
aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
6. Confidential Information.
6.1 Confidential Information.
A. Xx. Xxxxxxx acknowledges that Company's business is highly
competitive and that Company's methods, strategies, books, records and
documents, Company's technical information concerning its products,
equipment, services and processes, procurement procedures and pricing
and marketing techniques, including but not limited to the names of
and other information (such as credit and financial data) concerning
Company's customers and business affiliates, all comprise confidential
business information and trade secrets of Company which are valuable,
special, and unique assets of Company, which Company uses in its
business to obtain a competitive advantage over Company's competitors
which do not know or use this information. Xx. Xxxxxxx further
acknowledges that protection of Company's confidential business
information and trade secrets against unauthorized disclosure and use,
is of critical importance to Company in maintaining its competitive
position. Accordingly, Xx. Xxxxxxx hereby agrees that notwithstanding
any other provision of this Agreement other than contained in the
following paragraph "B", he will not, at any time, make any
unauthorized disclosure of any of the information referred to in the
first sentence of this Section 6.1A ("Confidential Information") or
make any unauthorized use thereof which, in any manner, would have, or
is likely to have, an adverse effect upon the Company or any
affiliate.
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B. However, Xx. Xxxxxxx obligations under this Section 6 shall not
extend to:
1) Confidential Information which is or becomes part of the public
domain or is available to the public by publication or otherwise
without disclosure by Xx. Xxxxxxx; or
2) Confidential Information which was within Xx. Xxxxxxx'x knowledge
or in his possession prior to his employment by the Company; or
3) Confidential Information which, either prior to or subsequent to
the Company's disclosure to Xx. Xxxxxxx with an obligation of
confidentiality, was disclosed to Xx. Xxxxxxx, without obligation
of confidentiality, by a third party who did not acquire such
information, directly or indirectly, from Xx. Xxxxxxx, or from
any third party who is under an obligation of confidentiality; or
4) any disclosure of Confidential Information by Xx. Xxxxxxx which
is required by law, including deposition or trial testimony by
Xx. Xxxxxxx pursuant to subpoena. If Xx. Xxxxxxx is requested or
required (by oral question, interrogatories, request for
information or documents, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information, if
reasonably possible under the circumstances as determined in good
faith by Xx. Xxxxxxx, Xx. Xxxxxxx will promptly notify the
Company of such request or requirement so that the Company may
seek an appropriate protective order or waive compliance with
provisions of this Agreement. In the absence of a protective
order or the receipt of a waiver hereunder, or in the good faith
determination of Xx. Xxxxxxx that time is of the essence, Xx.
Xxxxxxx may obtain legal counsel, and if Xx. Xxxxxxx and/or his
counsel in good faith believe that Xx. Xxxxxxx is compelled to
disclose the Confidential Information or be exposed to liability
for contempt or suffer other censure or penalty, Xx. Xxxxxxx may
disclose only such Confidential Information to the party
compelling disclosure as is required by law, as determined by Xx.
Xxxxxxx on advice of counsel. Xx. Xxxxxxx further agrees that he
will cooperate with the Company in its efforts to obtain a
protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information. All
legal fees, costs and expenses incurred by Xx. Xxxxxxx in
obtaining legal representation pursuant to his obligations under
this Section 6.1B shall be paid by the Company. The Company
further agrees that it will indemnify Xx. Xxxxxxx for any other
costs and expenses incurred by Xx. Xxxxxxx in connection with his
obligations under this Section 6.1B, including but not limited to
legal damages and penalties assessed against Xx. Xxxxxxx for
compliance with his obligations hereunder.
6.2 Definition of Company. For purposes of this Agreement, "Company" shall
include Enron Corp., Azurix Corp., and all of their subsidiaries and affiliated
companies.
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6.3 Non-Disparagement. Xx. Xxxxxxx and Company agree that they will not
knowingly make any comments with the intent to impugn, castigate or otherwise
damage the reputation of the other, including Company's subsidiaries and
affiliated companies, and the executives and managers thereof, unless legally
compelled to do so in any legal or administrative proceeding.
7. Miscellaneous.
7.1 Notices. For purposes of this Agreement, notices and all other
communications shall be in writing and shall have been duly given when
personally delivered or when mailed by United States certified or registered
mail, addressed as follows:
If to Company:
Azurix Corp.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Corporate Secretary
If to Xx. Xxxxxxx:
0 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxx
Xxxxxx Xxxxxxx
KT22 OJY
or to any other address which either party may furnish to the other in writing.
Any such notice shall be effective when so delivered or three business days
after it is so mailed, except that notices of changes of address shall be
effective only upon receipt.
7.2 Applicable Law. THIS CONTRACT IS ENTERED INTO UNDER, AND SHALL BE GOVERNED
FOR ALL PURPOSES BY, THE LAWS OF THE STATE OF TEXAS.
7.3 No Waiver. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
7.4 Remedy for Breach of Contract.
A. The parties agree that in the event there is any breach or asserted
breach of the terms, covenants or conditions of this Agreement, the
remedies of the parties hereto shall be in both law and in equity,
including injunctive relief for the enforcement of or relief from any
provisions of this Agreement.
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B. In the event either party has a reasonable basis for claiming that
the other party has violated the provisions of Section 5 of this
Agreement and that such violation is material, the aggrieved party
shall give the other party written notice of the specific facts of
such violation. If such violation is material and has not been cured
within three (03) days after such notice is given, the aggrieved party
may seek any relief provided in this Agreement, provided, the Company
may seek termination of the Consulting Arrangement, in addition to any
other relief that may be appropriate.
C. Of Sections 5 or 6.1: In the event either party has a reasonable
basis for claiming that the other party has violated the provisions of
Sections 5 or 6.1, and such violation is material, such party shall
give written notice of specific facts of such violation to the other
party. If, after three (03) days of giving such notice, the alleged
violation has occurred, has not ceased, or reasonably may be expected
to be repeated again, the aggrieved party shall have the right to
bring an action at law or in equity. In any action brought for an
alleged breach of Sections 5or 6.1, the complaining party may seek
whatever damages and redress it deems appropriate, including but not
limited to injunctive relief pertaining to the alleged violation
complained of.
D. Money damages would not be sufficient remedy for any breach of
Section 6.1 by either party, and either party shall be entitled to
seek specific performance and injunctive relief as remedies for such
breach or threatened breach, subsequent to the three (03) day period
after the notice provided for in Section 7.4C. Such remedies shall not
be deemed the exclusive remedies for a breach of Section 6.1 by either
party, but shall be in addition to all remedies available at law or in
equity to the non-breaching party including the recovery of damages
from the breaching party, as provided for in Section 7.4C.
7.5 Severability. It is a desire and intent of the parties that the terms,
provisions, covenants and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant or remedy of this Agreement or the application thereof to any person or
circumstances shall, to any extent, be construed to be invalid or unenforceable
in whole or in part, then such term, provision, covenant or remedy shall be
construed in a manner so as to permit its enforceability under the applicable
law to the fullest extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to any person or
circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect. It is further the desire
and intent of the parties that in the event of any breach of any portion of this
Agreement, the remainder of this Agreement shall remain in effect as written and
enforceable to the fullest extent permitted by law.
7.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
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7.7 Withholding of Taxes. Company may withhold from any benefits or remuneration
payable under this Agreement all United Kingdom and United States of America
taxes arising out of payments to Xx. Xxxxxxx under this Agreement, including by
way of illustration but not limitation, federal, state, city, or other taxes as
may be required pursuant to this Agreement, any law, or governmental regulation
or ruling. The Company will timely pay over to the appropriate taxing authority
any amounts withheld under the preceding sentence. Nothing contained in the
Section may affect the Company's obligation to tax equalize any payments under
this Agreement.
7.8 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
7.9 Assignability.
A. By the Company:
The Company's obligations under this Agreement are not
transferable or assignable by the Company and shall be considered
a liability of the Company in any sale or transfer of
substantially all of the business or assets of the Company by any
means whether direct or indirect, by purchase, merger,
consolidation or otherwise.
B. By Xx. Xxxxxxx:
With respect to Xx. Xxxxxxx'x rights and obligations, his
rights and obligations hereunder are personal and neither this
Agreement, nor any right, benefit or obligation of Xx. Xxxxxxx,
shall be subject to voluntary or involuntary assignment,
alienation or transfer, whether by operation of law or otherwise,
without the prior written consent of Company; provided, the
Company agrees that it will not withhold its consent to an
assignment by Xx. Xxxxxxx to a financial institution of his
rights to receive payments under this Agreement. In the event of
Xx. Xxxxxxx'x breach of any of the terms, covenants, or
conditions of this Agreement, any such assignment shall be
subject to the provisions of Section 7.4 of this Agreement. This
Agreement and all payments hereunder, including Consulting
Payments, shall inure to the benefit of and be enforceable by and
against Xx. Xxxxxxx'x personal or legal representatives,
executors, administrators, heirs, distributees, devisees and
legatees.
7.10 Release.
A. By execution of this Agreement, Xx. Xxxxxxx for himself, his legal
and other representatives, claimants, heirs and beneficiaries, forever
waives and releases Company and its affiliated companies from all
rights, benefits, payments and claims (including but not limited to
statutory, tort or contractual claims) of any kind and nature to which
Xx. Xxxxxxx
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is now or in the future may be entitled, and arising out of or in
connection with Xx. Xxxxxxx'x employment with Company or any
affiliated company, and Xx. Xxxxxxx'x termination of employment,
including but not limited to claims pursuant to the Age Discrimination
In Employment Act ("ADEA"), except as may be specifically provided for
under this Agreement or contained in the plan documents or grants of
benefits to which Xx. Xxxxxxx is entitled according to the provisions
hereof. It is specifically agreed that this Agreement and the
consideration Xx. Xxxxxxx will receive hereunder, constitute a
complete settlement and release, and an absolute bar to any and all
claims Xx. Xxxxxxx has or may have against the Company, its
subsidiaries, divisions, any affiliated company, or its directors,
officers, and employees, whether or not the same be presently known or
suspected to be arising out of or in any manner connected with Xx.
Xxxxxxx' employment thereby or termination of employment with Company,
except as may be specifically provided for under this Agreement or
contained in the plan documents or grants of benefits to which Xx.
Xxxxxxx is entitled according to the provisions hereof. This Section
of the Agreement applies to rights or claims pursuant to the ADEA only
in existence on or before the date of payment of consideration and
remuneration provided for herein. XX. XXXXXXX ACKNOWLEDGES AND AGREES,
AND REPRESENTS TO COMPANY THAT (I) HE UNDERSTANDS THE EFFECT OF THE
PROVISIONS OF THIS PARAGRAPH, (II) HE HAS HAD A REASONABLE TIME OF NOT
LESS THAN 21 DAYS IN WHICH TO CONSIDER THE EFFECT OF THE PROVISIONS OF
THIS PARAGRAPH, AND (III) HE WAS ADVISED AND ENCOURAGED TO CONSULT AN
ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT WITH RESPECT TO THE EFFECT
OF THE PROVISIONS OF THIS PARAGRAPH AND HIS EXECUTION OF THIS
AGREEMENT. XX. XXXXXXX MAY REVOKE THIS AGREEMENT DURING THE SEVEN-DAY
PERIOD FOLLOWING THE DATE OF EXECUTION, WHEREUPON THIS AGREEMENT SHALL
BE RESCINDED IN ITS ENTIRETY AND BECOME NULL AND VOID.
B. Xx. Xxxxxxx'x execution of the negotiable instrument tendered to
him by the Company in payment of the Consideration provided for in
Section 2 of this Agreement shall be considered ratification and a
separate execution of this Agreement by Xx. Xxxxxxx.
7.11 Entire Agreement: Modification. This Agreement constitutes the entire
agreement of the parties with regard to the termination of employment of Xx.
Xxxxxxx, supersedes any and all prior written agreements between the parties,
(with the exception of those plans, agreements and other documents identified or
referred to in Section 4), and this Agreement contains all of the covenants,
promises, representations and agreements between the parties with respect to the
termination of employment of Xx. Xxxxxxx with Company. Each party to this
Agreement acknowledges that no representation, inducement, promise or agreement,
oral or written, has been made by either party, which is not embodied herein, or
referred to hereby and that no agreement, statement or promise relating to the
employment or termination of employment of Xx. Xxxxxxx with Company, which is
not contained or provided for, identified or referred to in this Agreement,
shall be valid or binding. Any modification of this Agreement will be effective
only if it is in writing and signed by both parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
AZURIX CORP.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chairman and CEO
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
