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                                                                   EXHIBIT 10.21
                               SEVERANCE AGREEMENT

          THIS SEVERANCE AGREEMENT ("Agreement"), made and entered into the 30th
day of November, 1999 ("Date of Execution"), is between AZURIX CORP.
("Company"), a Delaware corporation, having its offices in Houston, Texas, and
ALEX KULPECZ ("Mr. Kulpecz"), an individual, residing in the United Kingdom.

                                   WITNESSETH:

          WHEREAS, the Company and Mr. Kulpecz have entered into an Executive
Employment Agreement effective as of September 15, 1998 (the "Employment
Agreement");

          WHEREAS, the Company and Mr. Kulpecz have agreed that Mr. Kulpecz's
employment with the Company will terminate;

          WHEREAS, the Company and Mr. Kulpecz have agreed upon the terms and
conditions under which Mr. Kulpecz's employment with the Company will terminate;
and

          NOW, THEREFORE, for and in consideration of the recitals and covenants
herein set forth, the parties agree as follows:

1. Employment. Mr. Kulpecz termination of employment with the Company shall be
effective on November 30, 1999 ("Termination Date"). Upon the execution of this
Agreement, Mr. Kulpecz shall resign as an officer of the various subsidiaries
and affiliated companies of the Company in which he holds office; however, until
the Termination Date, Mr. Kulpecz will continue to perform the duties reasonably
assigned to him by the Company in connection with the Company's business and
such other matters as the Company may reasonably request. Unless otherwise
requested by the Company, Mr. Kulpecz will perform such services from his
residence or such other location or locations (other than offices of the
Company) as he selects.

2. Consideration. Mr. Kulpecz shall be paid by Company the following:

          a.   a monthly payment in the amount of $41,000.00 beginning December
               31, 1999 and ending August 31, 2001 and a payment of $20,500.00
               to be paid on September 14, 2001 (for the period beginning
               September 1, 2001 and ending September 14, 2001), for a total of
               $881,500.00;

          b.   a monthly housing payment in the amount of $8,456.59 beginning
               December 1, 1999 and ending August 31,2001 and a payment of
               $4,228.61 to be paid on September 14, 2001 (for the period
               beginning September 1, 2001 and ending September 14, 2001), for a
               total of $181,817.00;


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          c.   an additional monthly payment in the amount of $39,534.51
               beginning December 31, 1999 and ending August 31, 2001 and a
               payment of $19,767.29 to be paid on September 14, 2001 (for the
               period beginning September 1, 2001 and ending September 14,
               2001), for a total of $849,992.00;

          d.   schooling and bus expenses reimbursement in an amount not to
               exceed $83,787.00, to be paid by Company as billed by the school
               for Mr. Kulpecz' children in elementary or secondary school; and

          e.   Company agrees to pack and ship a twenty-ft. container of
               household goods from London, United Kingdom to a location in the
               United States of America within the next six (6) months the cost
               of which shall not exceed $10,000.00; and

          f.   Company agrees to sell to Mr. Kulpecz the leased vehicle which he
               used during this employment at the December 31, 1999 Lease Buyout
               Value provided Mr. Kulpecz makes a payment to Azurix Corp. equal
               to the Lease Buyout Value no later than January 15, 2000.

3. Severance Pay. Mr. Kulpecz waives and the Company shall not be required to
pay, any severance pay or severance benefits, that otherwise would be payable
under the Company's Severance Pay Plan, except as provided for in this
Agreement, in connection with the termination of Mr. Kulpecz's employment. The
consideration and remuneration provided for under this Agreement are in lieu of
and take the place of any severance pay or severance benefit that otherwise
would be payable under the Company's Severance Pay Plan, which Mr. Kulpecz
forfeits.

4. Employee Benefits.

          a.   Except as otherwise provided in Section 3, Mr. Kulpecz shall be
               entitled to receive benefits earned by and payable to him under
               all employee benefit plans and compensation plans in which he
               participated or was covered by during his employment with
               Company, according to the terms and provisions thereof.
               Specifically, and without limiting the generality of the
               foregoing, Mr. Kulpecz shall continue his rights under any stock
               option agreements as if he were involuntarily terminated on the
               Termination Date as provided by each of the plan documents.
               Further, Mr. Kulpecz shall receive a payment of all of his
               accrued and unused vacation for the calendar year 1999, which
               totals 15 days for a total payment of $20,500.00;

          b.   Company agrees to tax equalize the Consideration, including stock
               option income up to 100,000.00, pursuant to the Company's tax
               equalization policy provided Mr. Kulpecz remains in the United
               Kingdom. Payment of United Kingdom and United States of America
               taxes shall be in the same manner as during the term of the
               Employment Agreement. Inherent in the tax equalization is Mr.
               Kulpecz' payment


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               of Hypothetical Tax on the Consideration noted in Sections 2.a.
               and 2.c. Company's responsibility through tax equalization is for
               the payment of United Kingdom and United States of America income
               taxes owed in excess of Mr. Kulpecz's Hypothetical Tax as
               described in Section 2a and 2c. In the event of any revisions of
               Mr. Kulpecz' tax return(s) by the governments of the United
               States or the United Kingdom, the tax equalization calculation
               will be updated, and payments made to Mr. Kulpecz or Company (by
               Company of Mr. Kulpecz, respectively), depending on revisions to
               the return(s).

          c.   Company shall provide tax assistance to Mr. Kulpecz for the
               Consideration and other compensation related to Mr. Kulpecz's
               employment and this Agreement through Price Waterhouse Coopers,
               LLP, or any other firm at Company's discretion. Further, Company
               agrees to pay any interest and/or late payment penalties, if
               applicable.



5 Post-Employment Non-Competition Obligations.

5.1 As part of the consideration for the compensation and benefits to be paid to
Mr. Kulpecz hereunder, in keeping with Mr. Kulpecz's duties as a fiduciary and
in order to protect the Company's interests in the confidential information of
the Company and the business relationships developed by Mr. Kulpecz with the
clients and potential clients of the Company; and as an additional incentive for
Company to enter into this Agreement, Company and Mr. Kulpecz agree to the
non-competition provisions of this Article 5. Mr. Kulpecz agrees that during the
period of Mr. Kulpecz's non-competition obligations hereunder, Mr. Kulpecz will
not, directly or indirectly for Mr. Kulpecz or for others, in any geographic
area or market where Company or Enron or any of their affiliated companies are
conducting any business as of the date of termination of the employment
relationship or have during the previous twelve months conducted any business:

          (i)   engage in any business competitive with the water business
                conducted by Company;

          (ii)  render advice or services to, or otherwise assist, any other
                person, associations, or entity who is engaged, directly or
                indirectly , in any business competitively with the water
                business conducted by the Company; or

          (iii) induce any employee of Company or Enron or their affiliates to
                terminate his or her employment with Company, or their
                affiliates, or hire or assist in the hiring of any such employee
                by person, association, or entity not affiliated with Enron.


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These non-competition obligations shall extend until September 14, 2001.
Notwithstanding the foregoing, Mr. Kulpecz may assist or participate in the
currently proposed sale of Azurix International's portfolio of projects to an
entity in which Nigel Robinson, or others at the discretion of the Company, acts
as a lead investor or manager.

5.2 Remedy for Breach of Contract. The parties agree that in the event there is
any breach or asserted breach of the terms, covenants or conditions of this
Agreement, the remedy of the parties hereto shall be in law and in equity and
injunctive relief shall lie for the enforcement of or relief from any provisions
of this Agreement. If any remedy or relief is sought and obtained by any party
against one of the other parties pursuant to this Section 5.2, the other party
shall, in addition to the remedy of relief so obtained, be liable to the party
seeking such remedy or relief for the expenses incurred by such party in
successfully obtaining such remedy or relief, including the fees and expenses of
such successful party's counsel.

5.3 It is expressly understood and agreed that Company and Mr. Kulpecz consider
the restrictions contained in this Article 5 to be reasonable and necessary to
protect the proprietary information of Company. Nevertheless, if any of the
aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.

6. Confidential Information.

6.1 Confidential Information.

          A. Mr. Kulpecz acknowledges that Company's business is highly
          competitive and that Company's methods, strategies, books, records and
          documents, Company's technical information concerning its products,
          equipment, services and processes, procurement procedures and pricing
          and marketing techniques, including but not limited to the names of
          and other information (such as credit and financial data) concerning
          Company's customers and business affiliates, all comprise confidential
          business information and trade secrets of Company which are valuable,
          special, and unique assets of Company, which Company uses in its
          business to obtain a competitive advantage over Company's competitors
          which do not know or use this information. Mr. Kulpecz further
          acknowledges that protection of Company's confidential business
          information and trade secrets against unauthorized disclosure and use,
          is of critical importance to Company in maintaining its competitive
          position. Accordingly, Mr. Kulpecz hereby agrees that notwithstanding
          any other provision of this Agreement other than contained in the
          following paragraph "B", he will not, at any time, make any
          unauthorized disclosure of any of the information referred to in the
          first sentence of this Section 6.1A ("Confidential Information") or
          make any unauthorized use thereof which, in any manner, would have, or
          is likely to have, an adverse effect upon the Company or any
          affiliate.


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          B. However, Mr. Kulpecz obligations under this Section 6 shall not
          extend to:

          1)   Confidential Information which is or becomes part of the public
               domain or is available to the public by publication or otherwise
               without disclosure by Mr. Kulpecz; or

          2)   Confidential Information which was within Mr. Kulpecz's knowledge
               or in his possession prior to his employment by the Company; or

          3)   Confidential Information which, either prior to or subsequent to
               the Company's disclosure to Mr. Kulpecz with an obligation of
               confidentiality, was disclosed to Mr. Kulpecz, without obligation
               of confidentiality, by a third party who did not acquire such
               information, directly or indirectly, from Mr. Kulpecz, or from
               any third party who is under an obligation of confidentiality; or

          4)   any disclosure of Confidential Information by Mr. Kulpecz which
               is required by law, including deposition or trial testimony by
               Mr. Kulpecz pursuant to subpoena. If Mr. Kulpecz is requested or
               required (by oral question, interrogatories, request for
               information or documents, subpoena, civil investigative demand or
               similar process) to disclose any Confidential Information, if
               reasonably possible under the circumstances as determined in good
               faith by Mr. Kulpecz, Mr. Kulpecz will promptly notify the
               Company of such request or requirement so that the Company may
               seek an appropriate protective order or waive compliance with
               provisions of this Agreement. In the absence of a protective
               order or the receipt of a waiver hereunder, or in the good faith
               determination of Mr. Kulpecz that time is of the essence, Mr.
               Kulpecz may obtain legal counsel, and if Mr. Kulpecz and/or his
               counsel in good faith believe that Mr. Kulpecz is compelled to
               disclose the Confidential Information or be exposed to liability
               for contempt or suffer other censure or penalty, Mr. Kulpecz may
               disclose only such Confidential Information to the party
               compelling disclosure as is required by law, as determined by Mr.
               Kulpecz on advice of counsel. Mr. Kulpecz further agrees that he
               will cooperate with the Company in its efforts to obtain a
               protective order or other reliable assurance that confidential
               treatment will be accorded the Confidential Information. All
               legal fees, costs and expenses incurred by Mr. Kulpecz in
               obtaining legal representation pursuant to his obligations under
               this Section 6.1B shall be paid by the Company. The Company
               further agrees that it will indemnify Mr. Kulpecz for any other
               costs and expenses incurred by Mr. Kulpecz in connection with his
               obligations under this Section 6.1B, including but not limited to
               legal damages and penalties assessed against Mr. Kulpecz for
               compliance with his obligations hereunder.

6.2 Definition of Company. For purposes of this Agreement, "Company" shall
include Enron Corp., Azurix Corp., and all of their subsidiaries and affiliated
companies.


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6.3 Non-Disparagement. Mr. Kulpecz and Company agree that they will not
knowingly make any comments with the intent to impugn, castigate or otherwise
damage the reputation of the other, including Company's subsidiaries and
affiliated companies, and the executives and managers thereof, unless legally
compelled to do so in any legal or administrative proceeding.

7. Miscellaneous.

7.1 Notices. For purposes of this Agreement, notices and all other
communications shall be in writing and shall have been duly given when
personally delivered or when mailed by United States certified or registered
mail, addressed as follows:

         If to Company:

                  Azurix Corp.
                  333 Clay Street
                  Houston, Texas  77002
                  Attention: Corporate Secretary

         If to Mr. Kulpecz:

                  2 Midgarth Close
                  Oxshott, Surrey
                  United Kingdom
                  KT22 OJY

or to any other address which either party may furnish to the other in writing.
Any such notice shall be effective when so delivered or three business days
after it is so mailed, except that notices of changes of address shall be
effective only upon receipt.

7.2 Applicable Law. THIS CONTRACT IS ENTERED INTO UNDER, AND SHALL BE GOVERNED
FOR ALL PURPOSES BY, THE LAWS OF THE STATE OF TEXAS.

7.3 No Waiver. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

7.4 Remedy for Breach of Contract.

          A. The parties agree that in the event there is any breach or asserted
          breach of the terms, covenants or conditions of this Agreement, the
          remedies of the parties hereto shall be in both law and in equity,
          including injunctive relief for the enforcement of or relief from any
          provisions of this Agreement.


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          B. In the event either party has a reasonable basis for claiming that
          the other party has violated the provisions of Section 5 of this
          Agreement and that such violation is material, the aggrieved party
          shall give the other party written notice of the specific facts of
          such violation. If such violation is material and has not been cured
          within three (03) days after such notice is given, the aggrieved party
          may seek any relief provided in this Agreement, provided, the Company
          may seek termination of the Consulting Arrangement, in addition to any
          other relief that may be appropriate.

          C. Of Sections 5 or 6.1: In the event either party has a reasonable
          basis for claiming that the other party has violated the provisions of
          Sections 5 or 6.1, and such violation is material, such party shall
          give written notice of specific facts of such violation to the other
          party. If, after three (03) days of giving such notice, the alleged
          violation has occurred, has not ceased, or reasonably may be expected
          to be repeated again, the aggrieved party shall have the right to
          bring an action at law or in equity. In any action brought for an
          alleged breach of Sections 5or 6.1, the complaining party may seek
          whatever damages and redress it deems appropriate, including but not
          limited to injunctive relief pertaining to the alleged violation
          complained of.

          D. Money damages would not be sufficient remedy for any breach of
          Section 6.1 by either party, and either party shall be entitled to
          seek specific performance and injunctive relief as remedies for such
          breach or threatened breach, subsequent to the three (03) day period
          after the notice provided for in Section 7.4C. Such remedies shall not
          be deemed the exclusive remedies for a breach of Section 6.1 by either
          party, but shall be in addition to all remedies available at law or in
          equity to the non-breaching party including the recovery of damages
          from the breaching party, as provided for in Section 7.4C.

7.5 Severability. It is a desire and intent of the parties that the terms,
provisions, covenants and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant or remedy of this Agreement or the application thereof to any person or
circumstances shall, to any extent, be construed to be invalid or unenforceable
in whole or in part, then such term, provision, covenant or remedy shall be
construed in a manner so as to permit its enforceability under the applicable
law to the fullest extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to any person or
circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect. It is further the desire
and intent of the parties that in the event of any breach of any portion of this
Agreement, the remainder of this Agreement shall remain in effect as written and
enforceable to the fullest extent permitted by law.

7.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.


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7.7 Withholding of Taxes. Company may withhold from any benefits or remuneration
payable under this Agreement all United Kingdom and United States of America
taxes arising out of payments to Mr. Kulpecz under this Agreement, including by
way of illustration but not limitation, federal, state, city, or other taxes as
may be required pursuant to this Agreement, any law, or governmental regulation
or ruling. The Company will timely pay over to the appropriate taxing authority
any amounts withheld under the preceding sentence. Nothing contained in the
Section may affect the Company's obligation to tax equalize any payments under
this Agreement.

7.8 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

7.9 Assignability.

          A.   By the Company:

                    The Company's obligations under this Agreement are not
               transferable or assignable by the Company and shall be considered
               a liability of the Company in any sale or transfer of
               substantially all of the business or assets of the Company by any
               means whether direct or indirect, by purchase, merger,
               consolidation or otherwise.

          B.   By Mr. Kulpecz:

                    With respect to Mr. Kulpecz's rights and obligations, his
               rights and obligations hereunder are personal and neither this
               Agreement, nor any right, benefit or obligation of Mr. Kulpecz,
               shall be subject to voluntary or involuntary assignment,
               alienation or transfer, whether by operation of law or otherwise,
               without the prior written consent of Company; provided, the
               Company agrees that it will not withhold its consent to an
               assignment by Mr. Kulpecz to a financial institution of his
               rights to receive payments under this Agreement. In the event of
               Mr. Kulpecz's breach of any of the terms, covenants, or
               conditions of this Agreement, any such assignment shall be
               subject to the provisions of Section 7.4 of this Agreement. This
               Agreement and all payments hereunder, including Consulting
               Payments, shall inure to the benefit of and be enforceable by and
               against Mr. Kulpecz's personal or legal representatives,
               executors, administrators, heirs, distributees, devisees and
               legatees.

7.10 Release.

          A. By execution of this Agreement, Mr. Kulpecz for himself, his legal
          and other representatives, claimants, heirs and beneficiaries, forever
          waives and releases Company and its affiliated companies from all
          rights, benefits, payments and claims (including but not limited to
          statutory, tort or contractual claims) of any kind and nature to which
          Mr. Kulpecz


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          is now or in the future may be entitled, and arising out of or in
          connection with Mr. Kulpecz's employment with Company or any
          affiliated company, and Mr. Kulpecz's termination of employment,
          including but not limited to claims pursuant to the Age Discrimination
          In Employment Act ("ADEA"), except as may be specifically provided for
          under this Agreement or contained in the plan documents or grants of
          benefits to which Mr. Kulpecz is entitled according to the provisions
          hereof. It is specifically agreed that this Agreement and the
          consideration Mr. Kulpecz will receive hereunder, constitute a
          complete settlement and release, and an absolute bar to any and all
          claims Mr. Kulpecz has or may have against the Company, its
          subsidiaries, divisions, any affiliated company, or its directors,
          officers, and employees, whether or not the same be presently known or
          suspected to be arising out of or in any manner connected with Mr.
          Kulpecz' employment thereby or termination of employment with Company,
          except as may be specifically provided for under this Agreement or
          contained in the plan documents or grants of benefits to which Mr.
          Kulpecz is entitled according to the provisions hereof. This Section
          of the Agreement applies to rights or claims pursuant to the ADEA only
          in existence on or before the date of payment of consideration and
          remuneration provided for herein. MR. KULPECZ ACKNOWLEDGES AND AGREES,
          AND REPRESENTS TO COMPANY THAT (I) HE UNDERSTANDS THE EFFECT OF THE
          PROVISIONS OF THIS PARAGRAPH, (II) HE HAS HAD A REASONABLE TIME OF NOT
          LESS THAN 21 DAYS IN WHICH TO CONSIDER THE EFFECT OF THE PROVISIONS OF
          THIS PARAGRAPH, AND (III) HE WAS ADVISED AND ENCOURAGED TO CONSULT AN
          ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT WITH RESPECT TO THE EFFECT
          OF THE PROVISIONS OF THIS PARAGRAPH AND HIS EXECUTION OF THIS
          AGREEMENT. MR. KULPECZ MAY REVOKE THIS AGREEMENT DURING THE SEVEN-DAY
          PERIOD FOLLOWING THE DATE OF EXECUTION, WHEREUPON THIS AGREEMENT SHALL
          BE RESCINDED IN ITS ENTIRETY AND BECOME NULL AND VOID.

          B. Mr. Kulpecz's execution of the negotiable instrument tendered to
          him by the Company in payment of the Consideration provided for in
          Section 2 of this Agreement shall be considered ratification and a
          separate execution of this Agreement by Mr. Kulpecz.

7.11 Entire Agreement: Modification. This Agreement constitutes the entire
agreement of the parties with regard to the termination of employment of Mr.
Kulpecz, supersedes any and all prior written agreements between the parties,
(with the exception of those plans, agreements and other documents identified or
referred to in Section 4), and this Agreement contains all of the covenants,
promises, representations and agreements between the parties with respect to the
termination of employment of Mr. Kulpecz with Company. Each party to this
Agreement acknowledges that no representation, inducement, promise or agreement,
oral or written, has been made by either party, which is not embodied herein, or
referred to hereby and that no agreement, statement or promise relating to the
employment or termination of employment of Mr. Kulpecz with Company, which is
not contained or provided for, identified or referred to in this Agreement,
shall be valid or binding. Any modification of this Agreement will be effective
only if it is in writing and signed by both parties.


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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

                                             AZURIX CORP.


                                             By:  /s/ Rebecca P. Mark
                                             Name:  Rebecca P. Mark
                                             Title:  Chairman and CEO


                                             ALEX KULPECZ

                                             /s/ Alex Kulpecz