'5~A /1~.~( TO: (4 Pages) FROM: Sherrie Gibson / *DATE: January 27, 1998 RB: Updated Collateral Valuation After numerous conversations with bank personnel and corrections to bank-prepared schedules, the following is a summary of our discussions: Compass Bank: Due to the increased value of the collateral, the amount available to borrow (Schedule 1) is approximately ~ If this amount is funded and the collateral drops belows the margin, the bank will call for additional collateral or request that payment be made to the line of credit. a~oC,I~ O~6tt~ NationsBank: The Collateral Valuation Report (Schedule 2) as of today reflects that you are limited to borrow on the personal line as a result of the amount of the line of credit (although you have additional borrowing power). NationsBank is amenable to increasing your personal line of credit to $35,000,000 with the same terms, so you can take advantage of your full borrowing power. Again, if the amount funded exceeds the renuired collateral, additional collateral or payment to the line of credit will be required. partnership's line of credit is limited by its required collateral. I suggested and the bank concurred, that the collateral on both lines of credit be cross-pledged. At your request, the bank will begin the appropriate paperwork. Hopefully by cross-pledging the assets, it will alleviate the limitation in availability to borrow. 4%zas Commerce Bank: ~ The $1,500,000 line of credit was opened on 9/30/97 with 30,000 shares of Compaq stock as collateral. An unsecured line of credit was not established at this time. I requested a $250,000 - $500.000 unsecured line of credit with an interest rate of prime- .5 ( I mentioned to the bank that this is a competitive rate.) I thought that I would start the process if you were interested in establishing an unsecured line of credit. The bani~ will notify me within the next two days on what they can offer. Attached is a summary of the lines of credit prepared by Sally (Schedule 3) which reflects the new information. I tried to anticipate your questions regarding these loans. Please advise me. ~ApA~' LAY-G34 0689 GOVERNMENT EXHIBIT 1037 Crim No. H-04-2S (S-2) & as, I *T1 3-NI-SETh JAN-26-99 10:32AM PROM-COMPASS SANK PRIVATE CLIENT SERVICES Line of Credit Availability As of 1/22/98 Revised Enron Stock (202,237 at $42.25) Enron Oil & Gas Stock (20,000 at S21.25) Lii Lilly & Co. (10,000 at $69.3 125) TOTAL COU..ATERAL Margin TOTAL AVAILABLE TO BORROW Less: CWTCnC Ours~ndings TOTAL UNFUNDED BUT AVAILABLE $8,544,513 (' 425 ,000( 9,662,638 80% 7,730,111 ~ '~c 't.o053 000 LAY-G34 0690 J~N 27 '96 ±2:24 FR PCG ~ ESTATE 7±3 247 6455 TO 96300189 P. 0±'8i 3~ Z7 '96 01:03PM Kenneth L Lay Collateral Valuation January 27, 1996 281.000.000 Line of Cr.dj~ Outstanding Loan Balance Collateral currently pledged: 675,827 shares Enron Corp. 493,784 shares Compaq Computer 10,000 shares Copytele 15,000 shares Afr*Cure Technologies 0 shares Enron Global Power & Pipelines 10,000 shares Fiberchem 5,000 shares EO'IT Energy Partners 86,473 shares TCW Core Equity Fund 61,666 shares TCW Mid.Cap Growth 17,278 shares TCW Small Cap Growth 40,697 shares TCW Latin American Equity Total Market Value of Collateral Less: Collateral Roqulred (70% LTV) L Excess (Deficit) Collateral Borrowing Power yallable to Borrow Outstanding Loan Balance Collateral currently pledged: * 30,000 shares Enron Oil & Gas 21,369 shares TCW Small Cap Growth 20,220 shares Eli Lilly & Co. 0 shares TCW Asia Pacifr Equity Total Market Value of Collateral Law Collateral Required (70% LTV) Excess (Deficit) Collateral L Borrowing Power vallable to Borrow $80,799,999 $27,539,950 $14,890,074 $32,500 $178,126 $0 $1,875 $92,500 $1,219,700 $610,785 $809,582 $498,181 $45,178,122 $1,173,124 $821,186 $200,000 I I po~cA ~ $175,000- *~ht IOc~v~ Wi~ S600, 000 $382,932 $1,390,125 4 r O~-1 P~i1:j' Plac.e. k~pqr1-vv~r~ $2,873,057 $2,128,057 I $1,486,140 I I $1,187,575 .ro~c4ed V~ ~~1,5O0 Total Net Excess (Deficit) Collateral Total Net Availabl, to Borrow $5,017,169 $1,387,575 LAY-G34 0691 ** TOT~ PAGE. 81 ** Jan. 27. 1998 2:~2P1~~ CHAIRI&AN'S OFFICE No ~5?~ P /~ 3~ 27 '98 ~:1jpp~ INS~ITIFflON LINE FUNDED AVAILABLE BALANCE SlOM £7,124,950 S 605,000 Libor * 1.00 (5,035,614 investments) (1,946,866 personal) ( 142,400 Looscan) prime~ rate S500,000 S 500,000 SO Unscured (personal) Enron Corn. S4M ('i2,040,004) $1,960,000 fed. rate, changes monthly \CI5U~i~) investments) (1,779,000 personal) ( 111,000 Reba) NationsBank Libor + .9 S31.OM 530,799,999 S 200,000 Non-Purpose ( 12,817,242 luvestuients) ( 231,423 Kingston, B/HI, Wilier, Way) ( 93,500 1741 Sul Ross) ( 159,633 Columbia add-on, ShadyLane) (17,441,201 personal) prime. .5 S750,000 S 750,000 SO Unsecured (personal) Partnership 52,750,000 S 175,000 SI,117SO00 Line Non-Purpose Libor + .9 TCB/Cbuse Lihor + 1.00 1/20/98 CC: KLL LPL SBG S1.SM S1,500,000 S 0 (1,390,000 personal) ( 110,000 loan to mv. Partnership) Today I have borrowed 5800,000 from the NationsBank line for expenses. 3~ LAY-G34 0692 Pc43~ 9-