DIANA SCHOLTES: 

As promised, I want to update you on the Special Stock Option Grant that I announced at the all-employee meeting.  

You have been awarded a stock grant as follows:

Special Stock Option Grant
Grant Date:  August 21, 2001 
Grant Price: $36.88 
Vesting: Options are 100 percent vested on date of grant
Number of options: Based on 5 percent of an employee's annualized base salary as of August 13, 2001 and a theoretical stock option value of $15. You will be notified of the actual number of stock options awarded to you.
Option Term: Five years
The terms and provisions of this grant are subject to the applicable 1991 or 1994 Enron Corp. Stock Plan, as will be referenced in the stock award agreement.

Employees who are eligible to participate in this special program will receive award details in the next several weeks.  More information about this grant will be available on the HR web site http://hrweb.enron.com.

As I mentioned at the employee meeting, one of my highest priorities is to restore investor confidence in Enron.  This should result in a significantly higher stock price.  I hope this grant lets you know how valued you are to Enron.  I ask your continued help and support as we work together to achieve this goal.  Again, on behalf of the Enron Board and myself, thanks for everything you are doing to make Enron the great company it is.  And stay tuned for regular updates from me about what is happening around Enron. 

Ken