FW:

Greg,

After making an election in October to receive a full distribution of my de=
ferral account under Section 6.3 of the plan, a disagreement has arisen reg=
arding the Phantom Stock Account. =20

Section 6.3 states that a participant may elect to receive a single sum dis=
tribution of all of the participant's deferral accounts subject to a 10% pe=
nalty. This provision is stated to be notwithstanding any other provision =
of the plan. It also states that the account balance shall be determined a=
s of the last day of the month preceding the date on which the committee re=
ceives the written request of the participant. In my case this would be as=
of September 30th. I read this paragraph to indicate a cash payout of 90%=
of the value of all deferrals as on September 30, 2001. The plan administ=
rators, however, interpret this paragraph differently. Their reading yield=
s a cash payout of 90% of the value for deferrals other than the Phantom St=
ock Account, which they believe should be paid with 90% of Enron Corp. sha=
res in the account as of September 30, 2001. Their justification is that i=
n several places throughout the plan document and brochures it is stated th=
at the distributions of the Phantom Stock Account shall be made in shares o=
f Enron Corp. common stock.

There are two reason that I do not agree with their interpretation. First,=
section 6.3 begins with "notwithstanding any other provision of the Plan.=
" This indicates that any other payout methodologies described in other se=
ctions of the plan which deal with normal distribution at termination do no=
t apply. Second, the language in section 6.3 stating "a single sum distrib=
ution of all of the Participant's deferral accounts" indicates that one pay=
ment will be made not a cash payment separate from a share distribution.

The interpretation of the administrators goes beyond section 6.3. If that =
is the case then section 7.1 should apply. This section does provide for t=
he Phantom Stock Account to be paid in shares. However, it states "The val=
ue of the shares, and resulting payment amount, will be based on the closin=
g price of Enron Corp. common stock on the January 1 before the date of pay=
ment, and such payment shall be made in shares of Enron Corp common stock".=
This would result in approximately 8.3 shares to be distributed for every=
share in the account on January 1, 2001. Although this would be the most =
beneficial to the participants due to the decline of the value of Enron Cor=
p. common stock from $83 to $10 per share, this methodology goes beyond se=
ction 6.3.

The calculations below illustrate the difference in the value and method of=
distribution under each of the three interpretations:

Section 6.3=09=09Plan Administrators=09=09Section 7.1

Number of shares=09=096,600=09shares=09=096,600=09shares=09=09=096,600 shar=
es
Relative share price=09=09$27.23=09=09=09=09=09=09=09$83.13
Phantom Stock Value=09=09$179,718=09=09=09=09=09=09$548,658
10% Penalty=09=09=09-17,972=09=09=09 -600=09=09=09=09-54,866
Value to be distributed=09=09$161,746=09=096,000 shares=09=09=09$493,792
Current stock price=09=09=09=09=09=09=09=09=09$10
Distribution=09=09=09$161,746=09=096,000 shares=09=09=0949,379 shares

I believe my interpretation under section 6.3 is correct and fair. If the =
administrators insist on distributing shares instead of cash then section 7=
.1 should apply. The current interpretation of the plan administrators is =
a hybrid between the two sections resulting in the lowest possible payout. =
=20

In addition to myself, Tom Martin, Scott Neal, and Don Black are facing the=
same issue. I would appreciate your review and consideration of this matt=
er.

Sincerely,

Phillip Allen =20
=09=09=09=09=09=09=09=09=09=09