Enron Net Works

1. Enron Net Works Opportunity Valuation May 2001 STRICTLY CONFIDENTIAL

2. Valuation The valuation method used is a discounted cash flow model based on software license revenues. Private Label Cash Flow Model Valuation method Discounted cash flow model (DCF) Source of revenue Licensing private label versions of platform Not Considered in this model Pull-through revenues from other products Revenues from professional services Value of Enron brand Transaction tax benefits

3. Valuation The Private Label Cash Flow valuation is based on logical assumptions. Private Label Cash Flow Model: Assumptions • Revenue Assumptions • Number of U.S. Licenses Sold 203, over 6 years • One-Time License Fees $3 to $12 Million per customer based on customer revenues • Annual Recurring Fees 20% of one-time fee yearly • License Fee Reduction 25% over six years • Licenses per Customer Company One license per customer • International Opportunities Similar to U.S. • Other Financial Assumptions • Operational Margin 50% • Discount Rate 10.6% • Transaction Tax Benefits Not Considered

4. Valuation We narrowed a list of one million companies to an addressable market of 13,200 sales prospects with an average hit rate of 1.5%. Private Label Cash Flow Model: U.S. Licenses Sold 203 Expected Licensees 13,200 Prospective companies 1,000,000 U.S. Companies • Eliminate smaller Companies • Rank by industry receptivity • Apply probabilities over 6 years Licenses sold by category Likelihood of licensing Over $2 billion $400 MM to $2 billion $100 MM to $ 400 MM 2 6 14 18 1% 2.5% 4 % 6 % 5 15 21 28 0.5% 1.75% 2.5 % 4 % One Million Companies with sales over $1 million/year Co. Revenue 0.25% 21 35 8 30 1% 2 % 1.5 % Very High Low Average High Industry Receptivity

5. Valuation Industries were classified based on their commoditization potential and transaction needs. Private Label Cash Flow Model: Industry Receptivity None • Agricultural services • Contractors • Leather products • Machinery • Merchandise stores • Auto repair stores • Motion pictures and recreation services • Health, legal and education services • Public Administration Medium • Food and kindred products • Lumber and wood products • Fabricated metal products • Freight forwarding • Insurance • Fishing • Railroad transportation • Advertising Very High • Grain production • Mining • Non-metallic minerals • Industrial inorganic chemicals • Oil and oil products • Primary non-ferrous metals • Commodity traders • Investment banks • Natural gas Low • Forestry • Apparel • Furniture and fixtures • Printing and publishing • Rubber products • Electric and electronic equipment • Transportation equipment • Real Estate High • Livestock production • Coal • Paper products • Plastics and synthetic materials • Basic steel products • Secondary non-ferrous metals • Electronic components • Trucking • Sea Shipping • Pipelines • Communication • Commercial banks • Utilities

6. Valuation Customers are added over a 6-year time frame. Private Label Cash Flow Model: Customer Acquisition Rate

7. Valuation Licensing fees increase with company revenue and decrease with time. Private Label Cash Flow Model: License Fees Annual Recurring Fee One-Time License Fee Company Revenue Higher than $10 billion $12 Million $2.4 Million Between $2 and $10 billion $9 Million $1.8 Million Between $0.5 and $2 billion $6 Million $1.2 Million Between $100 and $500 million $3 Million $0.5 Million License Fee Reduction Year License is sold 2001 2002 2003 2004 2005 2006 License Fee Multiplier 100% 95% 90% 85% 80% 75%

8. Valuation The business opportunity valuation results in a net present value of approximately $1 billion. Valuation Result Present Value of Operating Profit $1.05 billion

9. Valuation Adjusting for risk, the enterprise value is around $250 million. Valuation Result Present Value of Operating Profit$1.05 billion Execution risk adjustment (-75%) - customer acquisition - customer implementation Risk-adjusted valuation $263 million