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                                                                   EXHIBIT 10.17

                         EXECUTIVE EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between AZURIX CORP., a Delaware corporation ("Employer")
and subsidiary of ENRON CORP., an Oregon corporation, having offices at 1400
Smith Street, Houston, Texas 77002 ("Enron"), and JOHN L. GARRISON, an
individual currently residing at 237 Buckminster Court, Lake Bluff, Illinois
60044 ("Employee"), to be effective as of April 26, 1999 (the "Effective Date").

                                   WITNESSETH:

         WHEREAS, Employer is desirous of employing Employee pursuant to the
terms and conditions and for the consideration set forth in this Agreement, and
Employee is desirous of entering the employ of Employer pursuant to such terms
and conditions and for such consideration.

         NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:

ARTICLE 1:  EMPLOYMENT AND DUTIES:

         1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.

         1.2 Employee initially shall be employed in the position set forth on
Exhibit A. Employer may subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover, Employer may assign
this Agreement and Employee's employment to Enron or any affiliates of Enron.
Employee agrees to serve in the assigned position and to perform diligently and
to the best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time.

         1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer or Enron, or requires any significant portion of
Employee's business time.

         1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.

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         1.5 Employee acknowledges and agrees that, at all times during the
employment relationship Employee owes fiduciary duties to Employer, including
but not limited to the fiduciary duties of the highest loyalty, fidelity and
allegiance to act at all times in the best interests of the Employer, to make
full disclosure to Employer of all information that pertains to Employer's
business and interests, to do no act which would injure Employer's business, its
interests, or its reputation, and to refrain from using for Employee's own
benefit or for the benefit of others any information or opportunities pertaining
to Employer's business or interests that are entrusted to Employee or that he
learned while employed by Employer. Employee acknowledges and agrees that upon
termination of the employment relationship, Employee shall continue to refrain
from using for his own benefit or the benefit of others any information or
opportunities pertaining to Employer's business or interests that were entrusted
to Employee during the employment relationship or that he learned while employed
by Employer. Employee agrees that while employed by Employer and thereafter he
shall not knowingly take any action, which interferes with the internal
relationships between Employer and its employees or representatives or
interferes with the external relationships between Employer and third parties.

         1.6 It is agreed that any direct or indirect interest in, connection
with, or benefit from any outside activities, particularly commercial
activities, which interest might in any way adversely affect Employer or any of
its affiliates, involves a possible conflict of interest. In keeping with
Employee's fiduciary duties to Employer, Employee agrees that during the
employment relationship Employee shall not knowingly become involved in a
conflict of interest with Employer or its affiliates, or upon discovery thereof,
allow such a conflict to continue. Moreover, Employee agrees that Employee shall
disclose to Employer's President any facts, which might involve such a conflict
of interest that has not been approved by Employer's President. Employer and
Employee recognize that it is impossible to provide an exhaustive list of
actions or interests, which constitute a "conflict of interest." Moreover,
Employer and Employee recognize there are many borderline situations. In some
instances, full disclosure of facts by the Employee to Employer's President may
be all that is necessary to enable Employer or its affiliates to protect its
interests. In others, if no improper motivation appears to exist and the
interests of Employer or its affiliates have not suffered, prompt elimination of
the outside interest will suffice. In still others, it may be necessary for
Employer to terminate the employment relationship. Employer and Employee agree
that Employer's determination as to whether a conflict of interest exists shall
be conclusive. Employer reserves the right to take such action as, in its
judgment, will end the conflict.

         1.7 Employee understands and acknowledges that the terms and conditions
of this Agreement constitute confidential information. Employee shall keep
confidential the terms of this Agreement and shall not disclose this
confidential information to anyone other than Employee's attorneys, tax
advisors, or as required by law. Employee acknowledges and understands that
disclosure of the terms of this Agreement constitutes a material breach of this
Agreement and could subject Employee to disciplinary action, including without
limitation, termination of employment.

ARTICLE 2:  COMPENSATION AND BENEFITS:

         2.1 Employee's monthly base salary during the Term shall be not less
than the amount set forth under the heading "Monthly Base Salary" on Exhibit A,
subject to increase at the sole discretion of the Employer, which shall be paid
in semimonthly installments in accordance with Employer's standard payroll
practice. Any calculation to be made under this Agreement with respect to
Employee's Monthly Base Salary shall be made using the then current Monthly Base
Salary in effect at the time of the event for which such calculation is made.

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         2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the effective date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, and pension plans. Nothing in this Agreement is to be construed or
interpreted to provide greater rights, participation, coverage, or benefits
under such benefit plans or programs than provided to similarly situated
employees pursuant to the terms and conditions of such benefit plans and
programs.

         2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a written plan document adopted by the Board
of Directors of either Employer or Enron, none of the benefits or arrangements
described in this Article 2 shall be secured or funded in any way, and each
shall instead constitute an unfunded and unsecured promise to pay money in the
future exclusively from the general assets of Employer.

         2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

ARTICLE 3:  TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH
            TERMINATION:

         3.1. Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:

         (i)  For "cause" upon the determination by the Employer's Board of
              Directors or Enron's management committee (or, if there is no
              Enron management committee, the highest applicable level of Enron
              management) that "cause" exists for the termination of the
              employment relationship. As used in this Section 3.1(i), the term
              "cause" shall mean [a] Employee's gross negligence or willful
              misconduct in the performance of the duties and services required
              of Employee pursuant to this Agreement; [b] Employee has been
              convicted of a felony; [c] Employee has willfully refused without
              proper legal reason to perform the duties and responsibilities
              required of Employee under this Agreement which remains
              uncorrected for thirty (30) days following written notice to
              Employee by Employer of such breach; [d] Employee's involvement
              in a conflict of interest as referenced in Section 1.6 for which
              Employer makes a determination to terminate the employment of
              Employee which remains uncorrected for thirty (30) days following
              written notice to Employee by Employer of such breach; [e]
              Employee has willfully engaged in conduct that Employee knows or
              should know is materially injurious to Employer, Enron, or any of
              their respective subsidiaries; [f] Employee's material breach of
              any material provision of this Agreement or corporate code or
              policy which remains uncorrected for thirty (30) days following
              written notice to Employee by Employer of such breach; or [g]
              Employee violates the Foreign Corrupt Practices Act or other

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              applicable United States law as proscribed by Section 5.1. It is
              expressly acknowledged and agreed that the decision as to whether
              "cause" exists for termination of the employment relationship by
              Employer is delegated to the Employer's management committee (or,
              if there is no management committee, the highest applicable level
              of Employer's management) for determination. If Employee
              disagrees with the decision reached by Employer's management
              committee (or, if there is no management committee, the highest
              applicable level of Employer's management), the dispute will be
              limited to whether Employer's management committee (or, if there
              is no Enron management committee, the highest applicable level of
              Employer's management) reached its decision in good faith;

         (ii) for any other reason whatsoever, with or without cause, in the
              sole discretion of the management committee (or, if there is no
              management committee, the highest applicable level of management)
              of Employer;

        (iii) upon Employee's death; or

         (iv) upon Employee's becoming disabled so as to entitle Employee to
              benefits under Enron's long-term disability plan or, if Employee
              is not eligible to participate in such plan, then Employee is
              permanently and totally unable to perform Employee's duties for
              Employer as a result of any medically determinable physical or
              mental impairment as supported by a written medical opinion to
              the foregoing effect by a physician selected by Employer.

The termination of Employee's employment by Employer prior to the expiration of
the Term shall constitute a "Termination for Cause" if made pursuant to Section
3.1(i); the effect of such termination is specified in Section 3.4. The
termination of Employee's employment by Employer prior to the expiration of the
Term shall constitute an "Involuntary Termination" if made pursuant to Section
3.1(ii); the effect of such termination is specified in Section 3.5. The effect
of the employment relationship being terminated pursuant to Section 3.1(iii) as
a result of Employee's death is specified in Section 3.6. The effect of the
employment relationship being terminated pursuant to Section 3.1(iv) as a result
of the Employee becoming incapacitated is specified in Section 3.7.

         3.2 Notwithstanding any other provisions of this Agreement except
Section 8.6, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:

         (i)  a material breach by Employer of any material provision of this
              Agreement which remains uncorrected for 30 days following written
              notice of such breach by Employee to Employer; or

         (ii) for any other reason whatsoever, in the sole discretion of
              Employee.

The termination of Employee's employment by Employee prior to the expiration of
the Term shall constitute an "Involuntary Termination" if made pursuant to
Section 3.2(i); the effect of such termination is specified in Section 3.5. The
termination of Employee's employment by Employee prior to the expiration of the
Term shall constitute a "Voluntary Termination" if made pursuant to Section
3.2(ii); the effect of such termination is specified in Section 3.3.

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         3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination. Employee shall be
entitled to pro rata salary through the date of such termination, but Employee
shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.

         3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination. Employee shall be
entitled to pro rata salary through the date of such termination, but Employee
shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.

         3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to the expiration of the Term, Employee shall
be entitled, in consideration of Employee's continuing obligations hereunder
after such termination (including, without limitation, Employee's
non-competition obligations), to receive one hundred twenty-five percent (125%)
of the then current Monthly Base Salary as if Employee's employment (which shall
cease on the date of such Involuntary Termination) had continued for the full
Term of this Agreement and a bonus provided in Exhibit "A" for the year of
termination only prorated for the actual number of months worked in the calendar
year in which such termination occurs. Employee shall not be under any duty or
obligation to seek or accept other employment following Involuntary Termination
and the amounts due Employee hereunder shall not be reduced or suspended if
Employee accepts subsequent employment. Employee's rights under this Section 3.5
are Employee's sole and exclusive rights against Employer, Enron, or their
affiliates, and Employer's sole and exclusive liability to Employee under this
Agreement, in contract, tort, or otherwise, for any Involuntary Termination of
the employment relationship. Employee covenants not to sue or lodge any claim,
demand or cause of action against Employer for any sums for Involuntary
Termination other than those sums specified in this Section 3.5. If Employee
breaches this covenant, Employer shall be entitled to recover from Employee all
sums expended by Employer (including costs and attorneys fees) in connection
with such suit, claim, demand or cause of action.

         3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination, but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.

         3.7 Upon termination of the employment relationship as a result of
Employee's incapacity, Employee shall be entitled to his or her pro rata salary
through the date of such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.

         3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans, and policies of Employer, Enron, or its affiliates.

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         3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement, which are continuing obligations,
including, without limitation, Employee's obligations under Articles 6 and 7.

ARTICLE 4:  CONTINUATION OF EMPLOYMENT BEYOND TERM; TERMINATION AND EFFECTS OF
            TERMINATION:

         4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.

ARTICLE 5:  UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND
            OTHER LAWS:

         5.1. Employee shall at all times comply with United States laws
applicable to Employee's actions on behalf of Employer, including specifically,
without limitation, the United States Foreign Corrupt Practices Act, generally
codified in 15 USC 78 (FCPA), as the FCPA may hereafter be amended, and/or its
successor statutes. If Employee pleads guilty to or nolo contendere or admits
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee has personal civil or criminal liability
under the FCPA or other applicable United States law, or if a court finds that
Employee committed an action resulting in any Enron entity having civil or
criminal liability or responsibility under the FCPA or other applicable United
States law with knowledge of the activities giving rise to such liability or
knowledge of facts from which Employee should have reasonably inferred the
activities giving rise to liability had occurred or were likely to occur, such
action or finding shall constitute "cause" for termination under this Agreement
unless Employer's management committee (or, if there is no management committee,
the highest applicable level of Employer's management) determines that the
actions found to be in violation of the FCPA or other applicable United States
law were taken in good faith and in compliance with all applicable policies of
Employer and Enron.

ARTICLE 6:  OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS:

         6.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) which relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps

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and all other writings or materials of any type embodying any of such
information, ideas, concepts, improvements, discoveries, and inventions are and
shall be the sole and exclusive property of Employer.

         6.2 Employee acknowledges that the business of Employer, Enron, and
their affiliates is highly competitive and that their strategies, methods,
books, records, and documents, their technical information concerning their
products, equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer, Enron, or their affiliates use in their
business to obtain a competitive advantage over their competitors. Employee
further acknowledges that protection of such confidential business information
and trade secrets against unauthorized disclosure and use is of critical
importance to Employer, Enron, and their affiliates in maintaining their
competitive position. Employee hereby agrees that Employee will not, at any time
during or after his or her employment by Employer, make any unauthorized
disclosure of any confidential business information or trade secrets of
Employer, Enron, or their affiliates, or make any use thereof, except in the
carrying out of his or her employment responsibilities hereunder. Enron and its
affiliates shall be third party beneficiaries of Employee's obligations under
this Section. As a result of Employee's employment by Employer, Employee may
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Employer, Enron, and their
affiliates. Employee also agrees to preserve and protect the confidentiality of
such third party confidential information and trade secrets to the same extent,
and on the same basis, as Employer's confidential business information and trade
secrets. Employee acknowledges that money damages would not be sufficient remedy
for any breach of this Article 6 by Employee, and Employer shall be entitled to
enforce the provisions of this Article 6 by terminating any payments then owing
to Employee under this Agreement and/or to specific performance and injunctive
relief as remedies for such breach or any threatened breach. Such remedies shall
not be deemed the exclusive remedies for a breach of this Article 6, but shall
be in addition to all remedies available at law or in equity to Employer,
including the recovery of damages from Employee and his or her agents involved
in such breach.

         6.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer, Enron, or their affiliates shall be
and remain the property of Employer, Enron, or their affiliates, as the case may
be. Upon termination of Employee's employment by Employer, for any reason,
Employee promptly shall deliver the same, and all copies thereof, to Employer.

         6.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation,

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as a supplementary work, as a compilation, or as an instructional text, then the
work shall be considered to be work made for hire and Employer shall be the
author of the work. If such work is neither prepared by the Employee within the
scope of his or her employment nor a work specially ordered and is deemed to be
a work made for hire, then Employee hereby agrees to assign, and by these
presents does assign, to Employer all of Employee's worldwide right, title, and
interest in and to such work and all rights of copyright therein.

         6.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.

ARTICLE 7:  POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS:

         7.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 7. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area or market where
Employer or Enron or any of their affiliated companies related to the water
business, 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 Employer;

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

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

These non-competition obligations shall extend until the latter of (a)
expiration of the Term or (b) one year after termination of the employment
relationship.

         7.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 7 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 7 by terminating any payments then owing to

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Employee under this Agreement and/or to specific performance and injunctive
relief as remedies for such breach or any threatened breach. Such remedies shall
not be deemed the exclusive remedies for a breach of this Article 7, but shall
be in addition to all remedies available at law or in equity to Employer,
including, without limitation, the recovery of damages from Employee and his or
her agents involved in such breach.

         7.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 7 to be reasonable and
necessary to protect the proprietary information of Employer. 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.

ARTICLE 8:  MISCELLANEOUS:

         8.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Enron or Employer.

         8.2 Employee shall refrain, both during the employment relationship and
after the employment relationship terminates, from publishing any oral or
written statements about Employer, Enron, any of their respective subsidiaries
or affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Employer, Enron, any of their
respective subsidiaries or affiliates, or any of such entities' business
affairs, officers, employees, agents, or representatives; or that constitute an
intrusion into the seclusion or private lives of Employer, Enron, any of their
respective subsidiaries or affiliates, or such entities' officers, employees,
agents, or representatives; or that give rise to unreasonable publicity about
the private lives of Employer, Enron, any of their respective subsidiaries or
affiliates, or any of such entities' officers, employees, agents, or
representatives; or that place Employer, Enron, any of their respective
subsidiaries or affiliates, or any of such entities' or its officers, employees,
agents, or representatives in a false light before the public; or that
constitute a misappropriation of the name or likeness of Employer, Enron, any of
their respective subsidiaries or affiliates, or any of such entities' or its
officers, employees, agents, or representatives. A violation or threatened
violation of this prohibition may be enjoined by the courts. The rights afforded
the Enron entities and affiliates under this provision are in addition to any
and all rights and remedies otherwise afforded by law.

         8.3 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

         If to Employer:

                  Azurix Corp.
                  1400 Smith Street
                  Houston, Texas 77002
                  Attention:  Corporate Secretary

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         If to Employee, to the address shown on the first page hereof.

Either Employer or Employee may furnish a change of address to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.

         8.4 This Agreement shall be governed in all respects by the laws of the
State of Texas, excluding any conflict-of-law rule or principle that might refer
the construction of the Agreement to the laws of another State or country.

         8.5 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.

         8.6 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Article 6, or Article 7, and if
the dispute cannot be settled through direct discussions, then Employer and
Employee agree to first endeavor to settle the dispute in an amicable manner by
mediation, before having recourse to any other proceeding or forum.

         8.7 Each of Employer and Employee is a citizen of the State of Texas.
Employer's principal place of business is in Houston, Harris County, Texas.
Employee resides in Harris County, Texas. This Agreement was negotiated and
signed in Houston, Texas. This Agreement shall be performed in Houston, Texas.
Any litigation that may be brought by either Employer or Employee involving the
enforcement of this Agreement or the rights, duties, or obligations of this
Agreement, shall be brought exclusively in the State or federal courts sitting
in Houston, Harris County, Texas. In the event that service of process cannot be
effected upon a party, each party hereby irrevocably appoints the Secretary of
State for the State of Texas as its or his agent for service of process to
receive the summons and other pleadings in connection with any such litigation.

         8.8 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,
association, or entity 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, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.

         8.9 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.

                                       10
<PAGE>   11

         8.10 There exist other agreements between Employer and Employee
relating to the employment relationship between them, e.g., the agreement with
respect to company policies contained in Employer's Conduct of Business Affairs
booklet and agreements with respect to benefit plans. This Agreement replaces
and merges previous agreements and discussions pertaining to the following
subject matters covered herein: the nature of Employee's employment relationship
with Employer and the term and termination of such relationship. This Agreement
constitutes the entire agreement of the parties with regard to such subject
matters, and contains all of the covenants, promises, representations,
warranties, and agreements between the parties with respect such subject
matters. Each party to this Agreement acknowledges that no representation,
inducement, promise, or agreement, oral or written, has been made by either
party with respect to such subject matters, which is not embodied herein, and
that no agreement, statement, or promise relating to the employment of Employee
by Employer that is not contained 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 each party whose rights hereunder are affected thereby, provided
that any such modification must be authorized or approved by the Board of
Directors of Employer.

         IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.

                            AZURIX CORP.

                            By: /s/ Philip J. Bazelides
                            Name: Philip J. Bazelides
                            Title: Managing Director Human Resources and
                            Administration
                            This 26th day of April, 1999

                            JOHN L. GARRISON

                            /s/ John L. Garrison
                            This 26th day of April, 1999

                                       11
<PAGE>   12

                                 EXHIBIT "A" TO
                         EXECUTIVE EMPLOYMENT AGREEMENT
                    BETWEEN AZURIX CORP. AND JOHN L. GARRISON

Employee Name:            John L. Garrison

Term:                     Five years from the Effective Date of this Agreement

Position:                 Managing Director, Global Operations and Asset
                          Management

Location:                 Houston, Texas

Reporting Relationship:   Reports to Colin Skellett

Monthly Base Salary:      From the Effective Date through January 31, 2000,
                          Employee's Monthly Base Salary shall be Twenty Nine
                          Thousand One Hundred Sixty Six Dollars and Sixty-Six
                          Cents ($29,166.66). For the period beginning
                          February 1, 2000, Employee's Monthly Base Salary
                          shall be Thirty One Thousand Two Hundred Fifty
                          Dollars and No Cents ($31,250.00).

Bonus:                    Employee shall be eligible to participate in the Enron
                          Corp. Annual Incentive Plan ("Plan") or any
                          replacement plan of Employer. All bonuses shall be
                          paid in accordance with the terms and provisions of
                          the Plan, a portion of which may be paid in cash and a
                          portion of which may be paid in stock options and/or
                          restricted stock. Employee's annual bonus target is
                          100% of Employee's annual base salary, subject to
                          both Employer's performance and Employee's
                          performance.

Signing Bonus:            Employer shall pay Employee a sign on bonus in the
                          amount of Two Hundred Thousand Dollars and No Cents
                          ($200,000.00) within thirty (30) days of your hire
                          date. This amount will be due in full to Azurix should
                          you voluntarily terminate your employment prior to
                          the completion of one (1) year of service.

                                       12
<PAGE>   13

Long-Term Incentive:      Employee shall receive a grant of 400,000 stock
                          options from the 1999 Azurix Stock Plan at the Initial
                          Public Offering price. If an IPO does not occur in
                          1999, you will receive the grant by February 2000
                          based upon the market valuation of Azurix at that
                          time. The grant shall vest 25% on each grant date
                          anniversary (four-year vesting).

                                        AZURIX CORP.

                                        By: /s/ Philip J. Bazelides
                                        Name: Philip J. Bazelides
                                        Title:Managing Director Human Resources
                                        and Administration
                                        This 26th day of April, 1999

                                        JOHN L. GARRISON

                                        /s/ John L. Garrison
                                        This 26th day of April, 1999

                                       13<PAGE>   1
                                                                   EXHIBIT 10.19

                         EXECUTIVE EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement"), including the attached Exhibit
"A," is entered into between AZURIX Corp. a Delaware corporation ("Employer")
and subsidiary of ENRON CORP., an Oregon corporation, having offices at 1400
Smith Street, Houston, Texas 77002 ("Enron"), and JOHN C. ALE, an individual
currently residing at 33 Eaton Terrace, London, England UNITED KINGDOM
SWIW-8TP("Employee"), to be effective as of December 10, 1998 (the "Effective
Date").

                                   WITNESSETH:

         WHEREAS, Employer is desirous of employing Employee pursuant to the
terms and conditions and for the consideration set forth in this Agreement, and
Employee is desirous of entering the employ of Employer pursuant to such terms
and conditions and for such consideration.

         NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:

ARTICLE 1:  EMPLOYMENT AND DUTIES:

         1.1 Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
the date set forth on Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.

         1.2 Employee shall be employed in the position set forth on Exhibit A.
Employee agrees to serve in the assigned position and to perform diligently and
to the best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer. Employee shall at all
times comply with and be subject to such policies and procedures as Employer may
establish from time to time.

         1.3 Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer or Enron, or requires any significant portion of
Employee's business time.

         1.4 In connection with Employee's employment by Employer, Employer
shall endeavor to provide Employee access to such confidential information
pertaining to the business and services of Employer as is appropriate for
Employee's employment responsibilities. Employer also shall endeavor to provide
to Employee the opportunity to develop business relationships with those of
Employer's clients and potential clients that are appropriate for Employee's
employment responsibilities.

                                       1
<PAGE>   2

         1.5 Employee acknowledges and agrees that, at all times during the
employment relationship Employee owes fiduciary duties to Employer, including
but not limited to the fiduciary duties of the highest loyalty, fidelity and
allegiance to act at all times in the best interests of the Employer, to make
full disclosure to Employer of all information that pertains to Employer's
business and interests, to do no act which would injure Employer's business, its
interests, or its reputation, and to refrain from using for Employee's own
benefit or for the benefit of others any information or opportunities pertaining
to Employer's business or interests that are entrusted to Employee or that he
learned while employed by Employer. Employee acknowledges and agrees that upon
termination of the employment relationship, Employee shall continue to refrain
from using for his own benefit or the benefit of others any information or
opportunities pertaining to Employer's business or interests that were entrusted
to Employee during the employment relationship or that he learned while employed
by Employer. Employee agrees that while employed by Employer and thereafter he
shall not knowingly take any action which interferes with the internal
relationships between Employer and its employees or representatives or
interferes with the external relationships between Employer and third parties.

         1.6 It is agreed that any direct or indirect interest in, connection
with, or benefit from any outside activities, particularly commercial
activities, which interest might in any way adversely affect Employer or any of
its affiliates, involves a possible conflict of interest. In keeping with
Employee's fiduciary duties to Employer, Employee agrees that during the
employment relationship Employee shall not knowingly become involved in a
conflict of interest with Employer or its affiliates, or upon discovery thereof,
allow such a conflict to continue. Moreover, Employee agrees that Employee shall
disclose to Employer's President any facts which might involve such a conflict
of interest that has not been approved by Employer's President. Employer and
Employee recognize that it is impossible to provide an exhaustive list of
actions or interests which constitute a "conflict of interest." Moreover,
Employer and Employee recognize there are many borderline situations. In some
instances, full disclosure of facts by the Employee to Employer's President may
be all that is necessary to enable Employer or its affiliates to protect its
interests. In others, if no improper motivation appears to exist and the
interests of Employer or its affiliates have not suffered, prompt elimination of
the outside interest will suffice. In still others, it may be necessary for
Employer to terminate the employment relationship. Employer and Employee agree
that Employer's determination as to whether a conflict of interest exists shall
be conclusive. Employer reserves the right to take such action as, in its
judgment, will end the conflict.

         1.7 Employee understands and acknowledges that the terms and conditions
of this Agreement constitute confidential information. Employee shall keep
confidential the terms of this Agreement and shall not disclose this
confidential information to anyone other than Employee's attorneys, tax
advisors, or as required by law. Employee acknowledges and understands that
disclosure of the terms of this Agreement constitutes a material breach of this
Agreement and could subject Employee to disciplinary action, including without
limitation, termination of employment.

                                       2
<PAGE>   3

ARTICLE 2:  COMPENSATION AND BENEFITS:

         2.1 Employee's monthly base salary during the Term shall be not less
than the amount set forth under the heading "Monthly Base Salary" on Exhibit A,
subject to increase at the sole discretion of the Employer, which shall be paid
in semimonthly installments in accordance with Employer's standard payroll
practice. Any calculation to be made under this Agreement with respect to
Employee's Monthly Base Salary shall be made using the then current Monthly Base
Salary in effect at the time of the event for which such calculation is made.

         2.2 While employed by Employer (both during the Term and thereafter),
Employee shall be allowed to participate, on the same basis generally as other
employees of Employer, in all general employee benefit plans and programs,
including improvements or modifications of the same, which on the effective date
or thereafter are made available by Employer to all or substantially all of
Employer's employees. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, and pension plans. Nothing in this Agreement is to be construed or
interpreted to provide greater rights, participation, coverage, or benefits
under such benefit plans or programs than provided to similarly situated
employees pursuant to the terms and conditions of such benefit plans and
programs.

         2.3 Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a written plan document adopted by the Board
of Directors of either Employer or Enron, none of the benefits or arrangements
described in this Article 2 shall be secured or funded in any way, and each
shall instead constitute an unfunded and unsecured promise to pay money in the
future exclusively from the general assets of Employer.

         2.4 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

ARTICLE 3:  TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH
            TERMINATION:

         3.1. Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:

         (i)      For "cause" upon the determination by the Employer's Board of
                  Directors or Enron's management committee (or, if there is
                  no Enron management committee, the highest applicable level
                  of Enron management) that "cause" exists for the termination
                  of the employment relationship. As used in this Section
                  3.1(i), the term "cause" shall mean [a] Employee's gross
                  negligence or willful misconduct in the performance of the
                  duties and services required of Employee pursuant to this

                                       3
<PAGE>   4

                  Agreement; [b] Employee has been convicted of a felony; [c]
                  Employee has willfully refused without proper legal reason
                  to perform the duties and responsibilities required of
                  Employee under this Agreement which remains uncorrected for
                  thirty (30) days following written notice to Employee by
                  Employer of such breach; [d] Employee's involvement in a
                  conflict of interest as referenced in Section 1.6 for which
                  Employer makes a determination to terminate the employment
                  of Employee which remains uncorrected for thirty (30) days
                  following written notice to Employee by Employer of such
                  breach; [e] Employee has willfully engaged in conduct that
                  Employee knows or should know is materially injurious to
                  Employer, Enron, or any of their respective subsidiaries;
                  [f] Employee's material breach of any material provision of
                  this Agreement or corporate code or policy which remains
                  uncorrected for thirty (30) days following written notice to
                  Employee by Employer of such breach; or [g] Employee
                  violates the Foreign Corrupt Practices Act or other
                  applicable United States law as proscribed by Section 5.1.
                  It is expressly acknowledged and agreed that the decision as
                  to whether "cause" exists for termination of the employment
                  relationship by Employer is delegated to the Employer's
                  management committee (or, if there is no management
                  committee, the highest applicable level of Employer's
                  management) for determination. If Employee disagrees with
                  the decision reached by Employer's management committee (or,
                  if there is no management committee, the highest applicable
                  level of Employer's management), the dispute will be limited
                  to whether Employer's management committee (or, if there is
                  no Enron management committee, the highest applicable level
                  of Employer's management) reached its decision in good
                  faith;

         (ii)     for any other reason whatsoever, with or without cause, in the
                  sole discretion of the management committee (or, if there is
                  no management committee, the highest applicable level of
                  management) of Employer;

         (iii)    upon Employee's death; or

         (iv)     upon Employee's becoming disabled so as to entitle Employee to
                  benefits under Enron's long-term disability plan or, if
                  Employee is not eligible to participate in such plan, then
                  Employee is permanently and totally unable to perform
                  Employee's duties for Employer as a result of any medically
                  determinable physical or mental impairment as supported by a
                  written medical opinion to the foregoing effect by a physician
                  selected by Employer.

The termination of Employee's employment by Employer prior to the expiration of
the Term shall constitute a "Termination for Cause" if made pursuant to Section
3.1(i); the effect of such termination is specified in Section 3.4. The
termination of Employee's employment by Employer prior to the expiration of the
Term shall constitute an "Involuntary Termination" if made pursuant to Section
3.1(ii); the effect of such termination is specified in Section 3.5. The effect
of the employment relationship being terminated pursuant to Section 3.1(iii) as
a result of Employee's death is specified in Section 3.6. The effect of the
employment relationship being terminated

                                       4
<PAGE>   5

pursuant to Section 3.1(iv) as a result of the Employee becoming incapacitated
is specified in Section 3.7.

         3.2 Notwithstanding any other provisions of this Agreement except
Section 8.6, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:

              (i) a material breach by Employer of any material provision of
                  this Agreement which remains uncorrected for 30 days following
                  written notice of such breach by Employee to Employer;

             (ii) within sixty (60) days of and in connection with or based
                  upon a sale or other disposition of Employer by Enron Corp. or
                  the sale or other disposition of a material amount of
                  Employer's assets, such that Employer is no longer affiliated
                  with Enron Corp., except when Employer becomes a separate
                  publicly traded company; or

            (iii) for any other reason whatsoever, in the sole discretion of
                  Employee.

The termination of Employee's employment by Employee prior to the expiration of
the Term shall constitute an "Involuntary Termination" if made pursuant to
Sections 3.2(i) and 3.2(ii); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by Employee prior to the
expiration of the Term shall constitute a "Voluntary Termination" if made
pursuant to Section 3.2(iii); the effect of such termination is specified in
Section 3.3.

         3.3 Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination. Employee shall be
entitled to pro rata salary through the date of such termination, but Employee
shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.

         3.4 If Employee's employment hereunder shall be terminated by Employer
for Cause prior to expiration of the Term, all future compensation to which
Employee is entitled and all future benefits for which Employee is eligible
shall cease and terminate as of the date of termination. Employee shall be
entitled to pro rata salary through the date of such termination, but Employee
shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.

         3.5 Upon an Involuntary Termination of the employment relationship by
either Employer or Employee prior to the expiration of the Term, Employee shall
be entitled, in consideration of Employee's continuing obligations hereunder
after such termination (including, without limitation, Employee's
non-competition obligations), to receive the then current Monthly Base Salary
and the full target Bonuses described on Exhibit "A" as if Employee's employment
(which shall cease on the date of such Involuntary Termination) had continued
for the full Term of this Agreement. Employee shall not be under any duty or
obligation to seek or accept other employment following Involuntary Termination
and the amounts due Employee hereunder shall

                                       5
<PAGE>   6

not be reduced or suspended if Employee accepts subsequent employment.
Employee's rights under this Section 3.5 are Employee's sole and exclusive
rights against Employer, Enron, or their affiliates, and Employer's sole and
exclusive liability to Employee under this Agreement, in contract, tort, or
otherwise, for any Involuntary Termination of the employment relationship.
Employee covenants not to sue or lodge any claim, demand or cause of action
against Employer for any sums for Involuntary Termination other than those sums
specified in this Section 3.5. If Employee breaches this covenant, Employer
shall be entitled to recover from Employee all sums expended by Employer
(including costs and attorneys fees) in connection with such suit, claim, demand
or cause of action.

         3.6 Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination, but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to Employee
at the date of such termination.

         3.7 Upon termination of the employment relationship as a result of
Employee's incapacity, Employee shall be entitled to the Monthly Base Salary and
the full target Bonuses described at Exhibit "A" as if Employee's employment
(which shall cease on the date of Employee's incapacity) had continued for the
full Term of this Agreement; provided however, all monies paid hereunder shall
be offset by all payments received by Employee under Employer's disability plans
or programs during the Term of this Agreement

         3.8 In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under any
and all severance plans, and policies of Employer, Enron, or its affiliates.

         3.9 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement which are continuing obligations,
including, without limitation, Employee's obligations under Articles 6 and 7.

ARTICLE 4:  CONTINUATION OF EMPLOYMENT BEYOND TERM; TERMINATION AND EFFECTS OF
            TERMINATION:

         4.1 Should Employee remain employed by Employer beyond the expiration
of the Term specified on Exhibit "A," such employment shall convert to a
month-to-month relationship terminable at any time by either Employer or
Employee for any reason whatsoever, with or without cause. Upon such termination
of the employment relationship by either Employer or Employee for any reason
whatsoever, all future compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and terminate. Employee
shall be entitled to pro rata salary through the date of such termination, but
Employee shall not be entitled to any individual bonuses or individual incentive
compensation not yet paid at the date of such termination.

                                       6
<PAGE>   7

ARTICLE 5:  UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND
            OTHER LAWS:

         5.1. Employee shall at all times comply with United States laws
applicable to Employee's actions on behalf of Employer, including specifically,
without limitation, the United States Foreign Corrupt Practices Act, generally
codified in 15 USC 78 (FCPA), as the FCPA may hereafter be amended, and/or its
successor statutes. If Employee pleads guilty to or nolo contendere or admits
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee has personal civil or criminal liability
under the FCPA or other applicable United States law, or if a court finds that
Employee committed an action resulting in any Enron entity having civil or
criminal liability or responsibility under the FCPA or other applicable United
States law with knowledge of the activities giving rise to such liability or
knowledge of facts from which Employee should have reasonably inferred the
activities giving rise to liability had occurred or were likely to occur, such
action or finding shall constitute "cause" for termination under this Agreement
unless Employer's management committee (or, if there is no management committee,
the highest applicable level of Employer's management) determines that the
actions found to be in violation of the FCPA or other applicable United States
law were taken in good faith and in compliance with all applicable policies of
Employer and Enron.

ARTICLE 6:  OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS:

         6.1 All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) which relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks) shall be disclosed to Employer and are
and shall be the sole and exclusive property of Employer. Moreover, all
drawings, memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Employer.

         6.2 Employee acknowledges that the business of Employer, Enron, and
their affiliates is highly competitive and that their strategies, methods,
books, records, and documents, their technical information concerning their
products, equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which employer, Enron, or their affiliates use in their
business to obtain a competitive advantage over

                                       7
<PAGE>   8

their competitors. Employee further acknowledges that protection of such
confidential business information and trade secrets against unauthorized
disclosure and use is of critical importance to Employer, Enron, and their
affiliates in maintaining their competitive position. Employee hereby agrees
that Employee will not, at any time during or after his or her employment by
Employer, make any unauthorized disclosure of any confidential business
information or trade secrets of Employer, Enron, or their affiliates, or make
any use thereof, except in the carrying out of his or her employment
responsibilities hereunder. Enron and its affiliates shall be third party
beneficiaries of Employee's obligations under this Section. As a result of
Employee's employment by Employer, Employee may also from time to time have
access to, or knowledge of, confidential business information or trade secrets
of third parties, such as customers, suppliers, partners, joint venturers, and
the like, of Employer, Enron, and their affiliates. Employee also agrees to
preserve and protect the confidentiality of such third party confidential
information and trade secrets to the same extent, and on the same basis, as
Employer's confidential business information and trade secrets. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer, including
the recovery of damages from Employee and his or her agents involved in such
breach.

         6.3 All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer, Enron, or their affiliates shall be
and remain the property of Employer, Enron, or their affiliates, as the case may
be. Upon termination of Employee's employment by Employer, for any reason,
Employee promptly shall deliver the same, and all copies thereof, to Employer.

         6.4 If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to Employer's business,
products, or services, whether such work is created solely by Employee or
jointly with others (whether during business hours or otherwise and whether on
Employer's premises or otherwise), Employee shall disclose such work to
Employer. Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment; or, if the work is
not prepared by Employee within the scope of his or her employment but is
specially ordered by Employer as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Employer shall be the author of
the work. If such work is neither prepared by the Employee within the scope of
his or her employment nor a work specially ordered and is deemed to be a work
made for hire, then Employee hereby agrees to assign, and by these presents does
assign, to Employer all of Employee's worldwide right, title, and interest in
and to such work and all rights of copyright therein.

                                       8
<PAGE>   9

         6.5 Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer and its nominee, at any time, in the
protection of Employer's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works, including without limitation, the execution of all formal
assignment documents requested by Employer or its nominee and the execution of
all lawful oaths and applications for applications for patents and registration
of copyright in the United States and foreign countries.

ARTICLE 7:  POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS:

         7.1 As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary
and in order to protect Employer's interests in the confidential information of
Employer and the business relationships developed by Employee with the clients
and potential clients of Employer, and as an additional incentive for Employer
to enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 7. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area or market where
Employer or Enron or any of their affiliated companies related to the water
business, 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 Employer;

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

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

These non-competition obligations shall extend until the latter of (a)
expiration of the Term or (b) one year after termination of the employment
relationship.

         7.2 Employee understands that the foregoing restrictions may limit his
or her ability to engage in certain businesses anywhere in the world during the
period provided for above, but acknowledges that Employee will receive
sufficiently high remuneration and other benefits (e.g., the right to receive
compensation under Section 3.5 for the remainder of the Term upon Involuntary
Termination) under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 7 by Employee, and Employer shall be entitled to enforce the
provisions of this Article 7 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall

                                       9
<PAGE>   10

not be deemed the exclusive remedies for a breach of this Article 7, but shall
be in addition to all remedies available at law or in equity to Employer,
including, without limitation, the recovery of damages from Employee and his or
her agents involved in such breach.

         7.3 It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 7 to be reasonable and
necessary to protect the proprietary information of Employer. 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.

ARTICLE 8:  MISCELLANEOUS:

         8.1 For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Enron or Employer.

         8.2 Employee shall refrain, both during the employment relationship and
after the employment relationship terminates, from publishing any oral or
written statements about Employer, Enron, any of their respective subsidiaries
or affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Employer, Enron, any of their
respective subsidiaries or affiliates, or any of such entities' business
affairs, officers, employees, agents, or representatives; or that constitute an
intrusion into the seclusion or private lives of Employer, Enron, any of their
respective subsidiaries or affiliates, or such entities' officers, employees,
agents, or representatives; or that give rise to unreasonable publicity about
the private lives of Employer, Enron, any of their respective subsidiaries or
affiliates, or any of such entities' officers, employees, agents, or
representatives; or that place Employer, Enron, any of their respective
subsidiaries or affiliates, or any of such entities' or its officers, employees,
agents, or representatives in a false light before the public; or that
constitute a misappropriation of the name or likeness of Employer, Enron, any of
their respective subsidiaries or affiliates, or any of such entities' or its
officers, employees, agents, or representatives. A violation or threatened
violation of this prohibition may be enjoined by the courts. The rights afforded
the Enron entities and affiliates under this provision are in addition to any
and all rights and remedies otherwise afforded by law.

         8.3 For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                                       10
<PAGE>   11

         If to Employer:

                  Azurix Corp.
                  1400 Smith Street
                  Houston, Texas 77002
                  Attention:  Corporate Secretary

         If to Employee, to the address shown on the first page hereof.

Either Employer or Employee may furnish a change of address to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.

         8.4 This Agreement shall be governed in all respects by the laws of the
State of Texas, excluding any conflict-of-law rule or principle that might refer
the construction of the Agreement to the laws of another State or country.

         8.5 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.

         8.6 If a dispute arises out of or related to this Agreement, other than
a dispute regarding Employee's obligations under Article 6, or Article 7, and if
the dispute cannot be settled through direct discussions, then Employer and
Employee agree to first endeavor to settle the dispute in an amicable manner by
mediation, before having recourse to any other proceeding or forum.

         8.7 Each of Employer and Employee is a citizen of the State of Texas.
Employer's principal place of business is in Houston, Harris County, Texas.
Employee resides in the England, UNITED KINGDOM. This Agreement was negotiated
and signed in Houston, Texas. This Agreement shall be partially performed in
Houston, Texas. Any litigation that may be brought by either Employer or
Employee involving the enforcement of this Agreement or the rights, duties, or
obligations of this Agreement, shall be brought exclusively in the State or
federal courts sitting in Houston, Harris County, Texas. In the event that
service of process cannot be effected upon a party, each party hereby
irrevocably appoints the Secretary of State for the State of Texas as its or his
agent for service of process to receive the summons and other pleadings in
connection with any such litigation.

         8.8 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,
association, or entity 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

                                       11
<PAGE>   12

application thereof to any person, association, or entity or circumstances other
than those to which they have been held invalid or unenforceable, shall remain
in full force and effect.

         8.9 This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under Agreement
hereof are personal and such rights, benefits, and obligations of Employee shall
not be voluntarily or involuntarily assigned, alienated, or transferred, whether
by operation of law or otherwise, without the prior written consent of Employer.

         8.10 There exist other agreements between Employer and Employee
relating to the employment relationship between them, e.g., the agreement with
respect to company policies contained in Employer's Conduct of Business Affairs
booklet and agreements with respect to benefit plans. This Agreement replaces
and merges previous agreements and discussions pertaining to the following
subject matters covered herein: the nature of Employee's employment relationship
with Employer and the term and termination of such relationship. This Agreement
constitutes the entire agreement of the parties with regard to such subject
matters, and contains all of the covenants, promises, representations,
warranties, and agreements between the parties with respect such subject
matters. Each party to this Agreement acknowledges that no representation,
inducement, promise, or agreement, oral or written, has been made by either
party with respect to such subject matters, which is not embodied herein, and
that no agreement, statement, or promise relating to the employment of Employee
by Employer that is not contained 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 each party whose rights hereunder are affected thereby, provided
that any such modification must be authorized or approved by the Board of
Directors of Employer.

                                       12
<PAGE>   13

         IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.

                                  AZURIX CORP.

                                  By: /s/ Rebecca P. Mark
                                  Name: Rebecca P. Mark
                                  Title: Chairman and CEO
                                  This 16th day of December, 1998

                                  JOHN C. ALE

                                  /s/ John C. Ale
                                  This 16th day of December, 1998

                                       13
<PAGE>   14

                                 EXHIBIT "A" TO
                         EXECUTIVE EMPLOYMENT AGREEMENT
                      BETWEEN AZURIX CORP. AND JOHN C. ALE

Employee Name:                      John C. Ale

Term:                               Three years from the Effective Date of this
                                    Agreement

Position:                           Executive Director and General Counsel
                                    reporting to the Office of the Chairman.
                                    Employee shall also be a member of the
                                    Executive Committee.

Location:                           For the period beginning December 10, 1998
                                    and ending June 30, 1999, Employee shall be
                                    located in London, United Kingdom. For the
                                    period beginning on July 1, 1999, Employee
                                    shall be located in Houston, Texas.

Reporting Relationship:             Reports to Office of the Chairman of
                                    Employer and James V. Derrick, Jr., Senior
                                    Vice President and General Counsel of Enron
                                    Corp.

Monthly Base Salary:                Twenty Eight Thousand Three Hundred Thirty
                                    Three Dollars and Thirty Three Cents
                                    ($28,333.33) per month

Bonus:                              Employee shall be eligible to participate in
                                    the Enron Corp. Annual Incentive Plan
                                    ("Plan") or any replacement bonus plan of
                                    Employer. All bonuses shall be paid in
                                    accordance with the terms and provisions of
                                    the Plan, a portion of which may be paid in
                                    cash and a portion of which may be paid in
                                    stock options and/or restricted stock.
                                    Employee's annual bonus target is 100% of
                                    Employee's annual base salary, subject to
                                    performance. For Calendar year 1998,
                                    Employee shall receive a sum equal to the
                                    difference between total compensation paid
                                    to Employee by Employee's former employer,
                                    Vinson & Elkins L.L.P. and $680,000.00.
                                    Employer shall pay this amount to Employee
                                    on January 31, 1999.

Vacation:                           In 1998 Employee shall be entitled to
                                    receive one (1) week of vacation. Effective
                                    January 1, 1999, Employee shall be entitled
                                    to receive four (4) weeks of vacation per
                                    year. Additional vacation will be earned in
                                    accordance with Enron's vacation policy.

                                       14
<PAGE>   15

Expatriate Benefits:                Employer shall match the expatriate benefits
                                    package provided to Employee by Vinson &
                                    Elkins L.L.P., Employee's former employer,
                                    as described in the letter of September 24,
                                    1998 from Enron to Employee, which shall be
                                    attached hereto and made a part hereof as
                                    Exhibit "B". In addition, any top up
                                    payments related to the letter of September
                                    24, 1998 will be net amounts after
                                    expatriate payments.

Long Term Incentive:                Employee shall be eligible to participate
                                    in the Azurix Corp. stock plan. The annual
                                    amount granted to Employee shall be in the
                                    range equal to a value of $250,000.00 -
                                    $300,000.00.

Travel:                             Employee shall be eligible to fly first
                                    class.

                                    AZURIX CORP.

                                    By:/s/ Rebecca P. Mark
                                    Name: Rebecca P. Mark
                                    Title: Chairman and CEO
                                    This 16th day of December, 1998

                                    JOHN C. ALE

                                    /s/ John C. Ale
                                    This 16th day of December, 1998

                                       15
<PAGE>   16

                                   EXHIBIT "B"

September 24, 1998

Mr. John C. Ale
33 Eaton Terrace
London SW1W 8TP England

Dear John:

In response to your fax of today, we have reviewed your summary of provisions in
comparison with Enron's expatriate policy and have determined we can match your
current expatriate compensation provisions. I have commented on several items as
appropriate.

Payments You will be employed by Enron Expat Services, Inc., a US company, and
will be paid in US dollars. The payroll is paid semi-monthly and direct
deposited into a US bank account of your choosing. An amount, determined by you,
may be wire transferred to a UK bank account each payday in US dollars or
converted into pound sterling.

Goods and Services Allowance Enron currently uses Organization Resources
Counselors, Inc. (ORC) to calculate this allowance, therefore, we will provide
this allowance for the 1999 partial year of assignment.

Housing Allowance The same provisions apply under current Enron policy as you
have indicated in your fax, therefore, we will be able to match this
arrangement.

Home Leave The same provisions apply under current Enron policy as you have
indicated in your fax, therefore, we will be able to match this arrangement.

Tax Equalization The Company utilizes tax equalization for all U.S. employees on
international assignments. The intent of this process is to ensure that
international assignments are tax neutral; that you pay no more and no less
income tax on your base salary and bonus compensation had you remained in the
U.S.; and that any assignment related premiums and allowances are tax-protected.
The Company will pay all foreign taxes, including national, local and social
insurance taxes related to Company-source income.

The Company has contracted with an international certified public accounting
firm (currently PricewaterhouseCoopers) to prepare your US and UK tax returns
each year. In your transition year (1998), the tax equalization calculation will
be prepared for the entire tax year, assuming your pre-Enron employment wages
are personal income and allow you foreign earned income exclusion and non-Enron
foreign tax credits against that portion of the US stay-at-home liability that
relates to the pre-Enron employment wages. For 1998, you may still be covered
under the tax equalization policy of your current employer as well. If so,
PricewaterhouseCoopers will coordinate the

                                       16
<PAGE>   17

preparation of the tax equalization with Arthur Andersen to ensure equitable
treatment of all income and deductions.

Foreign Service Premium Enron will match this arrangement.

Automobile Enron will match this arrangement.

Schooling Enron will match this arrangement.

Relocation Enron will match this arrangement.

As evidenced by the comments above, it is Enron's intent to match your current
policy provisions. To the extent your current employer does not compensate you
for amounts due from January of 1998 to your date of transfer to Enron (i.e.,
foreign service premium to be paid in January 1999 for the 1998 year), we will
assume payments of these amounts.

I trust this answers all of your questions. However, should you need further
clarification, please feel free to call Jane Allen, Manager, International
Services, at 713/853-7860 or me at 713/853-5872. We look forward to hearing from
you.

Sincerely,

Philip J. Bazelides
Vice President
Compensation and Benefits

cc:      Jane J. Allen, Manager, International Services

                                       17

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