TEXAS COMMERCE BANK NATIONAL ASSOCIATION June 29, 1993 MARTHAD. VOSS Private Baiian~ Vice President Mr. Kenneth L Lay Chairman and Chief Executive Officer /~~Z 6~'~i~'*, ,«=t~w c~- i5Z&-t Enron Corp. 1400 Smith Street Houston, Texas 77002-7369 Dear Mr. Lay; First, I would like to "introduce" myself as your new Private Banking officer at Texas Commerce Bank and I look forward to working with you in the future. I have been with Texas Commerce Bank for 12 years, most recently working in Gary Wright's Houston Corporate Banking Department. I have met with Sally Keepers to discuss the pending issue of the renewal and consolidation of your two personal lines at TCB (including the $1.5 Million line formerly at First City and the $250,000 line at TCB). Sally requested that I write you a brief letter for our mutual discussion in order to outline the proposed terms and conditions as well as to point out the major differences between the existing and proposed line. Attached you will find a brief summary of the proposed terms and conditions of a new combined S1.75 Million line. I believe there are several major advantages (both economic and administrative) of this proposed structure induding (1) the two separate facilities are combined into ~ new facility; (2) all fundings will be under one xu~r note for a one-year period versus separate notes required every 90 days on the First City line; (3) interest rate of Prime on a 365 day basis versus the current rate of Prime + 1% on a 360 day basis on the First City line (TCB's current rate on the $250,000 line is also Prime); (4) collateral coverage of 150% on total outstandings versus the current "split" requirement of First City based on the type of stock pledged, i.e. "restricted" stock requires 175% coverage and "non-restricted" stock requires 150% coverage (TCB's $250,000 line is unsecured). With regards to the latter point, the issue of "excess collateral" under your existing lines versus the current structure is worthy of a brief discussion. As of June 29th (see the attached Collateral Valuation), the collateral coverage of the total outstandings underbg~ lines ($1,541,939 outstanding) would be 191% ($2,920,636 collateral value). Under either the existing or proposed structure, you would currently have the ability to borrow up to the full $1.75 Million line. However, it is fair to point out that the "excess" collateral is slightly different. Under the existing collateral and outstandings on the First City line, their is approximately $850M of excess collateral whereas under the new structure their would be slightly less excess collateral of approximately $625M. Texas GOVERNMENT Commerce EXHIBIT LAY-G34 0554 Bank I] -I 1045 Turn Cern,.,,. m,k N~aul AMcdOn C,,mNo H04 25 (S 2) MU~ P~C urn,.. Tm Caywiums ,m e,c. 4rZ Page Two June 29, 1993 Mr. Lay,I feel the structure outlined on the attached sheet is a much simpler arrangement for b~ih parties with economic advantages to you on pricing and a mutually beneficial collateral coverage requirement. As I noted earlier, this is for discussion purposes only and I would welcome the opportunity to discuss this matter with you in person or over the phone. Also, I would like to discuss your financing needs over the coming year to ensure that the amount of the line is sufficient to meet your borrowing needs. I would also like to darify a couple of items on your financial statement in light of the changes caused by the large ezercise of Baron stock options. I will wait to hear from you or Sally before I proceed further with the renewals and I look forward to hearing from you soon. As you know, Texas Commerce Bank has always valued its relationship with you and I am pleased to have the opportunity to be part of this fine relationship. Sincerely, -7) eAZ ~/a~ Martha D. Voss LAY-G34 0555 krrD~u~ Kenneth L. Lay and Linda P. Lay fr~nE $1,750,000 secured revolving line of credit Fundiap will be made pursuant to one master promissory revolving note. June 30, 1994. Tern Commerce Bank Prime as it changes, interest payable quarterly on a 365/366 day basis. ~ila~ra~ Marketable securities acceptable to Tern Commerce Bank in the bank's sole discretion. The market value of securities held will be greater than 150% of the outstanding balance under the line of credit at all times (to be governed pursuant to the banks standard collateral maintenance agreement). All of borro~rs' indebtedness and guarantees at Tern Commerce Bank will be cross-collateralized to the security held under this line. For Discusalom Purnomma Only. This proposal Is subject to the approval otTCB's Lean & Discount Committee and completion and ezacutlos of documesatatlom satisfactory to the bank. LAY-G34 0556 Kenneth Lay - Collateral Evaluation (As of 6/29/93) Registered ~h!~~! Name Id Price shams 52 Week Rena. per Share Total Value Enron OH & Gas Go. Enron Corp. Baker Hughes Inc. Compaq Corr~u~r Corp. Fberchem, Inc. Copytete, Inc. NYSE NYSE NYSE NYSE Kenneth & Linda Lay Kenneth Lay Kenneth Lay Kenneth Lay NASDAQ Kenneth & LInda Lay (Small Cap) NASDAQ Kenneth & Unda Lay 15.000 $45.00 - $24875 21,491 $68.25 - $40.50 1,000 $29625 - $17.75 15,000 $61.75 - $23.25 10,000 N/A 5,000 $15.50 - $9.38 $40.38 $605,625 $68.25 $1,406,761 $28.38 $26,375 $49.75 $746,250 $1.25 $12,500 $12.63 663.125 TOTAL CURRENT FIRST CITY *1.5MM UNE: Outstandlngs-Flrst CIty $1 .5MM Line: Collateral Value: $1,282,264 $2,920,636 ValuelUne Outstand Inas: UNDER NEW COMBINED *1.75MM UNE: 0/8 - First City 61.5MM Une $1,282,264 Current TCB Outstandlngs $249,675 Total Une 0/S (F.City+TCB) $1,531,939 Collateral Value: ______ $2,920,636 91 I~A1 r~ Current First City Une: ¶lestrlcted Stock Value: Max. Borrowings at 175% Non-ResL Stock Value: Max. Borrowings at 150% Total Maximum Borrowings (plus the $250M TCB unsecured line) Blended Coverage Ratio Required: $1,406,761 6638,149 $1,453,875 $969,250 $1,807,399 (1) Total Maximum Borrowings Coverage Required 161 .6% $1,947,091 (1) 150.0% Current Borrowings: Collateral Required (162%): Current Collateral Value: Excess Collateral $1,282,264 $2,072,139 $2,920,636 $848,497 Current Borrowings Coverage RequIred (150%) Current Collateral Value Excess Collateral $1,531,939 $2,297,909 $2,920,636 $622,727 (1) Hoi~.ver, borrowings would be limited to the maximum amount of the line I.e. $1.5 MM on the First City Une and $1 .75MM on the contined line. Security For Discussion PurDoses Only I~zwN~r~ Kenneth L Lay and Linda P. Lay Ea~iIit~ S1,750,000 secured revolving line of crediL Fundinp will be made pursuant to one master promissory revolving note. .M.aLuriL~ June 30, 1994. Texas Commerce Bank Prime as it changes, interest payable quarterly on a 365/366 day basis. .~oi1at~rak Marketable securities acceptable to Texas Commerce Bank in the bank~s sole discretion. The market value of securities held will be greater than 150% of the outstanding balance under the fine of credit at all times (to be governed pursuant to the bank's standard collateral maintenance agreement). All of borrowers' indebtedness and guarantees at Texas Commerce Bank will be cross-collateralized to the security held under this line~ LAY-G34 0558 Kenneth L. Lay - Loan Relationship Summary Current ______ Facity ~ Pulcina B- Kenneth L & Unda P. Lay $1500000 RevoMng Un. *1.262.2646/30198 Loan#4040603 NoteD 1002 PAC +1% (PAC unti 3131193) Medetable securities: 150% coverage on non-restricied stock (125% urd S/3119~ 175% coverage on restricted stock Current Cowing.: 221.1% (See attached collateral ewluatlon - o 6/14/9w Kenneth L Lay 8250,000 RevoMng Une 8249.6756130/93 Loan # 2061420 Note #1001 Kenneth L & Unda P. Lay 867.500 Home Improvement Loan (Orig. ant: 825aM. 6/66) Loan 05041769 NoteD 867.5006126194 PAC + 1/2% Cross collateralIzed to 81.5MM lIne. Monthly princIpal (86.250) Unpedeoted lien on Inwood home. + kterest(lOyr. 895.631 Taint Loan ~ (Purchase duplex for son. - Orig. lint. - 896.4M. 4/90) Loan 06001414 (Mor~age) *05.631 4130195 ~Loans acquired from First City. PAC + 1/2% (adjusted First lien DIT on properly located at 1741 Sul K. Lay semi-annually). Monthly Roes. Houston. Texas. Appraised In 1900@ princIpal kid. h~ereat 8132M. ($613.06 -30 year Cross collateralized to 81.5mm Dna. U- ,Lm~i ajJij~l2 0 0 U, (J1 'fl b Collateral None PAC Unda P. Lay Unsecured Non. TOTAL None Kenneth Lay - (As of 6/14/93) Security Enron Oil & Gas Go. Enron Corp. Baker Hughes Inc. Compaq Computer Corp. Fiberchem, Inc. Copytele, Inc. Collateral Evaluation Exchange NYSE NYSE NYSE NYSE NASDAQ (Sinai Cap) NASDAQ Registered Name Kenneth & Unda Lay Kenneth Lay Kenneth Lay Kenneth Lay Kenneth & Unda Lay Kenneth & Unda Lay Dot shares 15,000 21,491 1,000 15.000 10,000 5,000 52 Week Ranae $45.00 - $24875 $63.50 - $40125 $29.50 - $17.75 $61.75 - $23.125 N/A $15.50 - $8.75 Price oer Share Total Value $41.00 $615,000 $59.25 $1,273,342 $27.25 $27,250 $55.68 $838,125 $1.31 $13,125 $13.75 $66.750 TOTAL Outstanding Loans: Revolver Home Improvement Loan Duplex @ 1747 Sul Ross Total Outstanding Loans Collateral Value: Value/Line Outatandlnap: $1,262,264 $87,500 695.831 $1,465,595 $2,635,592 uIJ~ Current Fbst City Une: Resbicted Stock Value: Max. Borrowings at 175% Non-ReeL Stock Value: Max. Borrowings at 150% Total Maxhnum Borrowings: Current Borrowings: Excess Borrowing Capacity: Blended Coverage Ratio Required: Coverage mci, TCB $250M lIne: Current TCB outstandings: Value/Line Outatandings: $1,273,342 $727,624 $1 .562, 250 $1,041,500 $1,769,124 $1 ,26,264 $466,860 $249,675 jfiJ~ t-i I. U, 0 (J1 160.3%