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Total:$2.0 billion609. The three parties involved in each Toronto Dominion prepay included TorontoDominion, which served as the lender in five of the six transactions; an Enron affiliate, whichborrowed the money; and a financial institution, which served as the pass-through entity. Like theother Enron prepay transactions, the Toronto Dominion prepays were circular and involved thefollowing three basic steps, all of which were negotiated simultaneously and were interrelated:(a)In the first step of the transaction, Toronto Dominion and an Enron affiliateentered into a transaction in which Toronto Dominion agreed to pay the Enron affiliate a fixedpayment equal to the amount of money Enron wanted to borrow from Toronto Dominion (the“Principal Payment”). In exchange, the Enron affiliate agreed to pay to Toronto Dominion at date(s)in the future the financial equivalent of specified quantities of either oil or gas at the future spotprice (the “Floating Payments”).(b)In the second step of the transaction, Toronto Dominion entered into a socalledswap transaction with a financial institution in which Toronto Dominion agreed to pay thefinancial institution the same Floating Payments it received from the Enron affiliate in exchange fora fixed payment or payments from the financial institution, which were calculated to be an amountthat would cover the Principal Payment plus interest (the “Principal Plus Interest Payments”).(c)In the third step of the transaction, the financial institution and the Enronaffiliate entered into a so-called swap transaction in which the financial institution agreed to pay toEnron the Floating Payments in exchange for Enron paying to the financial institution the PrincipalPlus Interest Payments.610. When the transactions described in paragraphs 609(a)-(c) above are viewed as awhole, no party in the Toronto Dominion prepays had any commodity price risk. The Floating604041v1/007457-208-