To:  Participants of the Enron Corp. Savings Plan
From:  Enron Benefits Department

Several weeks ago, we announced that beginning July 1, 2002, the company would again match employees' eligible contributions to the Enron Corp. Savings Plan ("the Plan").  We also announced that from July 1 through December 31, 2002, Enron would double the rate of the company match that was in effect prior to the suspension.  Based on your questions and feedback, we want to further clarify the double match and share with you some further modifications we are making to the administration of the match.

Doubling the Match
Doubling the match will accelerate the rate at which company matching contributions accumulate. However, the annual company matching contributions remain limited to 50 percent of an employee's pre-tax contributions, up to 6 percent of eligible compensation.

For example, assume a participant contributes the 2002 Federal pre-tax maximum of $11,000 to the Plan.  The company match in effect prior to its suspension was $.50 for each $1 contributed, so the maximum amount the employee would have received in company matching contributions would have been $5,500, or half of $11,000. With the double match, the same participant will receive $1 for each $1 contributed, but the match will not exceed $5,500.  Likewise, if a participant contributes $8,000 pre-tax during 2002, the company matching contribution would equal $4,000.  

"Truing Up" the Match for Previous Contributions
Many participants in the Plan expressed concern that contributions to the Plan prior to July were not eligible for the reinstated company match.  To rectify this, we are modifying the administration of the match for the remainder of 2002.

Employees who were active as of December 31, 2001, and who participate in the Plan, will receive the double match for contributions made after July 1, 2002.  If at the end of 2002, the matched amount falls short of the maximum level possible based on the participant's annual pre-tax contributions to the Plan, the company will "true up" their match for 2002 to ensure the company contributions equal what would have been received had the match not been suspended.

For example, if an active employee's annual pre-tax contribution to the Plan will reach $11,000, and on July 1 the employee has already contributed $7,000, the remaining employee pre-tax contribution allowed will be $4000.  With the double match, the employee will receive $4,000 in company matching contributions between July and December, but will be $1,500 short of the company matching contributions he or she would have otherwise received.  On December 31, 2002, the employee's company matching contributions would be trued up with $1,500.

New Hires and Rehires After January 1, 2002
Any participants in the Plan hired or re-hired after January 1, 2002, will not be eligible for the double match.  Instead, they will receive the same match level in effect prior to suspension of the company match.  However, at the end of the year, they too will receive a true up to reach the maximum company match contributions for their annual pre-tax employee contribution.

Terminations Prior to December 31, 2002
If a Plan participant's employment is terminated involuntarily prior to December 31, 2002, the true up will take place as early as practical after termination.  The total amount of company matching contributions, including any true up, will be based on year-to-date contributions up to the time the participant is terminated.

If a Plan participant resigns voluntarily, he or she is not eligible for a true up, but will receive the double match on any pre-tax contributions made to the Plan between July 1 and his or her termination.

Participating in the Plan
Active Enron employees who are not currently participating in the Enron Corp. Savings Plan have until 3:00 p.m. CST on Thursday, June 27, 2002 to enroll in the Plan for their first July payroll contribution to be matched.  The same deadline applies to active participants in the Plan who may wish to increase their Savings Plan contribution rate in time for the first July payroll.  (For now, participants can only increase their contribution rate to the current maximum of 15 percent of their base salary.  After July 1, participants will be able to increase their contribution rate to the new maximum of 50 percent.)

To enroll in the Savings Plan or make a change to your current contributions, please log on to <<http://resources.hewitt.com/enron>>, or call the Benefit Service Center at 1-800-332-7979, option 3.