============= Page 1 of 4 ============= a ionsBank Credit Approval RL1..ort for the General Bank Bank ' City/Unit Profit Center No. Effective bat. Ownership/Stodc Traded Nations Bank of Texas Houston / Private Client Group 3055 9/1197 N/A Borrower Name & Address 'Kenneth L. & Linda.Loy Tax ID No./SS No. Officer. No. Customer No. SIC/NB Industry Cod. 13:• ...t Drive 236 9073 (asrnnm) 1312 Houston, TX 579-68.0993 4324510 ($750m) (Natural Gas Independent) GTR CS Lotus Notes ID# CRA Code: Principals/Guarantors Tide Amount of Gty GTR ONW Score 1. 1).BS70711134511 ($30mm) 2. 2).BS70711134309 ($750m) V Company Revenues: 3. 3).B570730160227 Terf $1,578m v Nature of Business Credit. Exposure Borrower Risk Rating 4).8570730152851 Terf$4.lmtn V Chairman & CEO of Strata Existing Rating 5 DOD Pr. Approved.timits CB Score 758•i7l Enron Corp. (NYSE-ENE) Inc. Dec. Proposed Rating 5 Public Debt Main. R Out. mg2CarHISCG cc~rJRt3 Rating New Credit Requests Projected. Avg. Maturity Collateral GL Loan Basis of Liquidation Risk Amount Tie Outstanding Rat. Date Description Code Value Loan Value Value Rating 1. $30,000 000 CLN $28,000,000 Libar 9/1198 Marketable sec 100 $31.2mm 70% MV 4 N°Tg '1 -r' c C /f +100 70%/75% adv/call 2, $750,000 CLN $600,000 P - Ii 9/1/98 Unsecured 100 n/a 5 3. 4. $30,750,000 Subtotal 5. $37,868,150 Existing Commitment Totals (from Page 2, Section I) 6. $68,618,150 Total Amount (sum lines 5 & 6) Total Corporate Exposure Seasonal Line Activity 7. $30,750,000 Less: Existing Credit RgnewedlRepleced by New Request $41,134,150 8. $37,868,150 Total Proposed Direct Exposure (This name only, this state only) Pr. Authorized Limit (PAL) Payout R.q'd/# of days: 9. $3,266,000 Plus: Indirect & Related Exposure (from Page 2, Section 11) Amount $42mrn Was it met? 10. Plus: Other NationsBank Exposure (from Page 2, Section 111) Effective Date Sept 1, 1997 When? 11. Plus: Trading Exposure (Page 3 required) Maturity Date Sept 1, 1998 12 mo. avg. O/S 12. $41,134,150 Sum of lines 9, 10, 11 & 12, Equals TCE Multi-Bank Facility Is Coll. Specifically Cross Pledged? Credit Assessment (must chock one) Yes No Agent _ Yes No X 1. Existing or Proposed Policy Exception? E _X__1 Total Facility Yes Except Nos. Address in CAR Comments to Justify Exception NB Underwritten Are Notes Cross Defaulted? ~ -, ~ 2. Material Doc or Collateral Exception or I n l NB Hold Yes X No Approved Underwriting Variance? (See Page 2) Syndication Rt : Yes Except Nos. 3. Proposed Loan Agreement Covenants Attached? X Loan/Commitment Fee Agreement(s) (By requested Facility No.) 4. Covenant Compliance Form Attached? X 1) None 5. Base memo prepared updated? Date X 2) None 6. Annual Exposure Review Prepared? r 7. Borrower has subsidiarieslaffiliates X not party to credit Purpose of Credit (By requested Facility No.) 8. Is this an HLT transaction? B X 1) To renew an existing $30mm Line of Credit which will continue to be used to 9. Does borrower have foreign guarantor? X finance business investments & personal expenses (non-purpose) (Country of Risk ) 2) To renew an existing $750m Line of Credit which will continue to be used for r~ 10. Is Credit related to NationsBank L~ X business investments Correspondent bank insider or related interest? - Terms of Payment (By requested Facility No.) r ~ 11. Is Credit related ton NationsBank L~ X 1) Interest only payable quarterly with full principal due at maturity Director or related interest? 2) Interest only payable quarterly with full principal due at maturity (Director Credit Limit $ ) (Date Approved: ) 12. Is loan Real Estate Dependent? X Source of Repayment (By Requested Facility No.. Primary & Alternate) 13. Is this a Shared National Credit? X 1 & 2) Primary: Conversion of assets & cash flow of Borrower 14. Pledged Securities qua. SEC Rule 17-f-I? X I & 2 Alternate: Liquidation of collateral 15. Is this transaction permitted by General Bank X Loan Agree,nent Yes: Tickler Data Drawn By: BK Counsel esIt. ream[. agree. Bulletin #GBO06-95 and the referenced Req: No X Frequency: Bank Standard Form Firew ails flowchart? Bk Outside Counsel 16. Does Cust use derivatives in its operations? ] X Annual Exp. Review: Tickler Date: 17. Ls a CPM or CRISP form attached? X Annually Renew. LC Yes: No Date Notice Req'd. Tickler Dt 18. Does loan exceed FDICA Supervisory LTV O X Was credit committed/funded prior to proper approval? Yes No X Limits? (CPG B-35) If yes, which one? Line Officers (Concurred/Approved) Credit Policy (Concurred / oved) (circle one) Raw Land (65%); Land Dev (75%); Name Initial Date Name Ini al Date Improved Prop (85%); Owner Occ 1-4 Fam & Home Eqty (90%) J. Shelton I J. Burns r Coast Cml, Multifamily & Other Non-Res (80%) ~l /~ 1 1 / 7 Const 1-4 Family Residential 85% 'I'. Pruden M. Washington Approving Officer's Comments & Conditions ~~ (Initia)ed Continued on page. 2 if necessary) B. Scott (l F. Lindholm Z Serves as Term loan review for y J Cust# 9664: Notes: 5311493 J. Morton Cust# 9073: Notes: 5008057, 5231485 Cust# 0143: Notes: 4933636, 5147475 BOA/FBI/LAY: 30117 -BF002-00339 ============= Page 2 of 4 ============= Borrower Name: eth L. & Linda P. Credit Approval Report for the General Bank Page 2 RELATIONSHIP SUMMARY (' -Facilities Being Renewed/Replaced) 1. Existing Commitments Manwky Rick Collat.rd Loan B.A. of List. Amount S;-Fr- S;-Fr- Rote Type Outstanding, Date Rating Description Valu. Loan Vol Vol.. 1. *$,10,000,0M + 100 CLN $29,920,000 911/97 4 Marketable Securities $31.2 70% MV 2. $258,599 PCG L + 150 TML $258,599 511104 5 1st mt5 Galveston $257m 70% MV 3. *$750,000 FCC T1. h CLN $400,000 9/1197 5 Unsecured n/a n/a 4. $1,677,846 FCC 7.5% CJM $1,577,846 7/6/10 5 lot mtg - Aspen residence $1,610m 70% MV 5. $4,500,000 PCG 7.05% C.IIvl $3,105,197 111111 5 lot mtg Hunting $4.5-in 75% of cost 6. $138,750 FCC Prime TIvO,. $138,750 9/15199 6 lot mtg Galveston $150m 50% of MV 7. $642,955 FCC 7% CJM $642,956 711/01 5 1st mtg River $640m 80% of cost $37,868,150 II. Indirect and Related Exposure Included in TCE (This State Only - Us. 2nd Pg if Nece.) Manwity Type of Collateral Loon Basis of Liq. CFG Amount Rat. Type Outstanding. Dot. RR GTY Description Valu. Loan Vol Val.. Borrower Nom. 1. ~ 2. KLL& LPL Investments FCC $2,760,000 Lib+100 CLN $2,087,500 911197 5 Unl Market sons $2,114m 3. Undo P. Lay dba LPL In. PCG $360,000 6.5% CJM $360,000 15 yrs 5 n/a - 1st mtg res $360m 80% of AV 5. $3,266,000 Total Section II. (to p age 1, line 10) Ill. Ot .r Nationxhonk Exposure (Exposure Outside of this State or CFG) Maturity Collahrol Loan Basis of Uq. Borrower Nam. CFG Amount RR Typ. Outstondings Dote Description Value Loan Veil Value 1. 2. 3. 4. 5. Total Section III. (to page 1, line 11) Material Documentation and Collateral Exceptions and Approved Underwriting Variances P-.-1 Wa,e.e Net Permin.d; Will Continv... Eareption until :.JI Material Documentation Exceptions Waive Material Collateral Exceptions Waive ro ved Underwrithi Variances Track 1. F/S not in approp. format content or missing XXX 1. Sonority instruments will not be obtained (DiT, "" 1. Will not get annual F/S. The obligor or guarantor info per policy S/A) (C24/1) is considered a material aspect of the repayment of the loan. Ret GB007.95 23,B24 C23/l C25/6c 2. CAR not doe, within 30 days (C23/3) "' 2. Title or title documentation will not be obtained ... 2. Will not get appraisal as required 024/2 26 C23/2 C25/66 3. Will not get note (C23/5) ... 3. Negotiable collateral will not be in possession or 3. Will not get proper borrowing authorization (C2314, security interest will not be perfected C2413 C25/6 4. Will not get lien search (DCC-11) C23/7) 4. Negotiable collateral will not be endorsed (C24/4) 4. Will not get Guaranties as required by 0B007.95 (non-public borrowers) (B22, C2316, C25/6a 5. Will not get AM listing and aging (C23/9) 5. Financing Statement expired or not filed properly 5. Will not have Loan Agreement if req'd by policy 024/5 25 C23/8 C25/6 6. Will not get inventory certificates 6. Title Insurance wi8 not be obtained (024/6) 6. No environmental due diligence as req (1127, or rc its 023/9 C23(l7 C25/6h _ 7. Will not have Borrowing Base Certificate 7. Hazard Insurance will not be obtained (C24/7) 7. Unauthorized or Discouraged loans including (C23/9) subordinated loans, demand loans, holding companies per OB007-95 (B17, BIB, 025/1, E17, E22 E31-E32 8. Will not get Contractor Status Reports 8. Flood letter/Bond insurance will not be obtained ... 8. TOE will exceed house limits (Al 3, C5, Cl 4, C2512) 023110 C24/7 9. Reg U-1 (Stk. or Bond Sec.) (C23111) ... 9. Bank will not be shown as 'parry in interest' on 9. Terms of credit exceed established limits (as insurance policy (s) (C2418) defined) incl. mat., amort., int. cap, int only period (B11.13, B15, B29, B31, C25/3) Reference GB007 95 10. Will not have Participation Certif, and/or ... 10 Landlord lien waiver will not be obtained (n24/9) 10. Cash flow cow. ratios violated per CFG or General Agreement 16, C23112 Policy Guides &Su 1. C25/4 _ 11. No nvrent boundary/as-built survey or plat 11 Assignment of Lease will not be obtained and/or I 1 Credit advance exceeds max. advance ratio s req'd by CFG (023/13) recorded (B28, 024/10) allowed or req marg not obtained as required by GB007.95 21-A C25/5 12. No tri -party agreement and/or 12 No confirmation letter from Sr. lienholder an Jr. 12 Will not get acknowledgment of collateral comelitmant/sales agreement, if req'd by lien collateral (C24/1 1) assignments as required by G8007-95 (C25/6d) CFG C23/l4 13. Note//Condo collateral; No does. as req'd per 13 No real estate presale/prelease CFG policy 023115 requirements per CFC 025/7 14. No construction related does per CFC policy 023116 Approving Otticer's Comments & Conditions: Jushty Exceptions or Variances Noted Above: (Initialed) (Continued from Page 1) J10 BOA/FBI/LAY: 30118 _BF002-00340 ============= Page 3 of 4 ============= Credit Approval Report for the Private Bar'' Page 3 Customer: Ken & Linda Lay Risk Rating: 5 CPM Analysis Date: 12-Sep-97 Relationship Profitability Summary Statistics After Tax After Tax Cont. Cont. Inc/Exp. to ROA to ROE Balance Summary Average Commitments $37,707,5D0 Net Interest Spread $423,589 0.75% 41.02% Average Funded Loans $35,357,500 Loan Fees $3,550 0.01% 0.34% Total Assets $35,249,129 Equity Funding Credit $40,040 0.07% 3.88% Allocated Equity-Assets $637,580 Reserve Funding Credit $6,806 0.01% 0.66% Allocated Equity-Other $2,639 Net Interest Income-Credits $473,985 0.83% 45.90% Total Book Deposits $0 Other Fee Income $0 0.00% 0.00% Total Collected Deposits $0 Less: Provision Expense $43,348 -0.08% -4.20% IMA Outstandings $o Net Credit income-Assets $430,637 0.76% 41.70% NationsFund Balances $0 Less: Loan & LC Prod. Costs $783 0.00% -0.08% Total Product Margin-Assets $429,854 0.76% 41.63% Services Used by Customer Proj. Ann. Fees Net Credit Income-Liabilities $0 0.00% 0.00% _ Letters of Credit Fees $0 Treas. Mgt/Analysis/Other Dep Fees $0 0.00% 0.00% Treas. Mgmt. & Dep. Fees $0 Less: FDIC Insurance $0 0.00% 0.0D% Funds Management Fees $0 Treas. Mgt/Dep Prod. Costs $0 0.00% 0.00% Investment Banking Fees $0 Total Product Margin-Liabilities $0 0.00% 0.00% Trust Fees $0 Foreign Exchange Fees $0 Other Service Fees $0 0.00% 0.130% IMA Trust Fees $0 Equity Creditt from Other Services $0 0.00% 0.00% NationsFund Fees $0 Other Service Production Costs $0 0.00% 0.00% Total Product Margin-Services $0 0.00% 0.00% Products/Services Not Incl. in Relationship Profitability Total Products Contribution Margin $429,854 0.76% 41.63% Lease Outstandings of $0 Factoring Outstandings of $0 Equity Credit-Fixed Assets, etc. $166 0.00% 0.02% Consumer Credit Outs. of $0 Less: Profit. Center Expense $20,000 -0.04% -1.94% _ Residential Mtg. Outs. of $0 Contribution Before Overhead I $410,019 0.72% 39.71% Other Significant Profit of $0 (Merchant Visa, Indirect Loans, etc.) Less: Corporate Overhead $4,911 -0.01% -0.48% Tax Expense $153,941 #N/A #N/A Key Variables Total Relationship Earnings $251,167 ' 0.71% 39.23% 1 Year Prime COF Commercial Float % After Tax RO E Analysis Summary Prime Rate Total Products Contribution Margin $429,854 41.63% Corporate OH Rate Contribution Before Overhead $410,019 39.71 % Tax Rate Total Relationship Earnings $251,167 39.23% Target. Earnings and ROE $160,055 25.00% Earnings and ROE Variance $91,112 14.23% Existing or Proposed Policy/Collateral Exceptions: Approving Officer: 5.87% 14.36% 8.50% 23.63% 38.00% 1/23196 rel. of CPM v 2.5 BOA/FBI/LAY: 30119 BF002-00341 ============= Page 4 of 4 ============= CREDIT>APPROVAL REPORT-COLLATERAL' 'TION BORROWER: Kenne .4 Linda Lay Law Firm & Attorney Preparing Collateral Documentation: Sewell &-Riggs (Gary-Rachlin) DATE: 8125197 (Amounts in (000's) ,; COLLATERAL DESCRIPTION VALUATION'METHOD.& SOURCE (brief desorlptionof BOOK VALUE valuation method and identify source of value i.e. appraisal OR POLICY LOAN (" Denotes Now Collateral) date orrfinanoial state date). Include borrowing base APPRAISED LOAN VALUE formula, and both ADVANCE and'CALL ratios for each VALUE marketable security category. Amount % Amount SEE AT] ACHED PAGE Total Debt Secured by Above Collateral Total Collateral Value RESPOND (Y/NI TO EACH QUESTION (NA) means not applicable to collateral listed above. If "N", please explain below. N 1. Is all debt (direct and indirect) cross collateralized? 2. Have UCC-1 1 searches reported a perfected senior lien position for the bank? 3. Have liens on real property (real estate, oil & gas, fixtures, etc.) indicating proper priority been confirmed by: Title binder? l Title Policy? E Attorney's opinion? Y 4. Has collateral requiring possession for perfection been received? Y] Does collateral include Marketable Securities? Collateral to be held; Loan Admin. Collat. Vault XXXXX Trust Custody Other (specify) NsB Discount Brokerage NsB Securities " Is a Margin Maintenance Agreement in effect? If yes, number of days to cure margin default. 2 _ If collateral is held by an outside party, has an acknowledgment of pledge form been received from outside party? Y 6. Have legal opinions been received? Explanation: Items marked (Y) to be obtained. Names of Add'I Support Entity (Guarantors, Endorsers, For This Request Capacity (Guarantor, INDIRECT LIABILITY NET WORTH Statement TOTAL NATIONSBAN Co-Makers, General Partners) (Y/N) Co-Maker, etc.) Limit Date Amount Date K EXPOSURE BOA/FBI/LAY: 30120 LBF002-00342