ENRON
				       July l~ ~RP
Kenneth L Lay                                                     P 0. Box 1188
 O~awman and                                                    Ho~js~on. Tans 77251.1185
O~~uI E,.cuti. Officer                                            (713) 853.6773


 Mr. James H. Shelton
 Vice President Private Banking
 NationsBank of Texas
 700 Louisiana
 Houston, Texas 77002

 Dear James:

     As we discussed, I would like for NationsBank to consider providing a line of credit
 for up to 70% of the market value of the assets to be held by the KLL & LPL
 Investments~ Ltd. Partnership. In addition, I would request a standby line of credit of up
 to $2 million to be used to purchase other assets to be placed inthe partnership in the
 future, subject to the limitation that no more than 50% of the market value of such assets
 could be borrowed to purchase such assets. This partnership will hold assets as listed in
 Appendix K

     The collateral for these loans would be all of Linda's and my ownership in the KLL
 & LPL hvestments~ Ltd. Partnership. In addition, Linda and I and the partnership will
 guarantee the above-described debt. The partnership and Linda and I will execute the
 necessary pledge agreements.

     The debt will be a personal debt of mine and Linda's (i.e., it will not be a partnership
 debt). The partnership has the power to guarantee our personal debt and to pledge
 partnership assets for our personal debts in consideration of an appropriate guarantee fee.
 We will pay that fee.

     Please call me with any questions that you may have. When your attorneys have
 completed the necessary documents, please forward those documents to S. Stacy Eastland
 at Baker & Botta, LIP. for his review and comments.

						Sincerely,

 Enclosure: Appendix A


     ~


								 LAYG2' i842