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EXHIBIT 10.6
BUSINESS OPPORTUNITY AGREEMENT
THIS BUSINESS OPPORTUNITY AGREEMENT (this "AGREEMENT"), dated as of
May 1, 1999, is by and among Enron Corp., an Oregon corporation ("ENRON"),
Atlantic Water Trust, a Delaware statutory business trust ("ATLANTIC WATER
TRUST"), and Azurix Corp., a Delaware corporation ("AZURIX"). Atlantic Water
Trust and Azurix are referred to herein collectively as the "AZURIX PARTIES."
Unless the context otherwise requires, references herein to Enron shall be
deemed to be references to Enron and its Affiliates other than Atlantic Water
Trust, Azurix, and entities controlled by either of them.
W I T N E S S E T H:
WHEREAS, Azurix is a wholly owned Subsidiary of Atlantic Water Trust;
and
WHEREAS, Enron owns a significant beneficial interest in Atlantic Water
Trust; and Enron may owe certain duties to Atlantic Water Trust and Azurix
resulting from its ownership interest in Atlantic Water Trust; and
WHEREAS, Azurix and Enron are engaged in the Water Business; and
WHEREAS, Enron engages in, or may engage in the future in, activities
that may have an impact on Atlantic Water Trust and Azurix and their respective
businesses, including the Water Business; and
WHEREAS, the application of the law relating to duties that Enron may
owe to Atlantic Water Trust and Azurix is often difficult to predict; and if a
court were to hold that Enron breached any such duty, Enron could be held liable
for damages in a legal action brought on behalf of Atlantic Water Trust or
Azurix; and
WHEREAS, Enron, Atlantic Water Trust, and Azurix desire to enter into
this Agreement in order to (i) define duties that Enron will owe to Atlantic
Water Trust and Azurix with respect to business opportunities; (ii) define
rights that Enron will have with respect to business opportunities; and (iii)
specify certain circumstances which will not give rise to a breach of duty on
the part of Enron; and
WHEREAS, the Azurix Parties anticipate that they and their Affiliates
will benefit from their relationships with Enron, and Enron's investment in
Atlantic Water Trust was predicated on the execution and delivery of an
agreement containing substantially the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, rights, and
obligations set forth in this Agreement and the benefits to be derived herefrom,
and for other good and valuable
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consideration, the receipt and the sufficiency of which each of the parties
hereto acknowledges and confesses, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINED TERMS; EXHIBITS. As used in this Agreement,
capitalized terms have the meanings ascribed to such terms in this Agreement and
on Exhibit A attached hereto. Any and all references to "EXHIBITS" are to
Exhibits to this Agreement, each of which is made a part of this Agreement and
incorporated herein for all purposes.
SECTION 2. REPRESENTATIONS. Each of the parties hereto represents and
warrants to the other parties that it has the power and authority (corporate or
other) to enter into this Agreement and to perform its obligations hereunder and
that the execution, delivery and performance of this Agreement will not conflict
with or result in a violation of any law or any other agreement to which it is a
party or by which it is bound.
SECTION 3. AGREEMENT BY AZURIX REGARDING ENRON BUSINESS ACTIVITIES.
Azurix acknowledges and agrees that, so long as such activities are conducted in
compliance with this Agreement in all material respects, Enron is free to
conduct business activities that are within Enron's existing lines of business,
including, but not limited to, the Water Business, and any other lines of
business in which Enron chooses to engage in the future. Without limiting the
foregoing, Azurix acknowledges and agrees that, so long as such activities are
conducted in compliance with this Agreement in all material respects, Enron may
engage in any and all aspects of the Water Business. In connection with the
foregoing, Azurix acknowledges that such activities may result in the
acquisition by Enron of Water Business Assets, and in certain cases Enron or
entities in which Enron has an interest may engage in the Water Business or
acquire Water Business Assets pursuant to bidding or auction processes in which
Azurix is also a bidder. Azurix acknowledges and agrees that such activities may
have an impact on Azurix or the price it pays for properties or securities it
purchases from others. Azurix acknowledges and agrees that Enron or entities in
which it has an interest may engage in the Water Business or acquire direct or
indirect interests in Water Business Assets as a result of the activities
described above, may own, operate, and control any such assets in connection
therewith, and may acquire additional Water Business Assets or pursue
opportunities related thereto or in connection therewith, in each case without
any duty to offer all or any portion of such assets or opportunities to Azurix.
SECTION 4. AGREEMENT BY ENRON REGARDING SEPARATE CONDUCT OF BUSINESS.
Enron agrees that, except with respect to business opportunities pursued jointly
by Enron and Azurix and except as otherwise agreed to between Enron and Azurix,
Enron's business will be conducted through the use of its own personnel and
assets and not with the use of any personnel or assets of Azurix; provided that
nothing herein shall be deemed to prevent Enron from using personnel and
information of Azurix in connection with Enron's decisions regarding its
investment in Atlantic Water Trust, Azurix, or their Affiliates. Without
limiting the foregoing, Enron agrees that, without the consent of Azurix, the
Water Business conducted by Enron entities will only involve business
opportunities identified by or presented to Enron personnel and developed and
pursued solely through the use of the personnel and assets of Enron entities.
Enron agrees that it will not pursue any business opportunity that involves
Water Business Assets that is first presented to an officer or director of Enron
who is also an officer or director of Azurix at the time such opportunity is
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presented (i.e. the first officer or director of Enron to receive notice of such
opportunity from a third party is also an officer or director of Azurix), or
that such officer or director identified on his or her own, unless Enron first
offers such opportunity to Azurix and within a reasonable period of time Azurix
notifies Enron in writing that Azurix elects not to pursue such opportunity. For
purposes of the foregoing, (a) a business opportunity that involves Water
Business Assets shall not include any opportunity where Water Business Assets
represent less than a majority of the fair market value of the opportunity, as
determined by the officer or director of Enron to whom such opportunity is first
presented, based on information available to such officer or director at the
time such opportunity is first presented (which determination shall be
conclusive if made in good faith), (b) senior officers of Azurix who are members
or ad hoc members of the Management Committee of Enron or any similar committee
shall not, by virtue of such membership or ad hoc membership, be deemed to be
Enron personnel, and (c) it will not be a breach of Enron's agreement to develop
and pursue business opportunities solely through the use of the personnel and
assets of ECT, EES, EII, or other Enron entities if one or more senior officers
of Enron who serve on the Board of Directors of Azurix participate, as officers
of Enron, in evaluating, developing or approving business opportunities that
were identified by other Enron personnel or first presented to other Enron
personnel (i.e. the first Enron person to receive notice of such opportunity
from a third party or who identified the opportunity on his or her own was not
also an officer or director of Azurix). The provisions of this Section 4 relate
exclusively to the duties that Enron owes Azurix, and nothing herein shall
affect the fiduciary or other duties owed to Azurix by any individual director
or officer of Azurix in his or her capacity as such. In this connection, Enron
agrees that its representatives on the Board of Directors of Azurix will not,
for the purpose of enabling Enron to pursue an opportunity in the Water
Business, vote in such a manner as to effectively prevent, prohibit, or restrict
Azurix from pursuing such opportunity.
SECTION 5. AGREEMENT, WAIVER, RELEASE AND INDEMNITY. In further
consideration of the benefits received and to be received by Azurix pursuant to
this Agreement, Azurix acknowledges and agrees that, if any business opportunity
is presented to or identified by Enron, except as otherwise provided in Section
4 of this Agreement, Enron may pursue such opportunity and conduct the business
related thereto without any obligation to offer it to Azurix. Azurix
acknowledges and agrees that in such case, to the extent that a court might hold
that the pursuit of such opportunity or the conduct of such activity is a breach
of any standard of care, any duty of loyalty, or any other duty to Azurix (and
without admitting that the pursuit of such opportunity or the conduct of such
activity is such a breach of any such standard or duty), Azurix hereby fully and
irrevocably releases and waives any and all Claims that Azurix or any Person
claiming by, through, or under Azurix may have to claim that the pursuit by
Enron of any such business opportunity or the conduct of the business related
thereto is a breach of any standard of care, any duty of loyalty, or any other
duty to Azurix (and including, without limitation, any and all Claims arising
either directly or derivatively, and whether brought by, through, or under
Azurix, or by any stockholder, creditor, or Subsidiary of Azurix). Further,
Azurix, for itself and its successors and assigns, hereby agrees to indemnify,
defend, and hold harmless Enron and its predecessors and successors in interest,
and all of Enron's and its respective predecessors and successors in interests'
respective Affiliates, stockholders, directors, officers, employees, agents,
attorneys, servants, invitees, contractors, licensees, legal representatives,
successors, and assigns, from any and all such Claims that may be asserted (a)
by any Person whomsoever claiming by, through, or under Azurix or (b) by any
successors or assigns of Azurix. It
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is the express intention of Azurix that the indemnity to Enron herein provided
covers any such Claims asserted by, through, or under Azurix, notwithstanding
that such Persons are not signatories to this Agreement, and whether or not the
release provisions are directly enforceable against any Persons who are not
signatories to this Agreement. This indemnity applies for the benefit of Enron
(including its predecessors and successors in interest, and all of Enron's and
its respective predecessors and successors in interests' respective Affiliates,
stockholders, directors, officers, employees, agents, attorneys, servants,
invitees, contractors, licensees, legal representatives, successors, and
assigns) regardless of whether such claims are based in whole or in part upon
the alleged partial or sole negligence or strict liability of Enron (or its
predecessors or successors in interest, or Enron's or its respective
predecessors or successors in interests' respective Affiliates, stockholders,
directors, officers, employees, agents, attorneys, servants, invitees,
contractors, licensees, legal representatives, successors, and assigns). The
waivers and agreements herein apply equally to activities to be conducted in the
future and activities that have been conducted in the past.
SECTION 6. AGREEMENT TO SUPPLY INFORMATION. Enron agrees that, in
connection with any opportunity presented to Azurix pursuant to Section 4 of
this Agreement, Enron will furnish to Azurix all information in Enron's
possession or reasonably available to Enron regarding the opportunity in
question that is material to a decision by Azurix whether or not to pursue such
opportunity; provided, however, that as a condition to the furnishing of such
information, Enron may require Azurix to enter into a written confidentiality
agreement to protect any non-public, confidential, or proprietary information of
Enron or any third party.
SECTION 7. CONFIDENTIALITY AGREEMENTS, ETC. In the event any party
hereto, or any controlled Affiliate of that party, executes a confidentiality
agreement, an area of mutual interest agreement, a standstill agreement or any
other agreement which purports to bind another party hereto (or any Subsidiary
of such other party), and such other party (or any such Subsidiary of such other
party) is not a party to such agreement, (a) such agreement shall not be binding
on the other party or any of its Subsidiaries (each party acknowledging that
neither it nor any of its Controlled Subsidiaries has any authority to bind any
other party or any other party's Subsidiaries), (b) the other party and its
Subsidiaries shall have no liability for any breach of such agreement, and (c)
the party that executed, or whose controlled Affiliate executed, such agreement
will indemnify, defend, and hold harmless the other party and its Subsidiaries
against any claims arising from or relating to such agreement or any alleged
breach thereof. In the event any third party requires Azurix or Enron to execute
a confidentiality or standstill agreement in order that Enron can furnish to
Azurix, or Azurix can furnish to Enron, any information required by this
Agreement in order to permit Azurix or Enron to exercise any right granted by
this Agreement, Enron and Azurix's obligation in this Agreement to furnish such
information will be conditioned upon the execution of such agreement by Azurix
or Enron, as the case may be.
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SECTION 8. ARBITRATION.
(a) Agreement to Arbitrate. Any and all Claims arising out of
or relating to any provision of this Agreement or the alleged breach hereof,
even though some or all of such Claims allegedly are extracontractual in nature,
whether such Claims sound in contract, tort, or otherwise, at law or in equity,
under domestic, or foreign law, whether provided by statute or the common law,
for damages or any other relief, shall be resolved and decided exclusively by
binding arbitration pursuant to the Federal Arbitration Act in accordance with
the Commercial Arbitration Rules then in effect with the American Arbitration
Association.
(b) Procedural Matters. The arbitration proceeding shall be
conducted in Houston, Texas. The arbitration shall be before a panel of three
arbitrators. Each party to such dispute (with the Azurix Parties being
considered one party of any dispute) shall select one arbitrator, and the two
arbitrators selected by the parties shall select the third arbitrator. The
arbitrators are authorized to issue subpoenas for depositions and other
discovery mechanisms, as well as trial subpoenas, in accordance with the Federal
Rules of Civil Procedure. Any party may initiate a proceeding in the appropriate
United States District Court to enforce this provision. This agreement to
arbitrate shall be enforceable in any and all courts (federal, state, or
otherwise). Judgment upon any award rendered in any such arbitration proceeding
may be entered by any court having jurisdiction. The enforcement of this
agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay, or
defenses to arbitrability and the rules governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act.
(c) Amounts Awarded. The arbitrators may award such damages as
they deem appropriate, except that the arbitrators shall have no authority to
award punitive (including, without limitation, any exemplary damages, treble
damages, or any other penalty or punitive type of damages), consequential,
incidental, or indirect damages (in tort, contract, or otherwise), the parties
hereby waiving their right, if any, to recover such damages; provided, however,
that the arbitrators shall have the authority to award damages (including,
without limitation, any punitive damages, exemplary damages, treble damages, or
any other penalty or punitive type of damages or indirect damages, in tort,
contract, or otherwise) that were incurred by a party as a result of a third
party Claim against such party.
(d) Costs. The arbitrators shall be entitled to award costs of
the arbitration and attorneys' fees as they deem appropriate.
(e) Prior Notice. Prior to the institution of a Claim under
this Agreement by any Person, such Person shall provide to Enron and all other
parties to this Agreement a written notice specifying the nature and basis of
the Claim. The Persons who are the subject of any Claim shall be given thirty
(30) days to cure any breach before any arbitration proceeding is initiated.
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SECTION 9. RESOLUTION OF CONFLICTS OF INTEREST
(a) Whenever a potential conflict of interest exists or arises between
Enron, on the one hand, and any of the Azurix Parties, on the other hand, any
resolution or course of action in respect of such conflict of interest shall be
permitted and deemed approved by all parties, and shall not constitute a breach
of any duty stated or implied by law or equity, if the resolution or course of
action is authorized by this Agreement or, by operation of this Agreement, is
deemed to be fair and reasonable to the Azurix Parties. Enron shall be
authorized but not required in connection with its resolution of such conflict
of interest to seek Special Approval of a resolution of such conflict or course
of action. The term "SPECIAL APPROVAL" shall mean the approval of a majority of
disinterested directors of Azurix. Any conflict of interest and any resolution
of such conflict of interest shall be conclusively deemed fair and reasonable to
the Azurix Parties if such conflict of interest or resolution is (i) approved by
Special Approval, or (ii) on terms no less favorable to the Azurix Parties than
those generally being provided to or available from unrelated third parties, or
(iii) fair to the Azurix Parties, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to one or more of the Azurix
Parties). Enron may also adopt a resolution or course of action that has not
received Special Approval. Enron and any Person voting in connection with
Special Approval shall be authorized in connection with its determination of
what is "fair and reasonable" to the Azurix Parties and in connection with its
resolution of any conflict of interest to consider (A) the relative interests of
any party to such conflict, agreement, transaction, or situation and the
benefits and burdens relating to such interest; (B) any customary or accepted
industry practices and any customary or historical dealings with a particular
Person; (C) any applicable generally accepted accounting or engineering
practices or principles; and (D) such additional factors as such Person
determines in its sole discretion to be relevant, reasonable, or appropriate
under the circumstances. In the absence of bad faith by Enron, the resolution,
action, or terms so made, taken, or provided by Enron with respect to such
matter shall not constitute a breach of this Agreement or any other agreement
contemplated herein or a breach of any standard of care, any duty of loyalty, or
any other duty imposed herein or therein or under Delaware law or any other law,
rule, or regulation.
(b) Any standard of care, any duty of loyalty, and any other duty
imposed by this Agreement or under Delaware law or any other applicable law,
rule, or regulation shall be modified, waived, or limited as required to permit
Enron to act under this Agreement and to make any decision pursuant to the
authority prescribed in this Agreement so long as such action is reasonably
believed by Enron to be in, or not inconsistent with, this Agreement or the
interests of the Azurix Parties.
SECTION 10. AMENDMENT OF AZURIX'S PURPOSE CLAUSE. Azurix, Atlantic
Water Trust, and Enron agree that, as soon as practicable following the
execution and delivery of this Agreement, they will take such action as is
necessary to cause the purpose clause of Azurix in its Certificate of
Incorporation to be amended to read as follows:
The purpose of the Corporation is to engage, directly or
indirectly (through affiliates or otherwise), in acquiring,
owning, operating, and managing water and wastewater assets,
providing water- and wastewater- related services, and
developing and managing water resources, including without
limitation (i) the ownership, operation, and management of
water supply and wastewater systems and facilities, (ii) the
ownership of interests entitling the owner to
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supplies of water (including water supply agreements and water
rights and other interests in real property held primarily for
use in production, collection, or storage of water), (iii) the
ownership and operation of real and personal property used or
useful in connection with exploration for water, development
of water reserves upon discovery thereof, production of water
from ▇▇▇▇▇ located on water properties, and storage and
transportation of water including, but not limited to, water
▇▇▇▇▇, water pipelines, water storage tanks, water treatment
plants, water pressurization facilities, water distribution
systems, and rights of way, licenses and other rights
associated therewith, (iv) the ownership and operation of real
and personal property used or useful in connection with water
and wastewater collection, treatment, distribution, and
disposal operations, including, but not limited to,
reservoirs, ▇▇▇▇▇, abstraction devices, pipelines, aqueducts,
desalination plants, water treatment facilities, distribution
networks, wastewater collection networks, and wastewater
treatment facilities, (v) service agreements that relate to
the management of water supply or water or wastewater
facilities or systems, including, but not limited to, water
and wastewater system management contracts and "back office"
services agreements, (vi) the operation, management, and
provision of architectural, engineering, and construction
services related to the foregoing, (vii) services and assets
to dispose of residual products from wastewater treatment,
(viii) remediation and development of underground
infrastructure related to water and wastewater systems and
supply, (ix) risk management services involving water
supplies, (x) debt of or equity interests in corporations,
partnerships, or other entities engaged in businesses that the
Corporation is permitted hereby to engage in, (xi) any other
lawful business or activity that now or hereafter may be
incidental to the foregoing purpose or acquired as part of a
larger acquisition transaction the majority of the value of
which (as determined by the Board of Directors of the
Corporation or its designee in good faith) relates to one or
more of the foregoing purposes, but excluding (in the case of
each of items (i) through (xi)) supplying fuel, supplying
energy (other than sales of excess generation from facilities
principally serving assets or facilities described in items
(i), (iii), (iv) and (vii) above), or providing risk
management services on a commodity other than water (other
than being a party to a risk management arrangement to protect
against risks facing the Corporation), and (xii) any other
lawful business or activity; provided that such other business
or activity contemplated by this clause (xii) is approved in
writing by Enron Corp., an Oregon corporation, which approval
may be granted or withheld by Enron Corp. in its sole
discretion and which approval may be general in nature or may
be confined to a particular facility or a particularly
described expanded business purpose. Notwithstanding the
foregoing, from and after the first date on which both of the
following tests are met: (a) Enron Corp. and affiliates of
Enron Corp. do not individually or collectively, directly or
indirectly, own or have the power to vote at least one-third
of the capital stock of the Corporation having ordinary voting
power for the election of
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directors, and (b) fewer than one-third of the directors of
the Corporation are persons who are employees, officers or
directors of Enron Corp. or of any affiliate of Enron Corp.,
the purpose of the Corporation shall be to engage in any
lawful business or activity in which a corporation organized
under the laws of Delaware is permitted to engage under
Delaware law.
Azurix agrees that, until the first date on which both of the following tests
are met: (a) Enron and Affiliates of Enron do not individually or collectively,
directly or indirectly, own or have the power to vote at least one-third of the
capital stock of Azurix having ordinary voting power for the election of
directors, and (b) fewer than one-third of the directors of Azurix are persons
who are employees, officers or directors of Enron or of any Affiliate of Enron,
without the prior written consent of Enron (which consent Enron may grant or
withhold in its sole discretion), Azurix will not further amend the purpose
clause of its Certificate of Incorporation. Azurix also agrees that, to the
extent practicable, it will take such action as it deems appropriate to ensure
that its activities and the activities conducted by its Controlled Subsidiaries
are conducted in a manner that is consistent with the foregoing purpose clause.
SECTION 11. DUTIES OF INDIVIDUAL DIRECTORS. Nothing herein shall affect
the fiduciary or other duties owed to Atlantic Water Trust or Azurix by any
individual director or officer of Atlantic Water Trust or Azurix in his or her
capacity as such.
SECTION 12. DUTIES TO EXISTING ENTITIES. The Azurix Parties acknowledge
that Enron has fiduciary and contractual obligations to other Persons and
entities under existing agreements and relationships and agree that, in the
event of a conflict between the duties of Enron under this Agreement and the
duties of Enron to third parties under agreements or relationships that exist on
the date hereof, Enron shall be entitled to perform its duties to such third
parties without any liability to the Azurix Parties. Without limitation or
exclusion to any other agreements or relationships that Enron has in or
affecting the Water Business on the date hereof, the parties acknowledge that
Enron has furnished to Azurix a confidential list of transactions or
relationships that Enron currently has in or affecting the Water Business or
Water Business Assets and for which Azurix fully and irrevocably waives and
releases any and all Claims with respect thereto.
SECTION 13. MISCELLANEOUS PROVISIONS.
(a) Governing Law and Venue. This Agreement shall be governed
by and construed and enforced in accordance with the laws of Delaware without
regard to principles of conflicts of law.
(b) Third Party Beneficiaries. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their successors and permitted assigns. This Agreement is also
intended for the benefit of each member of the Board of Directors of Enron,
Atlantic Water Trust and Azurix, each of which will be considered a third party
beneficiary of this Agreement.
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(c) Amendment; Waivers. This Agreement may be altered,
supplemented, amended, or waived only by the written consent of each party
hereto.
(d) Assignment. No party hereto shall have the right to assign
this Agreement or any of its rights or obligations hereunder without the prior
written consent of the other parties hereto; and any purported assignment of
this Agreement or any of the rights or obligations of a party hereunder without
such consent shall be deemed to be null and void ab initio.
(e) Notices. Any and all notices, designations, consents,
offers, acceptances, or other communications provided for herein (each a
"NOTICE") shall be given in writing by personal delivery, telegram, or telecopy
which shall be addressed, or sent, to the respective addresses or telecopy
numbers as follows (or such other address or telecopy number as any party hereto
may specify for itself by Notice given in accordance with this Section 13(e)):
If to Enron:
Enron Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: 713/646-5801
with a copy to:
Enron Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: 713/853-3920
If to Atlantic Water Trust:
Atlantic Water Trust
C/o Wilmington Trust Company, Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporation Trust Administration
Telecopy: 302/651-8681
with a copy to Azurix at its address below.
If to Azurix:
Azurix Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: 713/345-5330
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All Notices shall be deemed effective, delivered, and received (i) if given by
personal delivery, when such Notice is personally delivered at the address
specified above; (ii) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified above and receipt thereof is confirmed; or (iii)
if given by telegram, when such Notice is delivered at the address specified
above.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which counterparts shall be deemed to be an original
and which counterparts together shall constitute one and the same agreement of
the parties hereto.
(g) Entire Agreement. This Agreement contains the entire
understanding of the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, discussions, and understandings with respect
thereto.
(h) No Partnership. No term or provision of this Agreement
shall be construed to establish any partnership, agency, or joint venture
relationship among the parties hereto.
(i) Invalidity. In the event that any one or more of the
provisions contained in this Agreement is, for any reason, held invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability will not affect any other provision of this Agreement.
(j) Outside Advisers. Each of the parties agrees that the
other may engage any investment banker or engineering, accounting, legal, or
other professional adviser to perform services for it, notwithstanding the fact
that the other party may also employ such Person, and each party waives the
right to claim that the other party breached any duty to it in connection with
such engagement. Nothing herein shall be deemed to grant any rights to any
Person performing investment banking or other professional services for Enron,
Atlantic Water Trust, or Azurix or to preclude any claim by either Enron,
Atlantic Water Trust, or Azurix against any such Person that violates any duty
owed by such Person to Enron, Atlantic Water Trust, or Azurix.
(k) Termination. This Agreement will not be applicable to
opportunities first presented on or after the first date on which both of the
following tests are met: (a) Enron and Affiliates of Enron do not individually
or collectively, directly or indirectly, own or have the power to vote at least
one-third of the capital stock of Azurix having ordinary voting power for the
election of directors, and (b) fewer than one-third of the directors of Azurix
are persons who are employees, officers or directors of Enron or of any
Affiliate of Enron.
(l) Holding Company. No party to this Agreement will, or will
permit any of its Controlled Subsidiaries to, take any action that will require
any other party to this Agreement to register as a "holding company" under the
United States Public Utility Holding Company Act of 1935, as amended, or to have
to qualify for an exemption or change any existing exemption available to a
party to avoid registration thereunder.
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(m) Violation of Law. Neither Azurix nor its Controlled
Subsidiaries shall take any action that will cause Enron or any of its
Subsidiaries to violate applicable law or that will otherwise cause Enron or any
of its Subsidiaries to be subjected to fines, penalties, or forfeiture of
property, and neither Enron nor its Controlled Subsidiaries shall take any
action that will cause Azurix, Atlantic Water Trust, or any of their
Subsidiaries to violate applicable law or that will otherwise cause Azurix,
Atlantic Water Trust, or any of their Subsidiaries to be subjected to fines,
penalties, or forfeiture of property.
(n) Agreements and Waivers of Azurix Binding on Atlantic Water
Trust. Any agreement or waiver by Azurix entered into or granted herein, or in
accordance with the provisions hereof, shall be binding on Atlantic Water Trust
to the same extent as if entered into or granted by Atlantic Water Trust.
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EXECUTED as of the date first set forth above.
ATLANTIC WATER TRUST
By:
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Name:
----------------------------
Title:
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AZURIX CORP.
By:
---------------------------------
Name:
----------------------------
Title:
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ENRON CORP.
By:
---------------------------------
Name:
----------------------------
Title:
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EXHIBIT A
CERTAIN DEFINITIONS
"AFFILIATE" of a Person means any other Person controlling, controlled
by, or under common control with such first Person, and "controlled Affiliate"
means any other Person controlled by such first Person; provided that Azurix and
its Subsidiaries shall never be considered to be Affiliates of Enron or its
Affiliates. For purposes of this Agreement, the term "control" and its
correlative terms means the possession, directly or indirectly, through one or
more intermediaries, through the ownership of voting securities, by contract, or
otherwise, of the power or authority to exercise a controlling influence over
the management of the Person (including, but not limited to, serving as manager,
managing partner, or general partner of a Person or performing similar functions
for a Person).
"CLAIMS" means any and all claims, demands, causes of action,
liabilities, losses, costs, damages, and expenses of any kind or nature
whatsoever, in law or in equity (including, without limitation, attorneys' fees
and costs), and irrespective of whether any such claims or matters arise out of
common law, contract, tort, strict liability, violation of statutory laws, or
regulations, or any other theory or basis.
"ECT" means Enron Capital & Trade Resources Corp., a Delaware
corporation and its successors and assigns.
"EES" means Enron Energy Services, LLC, a Delaware limited liability
company and its successors and assigns.
"EII" means Enron International Inc., a Delaware corporation and its
successors and assigns.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, or other organization, whether or not a legal entity.
"SUBSIDIARY" of any Person means any other Person in which the first
Person owns an interest, directly or indirectly.
"WATER BUSINESS" means any of the businesses permitted by the purpose
clause in Azurix's Certificate of Incorporation as mandated by Section 10 of
this Agreement.
"WATER BUSINESS ASSETS" means assets used in connection with the Water
Business.
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