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EXHIBIT 1.2
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AZURIX CORP.
(a Delaware corporation)
7,320,000 Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: June , 1999
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TABLE OF CONTENTS
INTERNATIONAL PURCHASE AGREEMENT..................................................................................1
SECTION 1. Representations and Warranties..............................................................4
(a) Representations and Warranties Relating to the Company..........................................4
(i) Compliance with Registration Requirements..............................................4
(ii) Independent Accountants................................................................5
(iii) Financial Statements...................................................................5
(iv) No Material Adverse Change in Business.................................................6
(v) Good Standing of the Company...........................................................6
(vi) Good Standing of Subsidiaries..........................................................6
(vii) Capitalization.........................................................................7
(viii) Authorization of Agreement.............................................................7
(ix) Authorization and Description of Securities............................................7
(x) Absence of Defaults and Conflicts......................................................7
(xi) Absence of Labor Dispute...............................................................8
(xii) Absence of Proceedings.................................................................8
(xiii) Accuracy of Exhibits...................................................................8
(xiv) Possession of Intellectual Property....................................................9
(xv) Absence of Further Requirements........................................................9
(xvi) Possession of Licenses and Permits.....................................................9
(xvii) Title to Property.....................................................................10
(xviii) Investment Company Act................................................................10
(xix) Compliance with Particular Laws.......................................................10
(xx) Registration Rights...................................................................11
(xxi) Taxes.................................................................................11
(xxii) Public Utilities Holding Company......................................................11
(b) Representations, Warranties and Agreements Relating to Enron and the Selling
Stockholder....................................................................................11
(i) Authorization of Agreements...........................................................11
(ii) Good and Marketable Title.............................................................12
(iii) Due Execution and Delivery of Power of Attorney and Custody
Agreement.............................................................................12
(iv) Absence of Manipulation...............................................................12
(v) Absence of Further Requirements.......................................................13
(vi) Absence of Defaults and Conflicts.....................................................13
(vii) Restriction on Sale of Securities.....................................................13
(viii) Certificates Suitable for Transfer....................................................14
(ix) No Association with NASD..............................................................14
(c) Officer's Certificates.........................................................................14
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SECTION 2. Sale and Delivery to International Managers; Closing.......................................14
(a) Initial International Securities...............................................................14
(b) Option Securities..............................................................................15
(c) Payment........................................................................................15
(d) Denominations; Registration....................................................................16
SECTION 3. Covenants of the Company...................................................................16
(a) Compliance with Securities Regulations and Commission Requests.................................16
(b) Filing of Amendments...........................................................................16
(c) Delivery of Registration Statements............................................................17
(d) Delivery of Prospectuses.......................................................................17
(e) Continued Compliance with Securities Laws......................................................17
(f) Blue Sky Qualifications........................................................................18
(g) Rule 158.......................................................................................18
(h) Use of Proceeds................................................................................18
(i) Listing........................................................................................18
(j) Restriction on Sale of Securities..............................................................18
(k) Reporting Requirements.........................................................................19
(l) Compliance with NASD Rules.....................................................................19
(m) Compliance with Rule 463.......................................................................19
SECTION 4. Payment of Expenses........................................................................19
(a) Expenses.......................................................................................19
(b) Expenses of the Selling Stockholder............................................................19
(c) Termination of Agreement.......................................................................20
(d) Allocation of Agreement........................................................................20
SECTION 5. Conditions of Underwriters' Obligations....................................................20
(a) Effectiveness of Registration Statement........................................................20
(b) Opinions of Counsel for Company and the Selling Stockholder....................................20
(c) Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. .............................................................21
(d) Officers' Certificate..........................................................................21
(e) Certificate Relating to Selling Stockholder....................................................22
(f) Accountants' Comfort Letters...................................................................22
(g) Bring-down Comfort Letters.....................................................................22
(h) Approval of Listing............................................................................22
(i) No Objection...................................................................................22
(j) Lock-up Agreements.............................................................................22
(k) Conditions to Purchase of International Option Securities......................................22
(i) Officers' Certificate.................................................................22
(ii) Certificate Relating to Selling Stockholder...........................................23
(iii) Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P......................................................23
(iv) Opinion of Company General Counsel....................................................23
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(v) Opinion of Company English Counsel....................................................23
(vi) Opinion of Enron General Counsel......................................................23
(vii) Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P......................................................23
(viii) Bring-down Comfort Letters............................................................23
(l) Purchase of Initial U.S. Securities............................................................24
(m) Additional Documents...........................................................................24
(n) Termination of Agreement.......................................................................24
SECTION 6. Indemnification............................................................................24
(a) Indemnification of International Managers......................................................24
(b) Indemnification of Company, Directors and Officers and Selling Stockholder.....................26
(c) Actions against Parties; Notification..........................................................26
(d) Settlement without Consent if Failure to Reimburse.............................................27
(e) Indemnification for Reserved Securities........................................................27
SECTION 7. Contribution...............................................................................27
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.............................29
SECTION 9. Termination of Agreement...................................................................29
(a) Termination; General...........................................................................29
(b) Liabilities....................................................................................30
SECTION 10. Default by One or More of the International Managers......................................30
SECTION 11. Default by the Selling Stockholder.........................................................31
SECTION 12. Notices...................................................................................31
SECTION 13. Parties...................................................................................31
SECTION 14. GOVERNING LAW AND TIME....................................................................32
SECTION 15. Effect of Headings........................................................................32
SCHEDULES
Schedule A -- List of Underwriters..................................................................Sch A-1
Schedule B -- Securities to be Sold by the Company and the Selling
Stockholder .................................................................... Sch B-1
Schedule C -- Public Offering Price.................................................................Sch C-1
Schedule D -- List of Persons Subject to Lock-up....................................................Sch D-1
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EXHIBITS
Exhibit A-1 -- Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. ...............................................A-1
Exhibit A-2 -- Form of Opinion of ▇▇▇▇ ▇. Ale, Esq. ....................................................A-2
Exhibit A-3 -- Form of Opinion of Linklaters & Paines...................................................A-3
Exhibit A-4 -- Form of Opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq. ..........................................A-4
Exhibit B -- Form of Lock-up Letter.....................................................................B-1
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AZURIX CORP.
(a Delaware corporation)
7,320,000 Shares of Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
Dated: June , 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
Credit Suisse First Boston (Europe) Limited
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International
PaineWebber International (U.K.) Ltd.
ABN AMRO Rothschild
HSBC Investment Banking, Inc.
as Lead Managers of the several International Managers
c/o Merrill ▇▇▇▇▇ International
Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Ladies and Gentlemen:
Azurix Corp., a Delaware corporation (the "Company"), and Atlantic
Water Trust, a Delaware statutory business trust (the "Selling Stockholder"),
confirm their respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ International ("▇▇▇▇▇▇▇
▇▇▇▇▇") and each of the other international underwriters named in Schedule A
hereto (collectively, the "International Managers," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Credit Suisse First Boston (Europe) Limited,
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International, PaineWebber International (U.K.)
Ltd., ABN AMRO Rothschild, HSBC Investment Banking, Inc. are acting as
representatives (in such capacity, the "Lead Managers"), with respect to (i) the
sale by the Company and the Selling Stockholder, acting severally and not
jointly, and the purchase by the International Managers, acting severally and
not jointly, of the respective numbers of shares of Common Stock, par value $.01
per share, of the Company ("Common Stock") set forth in Schedule A and Schedule
B hereto, and (ii) the grant by the Selling Stockholder to the International
Managers, acting severally and not jointly, of the option described in Section
2(b) hereof to purchase all or any part of 1,098,000 additional shares of Common
Stock to cover over-allotments, if any.
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The aforesaid 7,320,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the 1,098,000 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "International Option Securities") are hereinafter
called, collectively, the "International Securities."
It is understood that the Company and the Selling Stockholder are
concurrently entering into an agreement dated the date hereof (the "U.S.
Purchase Agreement") providing for (i) the offering by the Company and the
Selling Stockholder of an aggregate of 29,280,000 shares of Common Stock (the
"Initial U.S. Securities") through arrangements with certain underwriters in the
United States and Canada (the "U.S. Underwriters") for which ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Credit Suisse First Boston Corporation,
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation, PaineWebber Incorporated,
BT Alex. ▇▇▇▇▇ Incorporated and Banc of America Securities LLC are acting as
representatives (the "U.S. Representatives") and (ii) the grant by the Selling
Stockholder to the U.S. Underwriters, acting severally and not jointly, of an
option to purchase all or any part of the U.S. Underwriters' pro rata portion of
up to 4,392,000 additional shares of Common Stock solely to cover
overallotments, if any (the "U.S. Option Securities" and, together with the
International Option Securities, the "Option Securities"). The Initial U.S.
Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities." It is understood that the Company and the Selling Stockholder are
not obligated to sell and the International Managers are not obligated to
purchase, any Initial International Securities unless all of the Initial U.S.
Securities are contemporaneously purchased by the U.S. Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters," the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities," and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate
Agreement dated the date hereof (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated (in such capacity, the "Global Coordinator").
The Company and the Selling Stockholder understand that the
International Managers propose to make a public offering of the International
Securities as soon as the Lead Managers deem advisable after this Agreement has
been executed and delivered.
The Company and the International Managers agree that up to 732,000
shares of the Initial International Securities to be purchased by the
International Managers and that up to 2,928,000 shares of the Initial U.S.
Securities to be purchased by the U.S. Underwriters (collectively, the "Reserved
Securities") shall be reserved for sale by the Underwriters to certain eligible
employees of the Company and its subsidiaries (and certain employees of
subsidiaries of Enron Corp.), as part of the distribution of the Securities by
the Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers,
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Inc. and all other applicable laws, rules and regulations. To the extent that
such Reserved Securities are not orally confirmed for purchase by such eligible
persons by the end of the first business day after the date of this Agreement,
such Reserved Securities may be offered to the public as part of the public
offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-74379) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of International Prospectus is identical to the Form
of U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting" and the inclusion in the Form of
International Prospectus of a section under the caption "Certain United States
Tax Considerations for Non-United States Holders." The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of International Prospectus and Form of U.S.
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of
International Prospectus and the final Form of U.S. Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated May 21, 1999 and the
preliminary U.S. Prospectus dated May 21, 1999, respectively, each together with
the applicable Term Sheet and all references in this Agreement to the date of
such Prospectuses shall mean the date of the applicable Term Sheet. For purposes
of this Agreement, all references to the Registration Statement, any preliminary
prospectus, the International Prospectus, the U.S. Prospectus or any Term Sheet
or any
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amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties Relating to the Company. The Company
represents and warrants to each International Manager as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
International Manager, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any International
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
the Prospectuses, any preliminary prospectuses and any supplement
thereto or prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), complied and will comply in all material respects with any
applicable laws or regulations of foreign jurisdictions in which the
Prospectuses and such preliminary prospectuses, as amended or
supplemented, if applicable, are distributed in connection with the
offer and sale of Reserved Securities. Neither of the Prospectuses nor
any amendments or supplements thereto (including any prospectus
wrapper), at the time the Prospectuses or any such amendments or
supplements thereto were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the
Prospectuses shall not be "materially different," as such term is used
in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or either of the Prospectuses
made in
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reliance upon and in conformity with information furnished to the
Company in writing by any International Manager through the Lead
Managers or by the Selling Stockholder expressly for use in the
Registration Statement or the Prospectuses.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The consolidated financial
statements of the Company included in the Registration Statement and
the Prospectuses, together with the related schedules and notes,
present fairly the financial position of the Company and its
consolidated subsidiaries (as such term, when used herein with lower
case, is defined in Rule 1-02(x) of Regulation S-X) at the dates
indicated and the statement of operations, stockholder's equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified; the consolidated financial statements of Wessex
Water Ltd, an English limited company ("Wessex"), included in the
Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly the financial position of Wessex
and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flow of Wessex
and its consolidated subsidiaries for the periods specified; and all of
such financial statements have been prepared in conformity with United
States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included
in the Prospectuses present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement. The pro
forma financial statements of the Company and the related notes thereto
included in the Registration Statement and the Prospectuses present
fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
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(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change (or development involving a
prospective material adverse change) in the financial condition,
earnings, business affairs or properties of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each of Wessex, Wessex
Water Services Ltd, SC Technology AG, Azurix Europe Ltd, ▇▇▇▇▇▇
Utilities Management Corporation, CDM ▇▇▇▇▇▇, Inc. and each of any
other subsidiaries of the Company that constitutes a "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation, limited company or other business entity, as the case may
be, in good standing, where applicable, under the laws of the
jurisdiction of its incorporation or organization, has corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectuses and is duly qualified as
a foreign corporation, limited company or other business entity to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock
of each such Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of
such Subsidiary. Exhibit 21 to the Registration Statement lists all the
subsidiaries of the Company required to be so listed.
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(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company, including the Securities to
be purchased by the Underwriters from the Selling Stockholder, have
been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the
Company, including the Option Securities to be purchased by the
International Managers from the Selling Stockholder, was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by
the Company.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the International Managers and the U.S.
Underwriters from the Company have been duly authorized for issuance
and sale to the International Managers pursuant to this Agreement and
the U.S. Underwriters pursuant to the U.S. Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant to
this Agreement and the U.S. Purchase Agreement, respectively, against
payment of the consideration set forth in this Agreement and in the
U.S. Purchase Agreement, respectively, will be validly issued, fully
paid and non-assessable; the Common Stock conforms to all statements
relating thereto contained in the Prospectuses and such description
conforms to the rights set forth in the instruments defining the same;
no holder of the Securities will be subject to personal liability by
reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or
other organizational documents or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance by the Company of this Agreement and the U.S. Purchase
Agreement and the consummation by the Company of the transactions
contemplated in this Agreement, the U.S. Purchase Agreement and in the
Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectuses under the caption "Use of Proceeds")
and compliance by the Company with its obligations under this Agreement
and the U.S. Purchase Agreement have been duly authorized by all
necessary corporate action
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and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of (i) the provisions of the charter or by-laws or other organizational
documents of the Company or any subsidiary or (ii) any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations (except, in the case of clauses (i)
and (ii), for such violations that would not result in a Material
Adverse Effect). As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
of the Company, any of its subsidiaries, or of ▇▇▇▇▇▇ Water Trust the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary.
(xi) Absence of Labor Dispute. Except as described in the
Registration Statement no labor dispute with the employees of the
Company or any subsidiary exists or, to the knowledge of the Company,
is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which, in
either case, may reasonably be expected to result in a Material Adverse
Effect.
(xii) Absence of Proceedings. Except as described in the
Registration Statement, there is no action, suit, proceeding, inquiry
or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration
Statement or which is reasonably expected to result in a Material
Adverse Effect, or which is reasonably expected to materially and
adversely affect the consummation of the transactions contemplated in
this Agreement and the U.S. Purchase Agreement or the performance by
the Company of its obligations hereunder or thereunder; the aggregate
of all pending legal or governmental proceedings to which the Company
or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, is not reasonably expected to result in a
Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
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14
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess or hold under valid license, or can acquire
on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice that the Company
has evidence is valid or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities under this Agreement and the U.S. Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement and the U.S. Purchase Agreement, except (i) such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations and foreign or state securities or blue sky laws and
(ii) such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved
Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, franchises, concessions,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to so possess
such Governmental Licenses would not, singly or in the aggregate, have
a Material Adverse Effect; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and, except as disclosed in the Registration
Statement, neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in a Material Adverse Effect.
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(xvii) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property material to the
business of the Company and its subsidiaries, considered as one
enterprise, and owned by the Company and its subsidiaries and good
title to all other properties owned by them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are
described in the Prospectuses or (b) do not, singly or in the
aggregate, have a Material Adverse Effect; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectuses, are in
full force and effect, and neither the Company nor any subsidiary has
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease, except such as, singly or in the aggregate, would not have or
result in a Material Adverse Effect.
(xviii) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xix) Compliance with Particular Laws. Except as described in
the Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of (i) any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), or (ii) any provisions of the United States
Foreign Corrupt Practices Act ("FCPA"), (B) the Company and its
subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law or the
FCPA against the Company or any of its subsidiaries and (D) there are
no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party
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16
or governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xx) Registration Rights. Except as described in the
Registration Statement and the Prospectuses, there are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xxi) Taxes. The Company and its Subsidiaries have filed or
caused to be filed all United States federal income tax returns and all
other material domestic and foreign tax returns and reports which are
required to be filed by them and have paid or provided for the payment,
before the same become delinquent, of all taxes (including related
fees, fines, penalties and interest, if any) due pursuant to such
returns or pursuant to any assessment received by the Company or any
Subsidiary. The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of taxes, are adequate, in the
opinion of the Company, to the extent required by GAAP.
(xxii) Public Utilities Holding Company. Each of the Company
and its subsidiaries is not subject to, or is exempt from, regulation
as a "holding company," a "subsidiary company" of a "holding company,"
an "affiliate" of a "holding company" or an "affiliate" of a
"subsidiary company" of a "holding company," in each case as such terms
are defined in the United States Public Utility Holding Company Act of
1935, as amended.
(b) Representations, Warranties and Agreements Relating to
Enron and the Selling Stockholder. Enron Corp., an Oregon corporation ("Enron"),
represents and warrants to each International Manager as of the date hereof, as
of the Closing Time, and, if the Selling Stockholder is selling International
Option Securities on a Date of Delivery, as of each such Date of Delivery, and
agrees with each International Manager, as follows:
(i) Authorization of Agreements. The Selling Stockholder has
the full right, power and authority to enter into this Agreement and a
Power of Attorney and Custody Agreement (the "Power of Attorney and
Custody Agreement") and to sell, transfer and deliver the International
Securities to be sold by the Selling Stockholder hereunder. The
execution and delivery of this Agreement and the Power of Attorney and
the Custody Agreement and the sale and delivery of the International
Securities to be sold by the Selling Stockholder and the consummation
of the transactions contemplated herein and the compliance by the
Selling Stockholder with its obligations hereunder have been duly
authorized by the Selling Stockholder and do not and will not, whether
with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any tax, lien, charge or encumbrance upon
the International Securities to be sold by the Selling Stockholder or
any property or assets of the Selling Stockholder pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, license, lease or other agreement or instrument to which the
Selling
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Stockholder is a party or by which the Selling Stockholder may be
bound, or to which the property or any assets of the Selling
Stockholder is subject (collectively, "Selling Stockholder Agreements
and Instruments"), except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not result in a material
adverse effect on the Selling Stockholder, nor will such action result
in any violation of (i) the provisions of the trust agreement or other
organizational instrument of the Selling Stockholder, if applicable, or
(ii) any applicable treaty, law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Selling
Stockholder or any of its properties, except in the case of clause
(ii), for such violations that would not result in a material adverse
effect on the Selling Stockholder.
(ii) Good and Marketable Title. The Selling Stockholder has
and will at the Closing Time and, if any Option Securities are
purchased, on the Date of Delivery have good and marketable title to
the International Securities to be sold by the Selling Stockholder
hereunder, free and clear of any security interest, mortgage, pledge,
lien, charge, claim, equity or encumbrance of any kind, other than
pursuant to this Agreement; and upon delivery of such International
Securities and payment of the purchase price therefore as herein
contemplated, assuming each such International Manager has no notice of
any adverse claim, each of the International Managers will receive good
and marketable title to the International Securities purchased by it
from the Selling Stockholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
(iii) Due Execution and Delivery of Power of Attorney and
Custody Agreement. The Selling Stockholder has duly executed and
delivered, in the form heretofore furnished to the International
Managers, the Custody Agreement and Power of Attorney with ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. Fastow, each as
attorney-in-fact (each an "Attorney-in-Fact") and First Chicago Trust
Company of New York as custodian (the "Custodian"); the Custodian is
authorized to deliver the International Securities to be sold by the
Selling Stockholder hereunder and to accept payment therefor; and each
Attorney-in- Fact is authorized to execute and deliver this Agreement
and the certificate referred to in Section 5(e) or that may be required
pursuant to Section 5(k)(ii) on behalf of the Selling Stockholder, to
sell, assign and transfer to the International Managers the
International Securities to be sold by the Selling Stockholder
hereunder, to determine the purchase price to be paid by the
International Managers to the Selling Stockholder, as provided in
Section 2(a) hereof, to authorize the delivery of the International
Securities to be sold by the Selling Stockholder hereunder, to accept
payment therefor, and otherwise to act on behalf of the Selling
Stockholder in connection with this Agreement.
(iv) Absence of Manipulation. The Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
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price of any security of the Company to facilitate the sale or resale
of the International Securities.
(v) Absence of Further Requirements. No filing with, or
consent, approval, authorization, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign, is necessary or required for the performance by the Selling
Stockholder of its obligations hereunder or in the Power of Attorney
and Custody Agreement, or in connection with the sale and delivery of
the International Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as may have
previously been made or obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state or foreign securities laws.
(vi) Absence of Defaults and Conflicts. The Selling
Stockholder is not in violation of its trust agreement or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any of the Selling Stockholder Agreements and
Instruments which violation or default could have a Material Adverse
Effect on the Company and its subsidiaries or result in a Repayment
Event; and the execution, delivery and performance of this Agreement
and the International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the U.S. Purchase
Agreement and in the Registration Statement (including the sale of
Securities by the Selling Stockholder as described in the Prospectus)
and compliance by the Selling Stockholder with its obligations under
this Agreement and the U.S. Purchase Agreement will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event under the
Selling Stockholder Agreements and Instruments, or result in the
erection or imposition of any lien, charge or encumbrance upon any
property or asset, of the Selling Stockholder, or the Company or its
subsidiaries, pursuant to the Selling Stockholder Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect on the Company or its subsidiaries).
(vii) Restriction on Sale of Securities. Except as may be
provided under Section 6.02 of the Amended and Restated Trust Agreement
of ▇▇▇▇▇▇ Water Trust or Section 9.03 of the Amended and Restated Trust
Agreement of Atlantic Water Trust during a period of 180 days from the
date of the Prospectus, Enron and the Selling Stockholder will not, and
Enron shall cause its subsidiaries not to, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend
or otherwise transfer or dispose of, directly or indirectly, any share
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, whether now owned or later acquired by
Enron, any of its subsidiaries or the Selling Stockholder or with
respect to which Enron, its subsidiaries, or the Selling Stockholder
acquires the power of disposition, or file, or cause to be filed, any
registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap
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19
or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to the Securities to be sold hereunder or under the
U.S. Purchase Agreement.
(viii) Certificates Suitable for Transfer. Certificates for
all of the Securities to be sold by the Selling Stockholder pursuant to
this Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in
blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver such
Securities to the International Managers pursuant to this Agreement.
(ix) No Association with NASD. Except for ECT Securities
Limited Partnership, a subsidiary of Enron, neither the Selling
Stockholder nor any of its affiliates directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, or has any other association with (within the
meaning of Article I, Section 1(m) of the By-laws of the National
Association of Securities Dealers, Inc.), any member firm of the
National Association of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any
officer of the Company or any of its subsidiaries delivered to the Lead Managers
or to counsel for the International Managers shall be deemed a representation
and warranty by the Company to each International Manager as to the matters
covered thereby; and any certificate signed by or on behalf of the Selling
Stockholder as such and delivered to the Lead Managers or to counsel for the
International Manager pursuant to the terms of this Agreement shall be deemed a
representation and warranty by the Selling Stockholder to the International
Managers as to the matters covered thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
(a) Initial International Securities. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company and the Selling Stockholder, severally
and not jointly, agree to sell to each International Manager, severally and not
jointly, and each International Manager, severally and not jointly, agrees to
purchase from the Company and the Selling Stockholder, at the price per share
set forth in Schedule C, that proportion of the number of Initial International
Securities set forth in Schedule B opposite the name of the Company or the
Selling Stockholder, as the case may be, which the number of Initial
International Securities set forth in Schedule A opposite the name of such
International Manager, plus any additional number of Initial International
Securities which such International Manager may become obligated to purchase
pursuant to the provisions of Section 10 hereof bears to the total number of
Initial International Securities, subject, in each case, to such adjustments
among the International Managers as the Lead Managers in their sole discretion
shall make to eliminate any sales or purchases of fractional securities.
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(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Stockholder hereby grants an option to the International
Managers, severally and not jointly, to purchase up to an additional 1,098,000
shares of Common Stock as set forth in Schedule B, at the price per share set
forth in Schedule C, less an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial International
Securities but not payable on the International Option Securities. The option
hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial International Securities upon notice by the Global
Coordinator to the Company and the Selling Stockholder setting forth the number
of International Option Securities as to which the several International
Managers are then exercising the option and the time and date of payment and
delivery for such International Option Securities. Any such time and date of
delivery for the International Option Securities (a "Date of Delivery") shall be
determined by the Global Coordinator, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the International Option Securities, each of the International
Managers, acting severally and not jointly, will purchase that proportion of the
total number of International Option Securities then being purchased which the
number of Initial International Securities set forth in Schedule A opposite the
name of such International Manager bears to the total number of Initial
International Securities, subject in each case to such adjustments as the Global
Coordinator in its discretion shall make to eliminate any sales or purchases of
fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of ▇▇▇▇▇▇▇
& ▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Global Coordinator, the Company and
the Selling Stockholder, at 8:00 A.M. (Houston time) on the third (fourth, if
the pricing occurs after 4:30 P.M. (New York time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator, the Company and the Selling
Stockholder (such time and date of payment and delivery being herein called
"Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator, the Company and the Selling
Stockholder, on each Date of Delivery as specified in the notice from the Global
Coordinator to the Company and the Selling Stockholder.
Payment shall be made to the Company and the Selling Stockholder by
wire transfer of immediately available funds to respective bank accounts
designated by the Company and the Selling Stockholder, against delivery to the
Lead Managers for the respective accounts of the International
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Managers of certificates for the International Securities to be purchased by
them. It is understood that each International Manager has authorized the Lead
Managers, for its account, to accept delivery of, receipt for, and make payment
of the purchase price for, the Initial International Securities and the
International Option Securities, if any, which it has agreed to purchase.
▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as the representative of the International
Managers, may (but shall not be obligated to) make payment of the purchase price
for the Initial International Securities or the International Option Securities,
if any, to be purchased by any International Manager whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such International Manager from its
obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
International Securities and the International Option Securities, if any, will
be made available for examination and packaging by the Lead Managers in The City
of New York not later than 10:00 A.M. (New York time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Global Coordinator immediately,
and confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus
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included in the Registration Statement at the time it became effective or to the
Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the Global
Coordinator or counsel for the International Managers shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Lead Managers and counsel for the International Managers,
without charge, copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and copies of all consents and certificates of experts, and
will also deliver to the Lead Managers, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the International Managers. The copies of the
Registration Statement and each amendment thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each International Manager, without charge,
during the period when the International Prospectus is required to be delivered
under the 1933 Act or the Securities Exchange Act of 1934 (the "1934 Act"), such
number of copies of the International Prospectus (as amended or supplemented) as
such International Manager may reasonably request. The International Prospectus
and any amendments or supplements thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement, the U.S.
Purchase Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the written opinion of counsel for the International
Managers or for the Company, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not include any
untrue statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the written opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement any Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectuses comply
with such requirements, and the Company will furnish to the
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International Managers such number of copies of such amendment or supplement as
the International Managers may reasonably request ; provided, however, that the
International Managers shall bear all the expenses of the Company incurred
pursuant to this clause (e) on or after the 9 month anniversary of this
agreement.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the International Managers, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Global Coordinator may designate and
to maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Common Stock (including the Securities) on the New York Stock
Exchange.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend
or otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder or under the U.S. Purchase Agreement,
(B) any shares of Common Stock issued by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
and referred to in the Prospectuses, (C) any shares of Common Stock issued or
options to purchase Common
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Stock granted pursuant to existing employee benefit plans of the Company
referred to in the Prospectuses, (D) any shares of Common Stock issued pursuant
to any non-employee director stock plan or dividend reinvestment plan and (E)
any shares of Common Stock or any securities convertible or exchangeable into
Common Stock issued as payment of any part of the purchase price for businesses
which are acquired by the Company (provided, however, that such shares shall be
subject to restrictions that will prohibit the transfer thereof until after the
expiration of the 180-day lock-up period described in the preceding sentence).
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(m) Compliance with Rule 463. The Company will file with the Commission
such information regarding the use of the net proceeds from the sale of the
Securities as may be required pursuant to Rule 463 of the 1933 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, except as provided in Section 3(e), (ii) the preparation,
printing and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters
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of copies of each preliminary prospectus, any Term Sheets and of the
Prospectuses and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to the review by the
NASD of the terms of the sale of the Securities and (x) the fees and expenses
incurred in connection with the listing of the Securities on the New York Stock
Exchange.
(b) Expenses of the Selling Stockholder. The Selling Stockholder will
pay all expenses incident to the performance of its obligations under, and the
consummation of the transactions contemplated by, this Agreement, including (i)
any stamp duties, capital duties and stock transfer taxes, if any, payable upon
the sale of the U.S. Securities to the U.S. Underwriters and (ii) the fees and
disbursements of its counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5, Section 9(a)(i) or
Section 11 hereof, the Company shall reimburse the International Managers for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the International Managers.
(d) Allocation of Agreement. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholder may make for
the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several International Managers hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholder
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of the Selling Stockholder
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the International Managers. A
prospectus containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A) or, if the Company has elected to
rely upon Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 424(b).
(b) Opinions of Counsel for Company and the Selling Stockholder. At
Closing Time, the Lead Managers shall have received the favorable opinions,
dated as of Closing Time, of each of (i) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the
Company and the Selling Stockholder, (ii) ▇▇▇▇ ▇. Ale,
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26
Executive Director and General Counsel of the Company, (iii) Linklaters &
Paines, English counsel for the Company and its subsidiaries and (iv) ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇., Senior Vice President and General Counsel of Enron, in form
satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibits ▇-▇, ▇-▇, ▇-▇ and A-4
hereto. In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States, the General Corporation Law of the State of
Delaware and, with respect to the opinions described under (ii) and (iii) above,
English law, upon the opinions of counsel satisfactory to the Lead Managers.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.
(c) Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing Time, of
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the International Managers, together with
signed or reproduced copies of such letter for each of the other International
Managers with respect to the matters set forth in clauses (i), (ii), (v), (vi)
(solely as to preemptive or other similar rights arising by operation of law or
under the charter or by-laws of the Company), and (ix) (solely as to the
information in the Prospectus under "Description of Capital Stock--Common
Stock") of Exhibit A-2 hereto and clauses (i), (ii) and (iii) and the
penultimate paragraph of Exhibit A-1 hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
law of the State of Texas, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Lead Managers. Such counsel may also state that, insofar as
such opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the Lead Managers
shall have received a certificate of the Chief Executive Officer, the Chief
Financial Officer or an Executive Officer of the Company and of the chief
financial (unless he is already certifying) or chief accounting officer of the
Company, on behalf of the Company dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued to
the knowledge of the Company and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
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(e) Certificate Relating to Selling Stockholder. At Closing Time, the
Lead Managers shall have received a certificate executed by an executive officer
of Enron or one of the Powers of Attorney, on behalf of the Selling Stockholder,
dated as of Closing Time, to the effect that (i) the representations and
warranties of the Selling Stockholder contained in Section 1(b) hereof are true
and correct in all respects with the same force and effect as though expressly
made at and as of Closing Time and (ii) the Selling Stockholder has complied in
all material respects with all agreements and all conditions on its part to be
performed under this Agreement at or prior to Closing Time.
(f) Accountants' Comfort Letters. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from each of (i) ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP and (ii) PriceWaterhouseCoopers Chartered Accountants, a letter
dated such date, in form and substance satisfactory to the U.S. Representatives,
together with signed or reproduced copies of such letter for each of the other
U.S. Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(g) Bring-down Comfort Letters. At Closing Time, the Lead Managers
shall have received from each of (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and (ii)
PriceWaterhouseCoopers Chartered Accountants a letter, dated as of Closing Time,
to the effect that they reaffirm the statements made in their respective letters
furnished pursuant to subsection (f) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(h) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(i) No Objection. The NASD has confirmed that it has not raised any
objections with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(j) Lock-up Agreements. At the date of this Agreement, the Lead
Managers shall have received an agreement substantially in the form of Exhibit B
hereto signed by the persons listed on Schedule D hereto.
(k) Conditions to Purchase of International Option Securities. In the
event that the International Managers exercise their option provided in Section
2(b) hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of Enron, the Company and the
Selling Stockholder contained herein and the statements in any certificates
furnished by the Company, any subsidiary of the Company and the Selling
Stockholder hereunder shall be true and correct as of each Date of Delivery and,
at the relevant Date of Delivery, the Lead Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(d) hereof remains true and correct as of such Date of
Delivery.
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(ii) Certificate Relating to Selling Stockholder. A
certificate, dated such Date of Delivery, of an executive officer of
Enron confirming that the certificate delivered at Closing Time
pursuant to Section 5(e) remains true and correct as of such Date of
Delivery.
(iii) Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. The favorable opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. counsel for the Company and the Selling
Stockholder, in form and substance satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇
L.L.P., counsel to the International Managers, dated such Date of
Delivery, relating to the International Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b)(i) hereof.
(iv) Opinion of Company General Counsel. The favorable opinion
of ▇▇▇▇ ▇. Ale, General Counsel of the Company, in form and substance
satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the International
Managers, dated as of such Date of Delivery, relating to the
International Option Securities to be purchased as of such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(b)(ii) hereof.
(v) Opinion of Company English Counsel. The favorable opinion
of Linklaters & Paines, English counsel of the Company, in form and
substance satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the
Underwriters, dated as of such Date of Delivery, relating to the U.S.
Option Securities to be purchased as of such Date of Delivery and
otherwise to the same effect as the opinion required by Section
5(b)(iii) hereof.
(vi) Opinion of Enron General Counsel. The favorable opinion
of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Vice President and General Counsel of Enron,
in form and substance satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel
for the International Managers, dated as of such Date of Delivery,
relating to the International Option Securities to be purchased as of
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b)(iv) hereof.
(vii) Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. The favorable opinion
of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(c) hereof.
(viii) Bring-down Comfort Letters. A letter from each of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Pricewaterhouse Coopers Chartered Accountants,
in form and substance satisfactory to the Lead Managers and dated such
Date of Delivery, substantially in the same form and substance as the
letter furnished to the Lead Managers pursuant to Section 5(g) hereof,
except that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior to such
Date of Delivery.
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(l) Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Managers of the Initial International Securities
under this Agreement, the U.S. Underwriters shall have purchased the Initial
U.S. Securities under the U.S. Purchase Agreement.
(m) Additional Documents. At Closing Time and at each Date of Delivery,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the International Managers, shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
International Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the International Securities as herein
contemplated shall be satisfactory in form and substance to the Lead Managers
and ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
(n) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of International
Option Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several International Managers to purchase the relevant
International Option Securities, may be terminated by the Lead Managers by
notice to the Company at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without liability of
any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) Indemnification of International Managers. The Company and Enron,
jointly and severally, agree to indemnify and hold harmless each International
Manager and each person, if any, who controls any International Manager within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation by
the Company, Enron or the Selling Stockholder of any applicable laws or
regulations of foreign jurisdictions in connection with the offering of
the Reserved Securities and (B) any untrue statement or alleged untrue
statement of a
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material fact in the supplement or prospectus wrapper material
distributed in foreign jurisdictions in connection with the reservation
and sale of the Reserved Securities to employees and officers and
directors of the Company and its subsidiaries and certain employees of
subsidiaries of Enron Corp. or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein,
when considered in conjunction with the Prospectuses or any preliminary
prospectus not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof; provided that (subject to Section 6(d) below) any
such settlement is effected with the written consent of the Company and
the Selling Stockholder; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i), (ii) or
(iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectuses (or any amendment
or supplement thereto); and provided further that neither the Company nor Enron
will be liable to any International Manager with respect to any Prospectus to
the extent that the Company shall sustain the burden of proving that any such
loss, liability, claim, damage or expense resulted from the fact that such
Underwriter, in contravention of a requirement of this Agreement or applicable
law, sold Securities to a person to whom such Underwriter failed to send or
give, at or prior to the Closing Date, a copy of the final Prospectus, as then
amended or supplemented if the Company has previously furnished copies
thereof (sufficiently in advance of the Closing Time to allow for distribution
by the Closing Time) to the Underwriter and the loss, liability, claim, damage
or expense of such Underwriter resulted from an untrue statement or omission of
a material fact contained in or omitted from the Preliminary Prospectus which
was corrected in the final Prospectus as, if applicable, amended or supplemented
prior to the Closing Time and such final Prospectus was required by law to be
delivered at or prior to the written confirmation of sale to such person.
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for such claim but for the failure to give or send such final Prospectus by the
Closing Time to such party or parties.]
(b) Indemnification of Company, Directors and Officers and Selling
Stockholder. Each International Manager severally agrees to indemnify and hold
harmless Enron, the Company, and their respective directors, each of their
officers who signed the Registration Statement, each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, the Selling Stockholder and each person, if any, who
controls the Selling Stockholder within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, and Enron and each person, if any, who
controls Enron within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectuses (or
any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In case any such action is brought against any indemnified party and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 6 for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in addition to local
counsel) in any one
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action or separate but substantially similar actions in the same jurisdiction
arising out of the same general allegations or circumstances, designated by the
Lead Managers in the case of paragraph (a) of this Section 6, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions) or (ii) the indemnifying party does not promptly retain counsel
satisfactory to the indemnified party or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into, and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement ; provided that an indemnifying party shall not be liable for any
such settlement effected without its consent if such indemnifying party, prior
to the date of such settlement, (1) reimburses such indemnified party in
accordance with such request for the amount of such fees and expenses of counsel
as the indemnifying party believes in good faith to be reasonable, and (2)
provides written notice to the indemnified party that the indemnifying party
disputes in good faith the reasonableness of the unpaid balance of such fees and
expenses.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of the officers, directors or employees of
Enron, the Company or their subsidiaries to pay for and accept delivery of
Reserved Securities which, by the end of the first business day following the
date of this Agreement, were subject to a properly confirmed agreement to
purchase.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any
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losses, liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholder on the one hand and
the International Managers on the other hand from the offering of the
International Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Selling Stockholder
on the one hand and of the International Managers on the other hand in
connection with the statements or omissions, or in connection with any violation
of the nature referred to in Section 6(a)(ii)(A) hereof, which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling
Stockholder on the one hand and the International Managers on the other hand in
connection with the offering of the International Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the International Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholder and the total underwriting discount received by the International
Managers, in each case as set forth on the cover of the International
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the International
Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholder on the
one hand and the International Managers on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Stockholder
or by the International Managers and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or any violation of the nature referred to in Section 6(a)(ii)(A)
hereof.
The Company, the Selling Stockholder and the International Managers
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the International
Managers were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
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34
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Managers has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Managers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, the Selling Stockholder
or Enron, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company, the Selling Stockholder or Enron,
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company, the Selling
Stockholder or Enron, as the case may be. The International Managers' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial International Securities set forth opposite their
respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company, Enron and the Selling Stockholder with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
International Manager or controlling person, or by or on behalf of the Company,
and shall survive delivery of the Securities to the International Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company and the Selling Stockholder, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the International Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Lead Manager, impracticable to market the Securities or
to
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enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the International Managers. If
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Lead Managers
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Lead Managers shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of International Securities to be purchased on such date,
each of the non-defaulting International Managers shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting
International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of International Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after
the Closing Time, the obligation of the International Managers to
purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company and the Selling Stockholder shall have the right to postpone Closing
Time or the relevant
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36
Date of Delivery, as the case may be, for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term
"International Manager" includes any person substituted for an International
Manager under this Section 10.
SECTION 11. Default by the Selling Stockholder. If the Selling
Stockholder shall fail at Closing Time or at a Date of Delivery to sell and
deliver the number of U.S. Securities which the Selling Stockholder is obligated
to sell hereunder, then the U.S. Underwriters may, at option of the U.S.
Representatives, by notice from the U.S. Representatives to the Company, either
(a) terminate this Agreement without any liability on the fault of any
non-defaulting party except that the provisions of Sections 1, 4, 6, 7 and 8
shall remain in full force and effect or (b) elect to purchase the U.S.
Securities which the Company has agreed to sell hereunder. No action taken
pursuant to this Section 11 shall relieve the Selling Stockholder so defaulting
from liability, if any, in respect of such default.
In the event of a default by the Selling Stockholder as
referred to in this Section 11, each of the U.S. Representatives and the Company
shall have the right to postpone Closing Time or Date of Delivery for a period
not exceeding seven days in order to effect any required change in the
Registration Statement or Prospectus or in any other documents or arrangements.
If the Company shall fail at Closing Time or at the Date of
Delivery to sell the number of U.S. Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any nondefaulting party; provided, however, that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section shall relieve the Company from liability, if any, in respect of
such default.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers c/o Merrill ▇▇▇▇▇
& Co., at North Tower, World Financial Center, New York, New York 10281-1201,
attention of ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇. Notices to the Company shall be directed to it
at ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; attention of ▇▇▇▇ ▇. Ale. Notices
to Enron or the Selling Stockholder shall be directed to Enron at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; attention of ▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the International Managers, the Company, Enron and the
Selling Stockholder and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the International Managers, the Company,
Enron and the Selling Stockholder and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
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37
intended to be for the sole and exclusive benefit of the International Managers,
the Company, Enron and the Selling Stockholder and their respective successors,
and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any International Manager shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF
DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.
Very truly yours,
AZURIX CORP.
(the "Company")
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ATLANTIC WATER TRUST
(the "Selling Stockholder")
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-32-
38
ENRON CORP.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-33-
39
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ INTERNATIONAL
PAINEWEBBER INTERNATIONAL (U.K.) LTD.
ABN AMRO ROTHSCHILD
HSBC INVESTMENT BANKING, INC.
By: ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By:
-------------------------------------------
Authorized Signatory
For themselves and as Lead Managers of the other International Managers named in
Schedule A hereto.
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40
SCHEDULE A
NUMBER OF
INITIAL
INTERNATIONAL
NAME OF INTERNATIONAL MANAGER SECURITIES
----------------------------- ----------
▇▇▇▇▇▇▇ ▇▇▇▇▇ International................................................. 2,196,000
Credit Suisse First Boston (Europe)......................................... 1,464,000
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International.................................. 1,464,000
Painewebber International (U.k.) Ltd. ..................................... 1,464,000
ABN AMRO Rothschild......................................................... 366,000
HSBC Investment Banking, Inc................................................ 366,000
---------
Total............................................................... 7,320,000
=========
Sch ▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇
NUMBER OF MAXIMUM NUMBER OF
INITIAL INTERNATIONAL INTERNATIONAL OPTION
NAME OF ENTITY SELLING SECURITIES SECURITIES TO BE SOLD SECURITIES TO BE SOLD
--------------------------------- ---------------------- ---------------------
Azurix Corp............................. 3,420,000 -0-
Atlantic Water Trust.................... 3,900,000 1,098,000
--------- ---------
7,320,000 1,098,000
========= =========
Sch B-1
42
SCHEDULE C
AZURIX CORP.
(A DELAWARE CORPORATION)
7,320,000 SHARES OF COMMON STOCK
(PAR VALUE $.01 PER SHARE)
1. The initial public offering price per share for the International
Securities, determined as provided in Section 2, shall be $ ________.
2. The purchase price per share for the International Securities to be
paid by the several International Managers shall be $ _______, being an amount
equal to the initial public offering price set forth above less $ ______ per
share; provided that the purchase price per share for any International Option
Securities purchased upon the exercise of the over-allotment option described
in Section 2(b) shall be reduced by an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial
International Securities but not payable on the International Option
Securities.
Sch C-1
43
SCHEDULE D
LIST OF PERSONS SUBJECT TO LOCK-UP AGREEMENTS
All executive officers and directors of Azurix Corp. referenced in the
Prospectus under the caption "Management -- Executive Officers and Directors,"
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
Sch D-1
44
EXHIBIT A-1
FORM OF OPINION OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
TO BE DELIVERED PURSUANT TO SECTION 5(b)(i)
I. Opinions Concerning the Company
(i) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by the Company.
(ii) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectuses pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and, to the best of our
knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or threatened by the Commission.
(iii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434 Information,
as applicable, the Prospectuses and each amendment or supplement to the
Registration Statement and the Prospectuses as of their respective effective or
issue dates (other than the financial statements and supporting schedules
and other financial or accounting information included therein or omitted
therefrom, as to which we need express no opinion) appear on their face to
comply as to form in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations.
(iv) If Rule 434 has been relied upon, the Prospectuses were not
"materially different," as such term is used in Rule 434, from the prospectuses
included in the Registration Statement at the time it became effective.
(v) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.
(vi) The information in the Prospectuses under "Material United States
Federal Income Tax Consequences to Non-United States Holders of Common Stock" to
the extent that it constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by us and fairly presents the information
called for with respect thereto and fairly summarizes the matters referred to
therein.
(vii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any United States Federal, New
York, or to the extent required under the General Corporation Law of the State
of Delaware, Delaware court or governmental authority or agency, domestic or
foreign (other than under the 1933 Act and the 1933 Act Regulations, which have
been obtained, or as may be required under the securities or blue sky laws of
the various states,
A-1-1
45
as to which we need express no opinion) is necessary or required in connection
with the due authorization, execution and delivery of the U.S. Purchase
Agreement and the International Purchase Agreement or for the offering,
issuance, sale or delivery of the Securities (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, or as may be required under
the securities or blue sky laws of the various states, as to which we need
express no opinion).
(viii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
(ix) The Company is not subject to, or is exempt from, regulation as a
"holding company," or a "subsidiary company" of a "holding company," in each
case under the Public Utility Holding Company Act of 1935, as amended.
II. Opinions Concerning Selling Stockholder
(i) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any United States Federal, New
York, or to the extent required under the General Corporation Law of the State
of Delaware, Delaware court or governmental authority or agency is necessary or
required to be obtained by the Selling Stockholder for the performance by the
Selling Stockholder of its obligations under the U.S. Purchase Agreement or in
the Power of Attorney and Custody Agreement, or in connection with the offer,
sale or delivery of the Securities (other than the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion).
(ii) The Power of Attorney and Custody Agreement has been duly
authorized, executed and delivered by the Selling Stockholder and constitutes
the legal, valid and binding agreement of the Selling Stockholder.
(iii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by or on behalf of
the Selling Stockholder.
(iv) The Attorney-in-Fact has been duly authorized by the Selling
Stockholder to deliver the U.S. Securities on behalf of the Selling Stockholder
in accordance with the terms of the U.S.
Purchase Agreement.
(v) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the Power of Attorney and
Custody Agreement and the sale and delivery of the U.S. Securities and the
consummation of the transactions contemplated in the U.S. Purchase Agreement and
the International Purchase Agreement and in the Registration Statement and
compliance by the Selling Stockholder with its obligations under the U.S.
Purchase
A-1-2
46
Agreement and the International Purchase Agreement have been duly authorized by
all necessary action on the part of the Selling Stockholder and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under or result in the
creation or imposition of any tax, lien, charge or encumbrance upon the
Securities or any property or assets of the Selling Stockholder pursuant to, any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
license, lease or other instrument or agreement listed in an exhibit to the
opinion to which the Selling Stockholder is a party or by which it may be bound,
or to which any of the property or assets of the Selling Stockholder may be
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect) nor will such action
result in any violation of (i) the provisions of the certificate of Trust and
Trust Agreement of the Selling Stockholder, if applicable, or (ii) any
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, governmental instrumentality or court, having
jurisdiction over the Selling Stockholder or any of its properties, assets or
operations, except in the case of clause (ii) for violations that would not have
a Material Adverse Effect.
(vi) To the best of our knowledge, the Selling Stockholder has valid
and marketable title to the Securities to be sold by the Selling Stockholder
pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement, free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind, and has full right, power and authority to
sell, transfer and deliver such Securities pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement. By delivery of a certificate
or certificates therefor the Selling Stockholder will transfer to the
Underwriters who have purchased such Securities pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement (without notice of any defect
in the title of the Selling Stockholder and who are otherwise bona fide
purchasers for purposes of the Uniform Commercial Code) valid and marketable
title to such Securities, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses in the column entitled "Actual"
under the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to the U.S. Purchase Agreement and the International Purchase Agreement
or pursuant to reservations, agreements, or employee benefit plans referred to
in the Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses); the shares of issued and outstanding
capital stock of the Company, including the U.S. Securities to be purchased by
the U.S. Underwriters from the Selling Stockholder, have been duly authorized
and validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company.
III. Matters Concerning the Registration Statement and the Prospectuses
We have participated in conferences with officers and other
representatives of the Company and the underwriters, with representatives of
counsel for the underwriters and with representatives
A-1-3
47
of the auditors of the Company, at which conferences the contents of the
Registration Statement and the Prospectuses and related matters were discussed.
Although we have not undertaken to determine independently, and do not assume
any responsibility for, or express any opinion regarding, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, based upon the participation described above
(relying as to matters of fact upon statements made to us by representatives of
the Company) and subject to the next succeeding sentence, no information has
come to our attention that causes us to believe that (a) the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations or (b)(i) the
Registration Statement, at the time that it became effective or at the date
hereof, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein not misleading or (ii) the Prospectus, at the date of the Prospectus or
at the date hereof, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In making the foregoing statement, we do not express any comment
or belief with respect to the financial statements, the notes thereto, the
schedules or the other financial [or accounting] information contained in the
Registration Statement or the Prospectus.
In rendering the foregoing opinions, such counsel may rely as to
matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company, the Selling
Stockholder and Enron and public officials. Such opinion shall not state that it
is to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
A-1-4
48
EXHIBIT A-2
FORM OF OPINION OF ▇▇▇▇ ▇. ALE, ESQUIRE
EXECUTIVE DIRECTOR AND GENERAL COUNSEL OF THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 5(b)(ii)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company, and the U.S. Securities to be purchased
by the U.S. Underwriters from the Selling Stockholder, have been duly authorized
for issuance and sale to the Underwriters pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to the U.S. Purchase Agreement and
the International Purchase Agreement, respectively, against payment of the
consideration set forth in the U.S. Purchase Agreement and the International
Purchase Agreement, will be validly issued and fully paid and non-assessable and
no holder of the Securities is or will be subject to personal liability by
reason of being such a holder.
(v) The issuance and sale of the Securities by the Company, and the
sale of the U.S. Securities by the Selling Stockholder, is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(vi) Each of the Subsidiaries (other than Azurix Europe Ltd., Wessex
Water Ltd. and Wessex Water Services Ltd. (the "English Subsidiaries")) has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate power and
authority and all governmental licenses, authorizations, consents and approvals
to own, lease and operate its properties and to conduct its business as
described in the Prospectuses and, to the best of my knowledge, each Subsidiary
is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement; except as otherwise disclosed in the Registration
Statement, all of the issued and outstanding capital stock of each Subsidiary
(and, in the case of ▇▇▇▇▇▇ Utilities Management Corporation and of its
subsidiaries, to my knowledge) has been duly authorized and validly issued, is
fully paid and non-assessable and, to the best of my
A-2-1
49
knowledge, is owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary.
(vii) To the best of my knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry, or investigation, to which the Company or
any subsidiary is a party, or to which the property of the Company or any
subsidiary is subject, before or brought by any court or governmental agency or
body, domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely the consummation of the transactions contemplated in the U.S. Purchase
Agreement and International Purchase Agreement or the performance by the Company
of its obligations thereunder.
(viii) The information in the Prospectuses under "Business--Property,"
and "Business--Litigation," to the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, has been reviewed by me and
fairly presents the information called for with respect thereto and fairly
summarizes the matters referred to therein.
(ix) To the best of my knowledge, there are no statutes or regulations
that are required to be described in the Prospectuses that are not described as
required.
(x) All descriptions in the Prospectuses of contracts and other
documents to which the Company or its subsidiaries are a party are accurate in
all material respects; to the best of my knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xi) Neither the Company nor any subsidiary is in violation of its
charter or by-laws or other organizational documents or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any material ("material" for purposes of this opinion means any
agreement or instrument filed as an exhibit to the Registration Statement or
involving a commitment of $25,000,000 or more) contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such violations or defaults that would not result in a
Material Adverse Effect.
(xii) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of Proceeds")
and compliance by the Company with its obligations under the U.S. Purchase
Agreement and the International
▇-▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the Purchase
Agreements) under or result in the creation or imposition of any lien, charge,
or encumbrance upon any property or assets of the Company or any subsidiary
pursuant to any material contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease, or any other agreement or instrument, known to
me, to which the Company or any subsidiary is a party or by which it or any of
them may be bound, or to which any of the property or assets of the Company or
any subsidiary is subject (except for such conflicts, breaches or defaults or
liens, charges, or encumbrances that would not have a Material Adverse Effect),
nor will such action result in any violation of (i) the provisions of the
charter or by-laws of the Company or any Subsidiary, or (ii) any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their respective
properties, assets or operations, except in the case of clause (ii) for
violations that would not have a Material Adverse Effect.
(xiii) Except as described in the Registration Statement, to the best
of my knowledge, there are no persons with registration rights or other similar
rights to have any securities of the Company registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act.
(xiv) To the best of my knowledge, none of the AEL Companies is in
violation of its memorandum or articles of association.
Subject to the next succeeding sentence, no information has come to my
attention that causes me to believe that (i) the Registration Statement, at the
time that it became effective or at the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein not misleading or (ii) the
Prospectus, at the date of the Prospectus or at the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. In making the
foregoing statement, I do not express any comment or belief with respect to the
financial statements, the notes thereto, the schedules or the other financial
information contained in the Registration Statement or the Prospectus.
In rendering the foregoing opinions, such counsel may rely as to
matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company, the Selling
Stockholder and Enron and public officials. Such opinion shall not state that it
is to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
A-2-3
51
EXHIBIT A-3
FORM OF OPINION OF LINKLATERS & PAINES
ENGLISH COUNSEL FOR THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 5(b)(iii)
(i) Each of Azurix Europe Ltd., Wessex Water Ltd. and Wessex Water
Services Ltd. (the "AEL Companies") is a private limited company duly
incorporated, validly existing and in good standing under law of England and
Wales and has the corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses. Wessex
Water Services Ltd. has been duly licensed as a water and wastewater service
company as described in the Prospectuses.
(ii) We have reviewed the information in the Prospectuses under
"Business--Existing Azurix Assets--Wessex--Customer Charges" and "Regulatory
Matters--U.K. Regulatory Matters", to the extent that information constitutes
matters of law or regulation, summaries of legal matters or legal conclusions,
in each case under the law of the United Kingdom, and that information fairly
presents the material information with respect to the matters addressed and
fairly summarizes the matters referred to in those sections.
In rendering the foregoing opinions, such counsel may rely as to
matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and its
subsidiaries, the Selling Stockholder and Enron and public officials.
A-3-1
52
EXHIBIT A-4
FORM OF OPINION OF ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ESQUIRE
SENIOR VICE PRESIDENT AND GENERAL COUNSEL OF ENRON
TO BE DELIVERED PURSUANT TO SECTION 5(b)(iv)
(i) Enron has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Oregon.
(ii) Enron has corporate power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and to enter
into and perform its obligations under the U.S. Purchase Agreement and the
International Purchase Agreement.
(iii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by Enron.
(iv) The execution, delivery and performance by Enron of the U.S.
Purchase Agreement and the International Purchase Agreement and the consummation
by Enron of the transactions contemplated in the U.S. Purchase Agreement, the
International Purchase Agreement and in the Registration Statement and
compliance by Enron with its obligations under the U.S. Purchase Agreement and
the International Purchase Agreement do not and will not (A) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of Enron or any subsidiary of Enron listed on Schedule I
hereto ("Enron Subsidiary") or any material ("material" for purposes of this
opinion involving a commitment of $50,000,000 or more) indenture, loan
agreement, mortgage or, to my knowledge, other agreement to which Enron or any
of the Enron Subsidiaries is a party or by which Enron or any of the Enron
Subsidiaries or any of their respective property is bound, (B) violate or
conflict with any existing applicable law or any rule, regulation, judgment,
order or decree of any court or domestic governmental body or agency known to me
and having jurisdiction over Enron, any of the Enron Subsidiaries or any of
their respective property or (C) result in the suspension, termination or
revocation of any authorization of Enron or any of the Enron Subsidiaries or any
other impairment of rights of the holder of any such authorization that would
have a material adverse effect on Enron and its subsidiaries, taken as a whole.
A-4-1
53
SCHEDULE I
Subsidiaries
Citrus Corp.
Enron Capital & Trade Resources Corp.
Enron International Inc.
Enron Oil & Gas Company
Enron Power Corp.
Florida Gas Transmission Company
Houston Pipe Line Company
Northern Natural Gas Company
Portland General Electric Company
Transwestern Pipeline Company
54
EXHIBIT B
__________________, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
PaineWebber Incorporated
BT Alex. ▇▇▇▇▇ Incorporated
Banc of America Securities LLC
as U.S. Representatives of the several U.S. Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
Credit Suisse First Boston (Europe) Limited
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International
PaineWebber International (U.K.) Ltd.
ABN AMRO Rothschild
HSBC Investment Banking, Inc.
c/o Merrill ▇▇▇▇▇ International
Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Re: Proposed Public Offering by Azurix Corp.
Dear Sirs:
The undersigned, a stockholder or option holder and an officer and/or
director of Azurix Corp., a Delaware corporation (the "Company"), understands
that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇"), its international affiliate, ▇▇▇▇▇▇▇ ▇▇▇▇▇ International
Limited, and certain other underwriters propose to enter into two Purchase
Agreements (the "Purchase Agreements") with the Company and the Selling
Stockholder providing for the public offering of shares (the "Securities") of
the Company's common stock, par value $.01
B-1
55
per share (the "Common Stock"). In recognition of the benefit that such
offerings will confer upon the undersigned as a stockholder or option holder and
an officer and/or director of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreements
that, during a period of 180 days from the date of the Purchase Agreement, the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
directly or indirectly, (i) offer, pledge, sell, sell short, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant for the sale of, or otherwise dispose
of or transfer any shares of the Company's Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise; provided that shares of Common Stock or
securities convertible or exercisable into Common Stock may be transferred as
bona fide gifts by stockholders to such stockholder's spouse, children,
siblings, parents or other descendants or trusts controlled by such stockholder
who agree prior to such transfer to be bound by a similar lock-up agreement.
Very truly yours,
Signature:
Print Name:
B-2