Licensing Agreement

Attached for your review is a revised draft of the Licensing Agreement
between Accenture and Enron Net Works. Following is a list of some of the
key issues raised by the draft. In addition, we have inserted various
questions and comments into the draft in bold type. I look forward to
resolving these questions with you and providing an updated draft over the
next few days. I plan to speak with Jay Webb to resolve some of the
technical issues as soon as possible. Thanks, and please feel free to
contact me at 713-758-2109.
Key Issues:
1. Qualification of Customers. In Section 2.3, we have adopted the
construct (same as in Kiodex) that Enron must receive a Consent and Release
from the relevant customer as a condition precedent to releasing that
customer's transaction data. This will help manage Enron's liability.
2. Data Storage. Section 2.4 relates to Accenture's obligation to
store transaction data. Should Accenture be obligated to purge the data
after a period of time, or may it keep the data indefinitely? Should the
data be purged at the end of the Agreement?
3. Service Levels. We have retained the reference to Service Levels in
Section 2.5, but have deleted the concept of a Service Credit (i.e., amounts
owed by Enron to Accenture for failure to achieve Service Levels).
4. License Rights/Exclusivity. Article III provides non-exclusive
license rights to Accenture to use the Customer-Specific Transaction Data
and SmartClient Software, for a narrow field of use. This is followed by
Section 4.1, which sets forth certain Enron covenants regarding exclusivity.
We prefer this construct due to the numerous exceptions to the exclusivity.

For example, Enron's right to market to customers that do not want to sign
up with Accenture is set forth as an exception to the exclusivity covenant
in Section 4.1(a)(i). As originally drafted by Accenture, this provision
had the effect of increasing the "TSH Gross Revenues," and thereby
offsetting any minimum royalty obligations of Accenture. We redrafted this
provision to simply obligate Enron to remit 70% of the net revenues it
raises from non-Qualified Customers, and exclude that amount from TSH
Revenues. That way, if Accenture never gets going, it would have to pay the
full minimum royalty, without reduction for sales by Enron.
5. Marketing. Section 4.2 sets forth Accenture's obligation to use
commercially reasonable efforts to market the TSH Services to Enron
Customers. What standards does Enron want to impose regarding Accenture's
use of Enron's name? Enron should not agree to let Accenture use the EOL
trademark except under the agreement and procedures established by Enron
from time to time.
6. Strategic Transactions. Section 4.5(a) sets forth a three-month
blackout on transactions with multilateral trading platforms, relating to
the transmission of transaction data; has this been agreed? With respect to
Section 4.5(b), we are concerned about the confusion that may occur if Enron
has an obligation to seek restrictions on another trading platform's use of
transaction data. Enron's ability to proceed with any transaction will be
substantially hampered if it needs to be able to prove to Accenture that it
is using commercially reasonable efforts in the context of a negotiation;
this is very difficult to prove. Our recommendation is a more
straightforward approach, focusing on economic alternatives.
7. Transaction Fees. In Section 5.1, we have introduced the concept of
a "Standard Transaction Fee," being a mutually agreed posted fee that will
serve as the minimum amount payable to Enron in respect of TSH Services.
The purpose is to address our concern that Accenture may price its services
very low in order to attract high consulting fees, thereby resulting in low
Gross TSH Revenue. We need to discuss how to calculate and apply the
Standard Transaction Fee. In addition, we should discuss the definition of
Gross TSH Revenues - the additions made to that definition in Accenture's
May 16 draft were far too broad, and would exclude platforms like
HoustonStreet, and even platforms which agreed contractually not to
distribute the data.
8. Term/Termination. Section 7.1 provides for a five year term,
commencing on the Enron Data Feed Launch Date. Accenture had provided that
it start when Accenture began to offer TSH Services, which could be
indefinitely in the future.
We have added Enron termination rights to Section 7.2, and provided for an
acceleration of all Minimum Annual Payments as liquidated damages if Enron
terminates for an Accenture breach (Section 7.6(b)).
9. Accenture Operations Failure. We have added several features to
guard against operational failure by Accenture's TSH Services. These
include termination rights on operational failure (see definition of
"Accenture Operational Failure") and indemnities. One additional safeguard
may be to add rights for operational audits. We need to assess these
provisions and determine if they are sufficient.
10. Successors. How should be address EOL's successors? Do we need to
come up with a way to exclude new industries and products that may be
offered in the future on Enron's Website.

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