Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Waiver grantedpursuant to section 4.5 of National Policy Statement No. 47 (and equivalent Quebeclegislation) to enable issuer to participate in the POP System and to utilize the ShelfProcedures and PREP Procedures (as contemplated in National Policy Statement No.44 (and equivalent Quebec legislation) to distribute asset-backed securities inaccordance with proposed National Instruments 44-101 and 44-102.

Applicable Ontario Rules

National Policy Statement No. 47 Prompt Offering Qualification System.

National Policy Statement No. 44 Rules for Shelf Prospectus Offerings and for PricingOfferings After the Final Prospectus is Receipted.

Proposed National Instrument 44-101 Prompt Offering Qualification System (1998), 21OSCB 1148, as amended (1999), 22 OSCB (POP Supp 2) 27.

Proposed National Instrument 44-102 Shelf Distributions (1998), 21 OSCB 6206.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWANMANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK, NOVA SCOTIA, PRINCE EDWARD ISLAND, NEWFOUNDLAND,YUKON, NORTHWEST TERRITORIES AND NUNAVUT

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
THE TORONTO-DOMINION BANK

AND

IN THE MATTER OF
TD CAPITAL TRUST

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec,New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, Yukon, NorthwestTerritories and Nunavut (collectively, the "Jurisdictions") has received an application fromThe Toronto-Dominion Bank (the "Bank") on behalf of TD Capital Trust (the "Trust") for adecision, pursuant to the securities legislation and the securities directions of theJurisdictions (the "Legislation"), that the eligibility requirements (the "EligibilityRequirements") contained in the POP Requirements (as defined below) for participationin the prompt offering qualification system (the "POP System") established under NationalPolicy Statement No. 47 ("NP 47") and the applicable securities legislation of Quebecincluding, but not limited to, Title II and Title III of the Securities Act (Quebec) ("QSA") andthe Regulation Respecting Securities (Quebec) ("QRRS") (collectively, the "POPRequirements"), and, as a result, for utilization of the Shelf Procedures and the PREPProcedures (each as defined in National Policy Statement No. 44 ("NP 44")), shall notapply to the Trust solely in connection with the distribution of Asset-Backed Securities (asdefined below) with an Approved Rating by an Approved Rating Organization (all asdefined in the POP Requirements), from time to time, subject to certain conditions;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS the Bank has represented to the Decision Makers that:

1. the Trust is a closed-end trust established under the laws of Ontario by TD TrustCompany, a subsidiary of the Bank, pursuant to an amended and restateddeclaration of trust made as of February 14, 2000 (the "Declaration of Trust");

2. the Trust's principal office is located at the Canadian Pacific Tower, Toronto-Dominion Centre, Toronto, Ontario, M5K 1A2;

3. the Trust is a reporting issuer or its equivalent under the Legislation by virtue ofhaving obtained an MRRS decision document dated March 15, 2000 evidencing thereceipt of each Jurisdiction for a final prospectus of the Trust and the Bank inrespect of an offering of Capital Trust Securities - Series 2009 of the Trust (the"Initial Prospectus");

4. the Declaration of Trust provides that the objective of the Trust is limited toacquiring, holding and reinvesting "Trust Assets" (as defined therein) to generateamounts for distribution to unitholders of the Trust;

5. the Declaration of Trust provides that the Trust Assets will be limited to residentialmortgages, mortgage co-ownership interests, mortgage-backed securities,contractual rights, cash and certain qualified debt obligations under the Income TaxAct (Canada) (collectively, "Eligible Trust Assets");

6. the Bank and the Trust have entered into an Administration and AdvisoryAgreement pursuant to which the Bank, as administrative agent (the "AdministrativeAgent"), will carry out certain administrative and advisory functions for the Trust;

7. the Trust proposes to offer securities from time to time (the "Offerings") under thePOP System, as well as pursuant to the Shelf Procedures and the PREPProcedures established under NP 44 and the applicable securities legislation ofQuebec including, but not limited to, those set forth in Title II and Title III of the QSAand the QRRS (collectively, the "Shelf and PREP Procedures"), having anApproved Rating that are primarily serviced by the cash flows derived from one ormore discrete pools of Eligible Trust Assets which, by their terms will convert intocash within a finite time period, and any rights or other assets designed to assurethe servicing or timely distribution of proceeds to securityholders ("Asset-BackedSecurities") with an Approved Rating by an Approved Rating Organization tofinance the purchase by the Trust from time to time from the Bank and/or itsmortgage affiliates including TD Mortgage Corporation, TD Pacific MortgageCorporation, Canada Trustco Mortgage Company and The Canada Trust Company(collectively, the "Sellers") of Eligible Trust Assets;

8. as a special purpose vehicle, the Trust will have no assets other than the EligibleTrust Assets, and will not carry on any activities other than acquiring and holdingTrust Assets and issuing the Asset-Backed Securities to investors under theOfferings and special securities to the Bank and activities ancillary thereto in allmaterial respects as set forth in the Initial Prospectus;

9. the net proceeds of the Offerings will be used by the Trust to purchase additionalEligible Trust Assets from the Sellers;

10. the Trust would not be eligible to participate in the POP System (and, thereby, toutilize the Shelf and PREP Procedures) without this decision by the DecisionMakers because it will not satisfy the 12-month reporting issuer history or the publicfloat eligibility criteria set out in the POP Requirements;

11. in connection with each proposed Offering:

(a) the Trust will have a current annual information form ("AIF");

(b) in the case of an Offering made under the POP System that is not anOffering under the Shelf Procedures, the Asset-Backed Securities to bedistributed will have:

(i) received an Approved Rating, on a provisional basis;

(ii) not been the subject of an announcement by an Approved RatingOrganization of which the Trust is or ought to be aware that theApproved Rating given by the organization may be down-graded toa rating category that would not be an Approved Rating; and

(iii) not received a provisional or final rating lower than an ApprovedRating from any Approved Rating Organization;

(c) if the Trust is filing a preliminary short form prospectus ("preliminary ShortForm Prospectus") under the POP System more than 90 days after the endof its most recently completed financial year, the Trust will have filedfinancial statements for that year;

(d) in the case of an Offering pursuant to the Shelf Procedures, at the respectivetimes of the filing of its preliminary short form prospectus ("preliminary ShelfProspectus"), final short form prospectus ("Shelf Prospectus") or prospectussupplements (each a "Prospectus Supplement"), the Trust will havereasonable grounds for believing that:

(i) all Asset-Backed Securities that it may distribute under the ShelfProspectus will receive an Approved Rating from at least oneApproved Rating Organization; and

(ii) no Asset-Backed Securities that it may distribute under the ShelfProspectus will receive a rating lower than an Approved Rating fromany Approved Rating Organization.

12. each AIF of the Trust will be prepared in accordance with Appendix A of NP 47 andSchedule IX to the QRRS, with the following additional information,

(a) the disclosure in AIFs filed by the Trust will reflect the special nature of itsbusiness; and

(b) if the Trust has not completed its first financial year, the Trust may presentthe information contained in its initial AIF as at a date within 30 days beforethe date that the initial AIF is filed;

(c) if the Trust has Asset-Backed Securities outstanding that were issuedpursuant to a prospectus, the AIF filed by the Trust will disclose:

(i) a description of any events, covenants, standards or preconditionsthat are dependent or based on the economic performance of theunderlying pool of financial assets and that may impact on the timingor amount of payments or distributions to be made under the Asset-Backed Securities;

(ii) for the Trust's two most recently completed financial years or suchlesser period commencing on the first date on which the Trust hadAsset-Backed Securities outstanding, information on the underlyingpool of financial assets relating to:

 

(A) the composition of the pool as of the end of the financial yearor partial period;

(B) income and losses from the pool, on at least a quarterly basis;

(C) the payment, prepayment and collection experience of the poolon a quarterly basis; and

(D) any significant variances experienced in the matters referredto in subclauses (A), (B) and (C);

(iii) if any of the information disclosed under clause (ii) has been audited,the existence and results of the audit;

(iv) the investment parameters applicable to investments of any cash flowsurpluses;

(v) the amount of payments made in respect of principal and interest orcapital and yield, each stated separately, on its Asset-BackedSecurities outstanding during the most recently completed financialyear or lesser period commencing on the first date on which the Trusthad Asset-Backed Securities outstanding;

(vi) the occurrence of any events that have led or with the passage oftime could lead to the accelerated payment of principal or capital ofAsset-Backed Securities; and

(vii) the identity of any principal obligors of the outstanding Asset-BackedSecurities of the Trust at the end of the most recent financial year orinterim period, the percentage of the underlying pool of financialassets represented by obligations of each principal obligors andwhether the principal obligors, if any, has filed an AIF in anyjurisdiction or a Form 10K or Form 20-F in the United States;

13. each preliminary Short Form Prospectus, final short form prospectus ("Short FormProspectus"), preliminary Shelf Prospectus and Shelf Prospectus of the Trust willbe prepared in accordance with Appendix B of NP 47 and Division III of Chapter Iof Title II and Schedule IV to the QRRS with such amendments in connection withthe Shelf Procedures as are specified in subsection 2.3(b), Section 3 and AppendixB of NP 44 and Division III of Chapter 1 of Title II to the QRRS and with thefollowing additional information:

(a) the disclosure in the preliminary Short Form Prospectus, Short FormProspectus, preliminary Shelf Prospectus and Shelf Prospectus filed by theTrust shall reflect the special nature of its business;

(b) the preliminary Short Form Prospectus, Short Form Prospectus, preliminaryShelf Prospectus and Shelf Prospectus will disclose:

(i) the material attributes and characteristics of the Asset-BackedSecurities to be offered including, if applicable, details on:

(A) the rate of interest or stipulated yield and any premium;

(B) the date for repayment of principal or return of capital and anycircumstances in which payments of principal or capital maybe made before such date, including any redemption or pre-payment obligations or privileges of the Trust and any eventsthat may trigger early liquidation or amortization of theunderlying pool of financial assets;

(C) provisions for the accumulation of cash flows to provide for therepayment of principal or return of capital;

(D) provisions permitting or restricting the issuance of theadditional securities and any other material negativecovenants applicable to the Trust;

(E) the nature, order and priority of the entitlements of holders ofAsset-Backed Securities and any other entitled persons orcompanies to receive cash flows derived from the underlyingpool of financial assets; and

(F) any events, covenants, standards or preconditions that aredependent or based on the economic performance of theunderlying pool of financial assets and that may impact on thetiming or amount of payments or distributions to be madeunder the Asset-Backed Securities;

(ii) information on the underlying pool of financial assets for the periodfrom the date as at which the following information was presented inthe Trust's current AIF to a date not more than 90 days before thedate of the issuance of a receipt for the preliminary Short FormProspectus or preliminary Shelf Prospectus, as the case may be,relating to:

(A) the composition of the pool as at the end of the period;

(B) income and losses from the pool for the period on at least aquarterly basis; and

(C) the payment, prepayment and collection experience of the poolfor the period on at least a quarterly basis;

(iii) the type or types of the financial assets, the manner in which thefinancial assets originated or will originate and, if applicable, themechanism and terms of the agreement governing the transfer of thefinancial assets comprising the underlying pool to or through theTrust, including the consideration paid for the financial assets;

(iv) any person or company (including its general business activities andits material responsibilities under the Asset-Backed Securities) who:

(A) originated, sold or deposited a material portion of the financialassets comprising the pool, or has agreed to do so;

(B) acts, or has agreed to act, as a trustee, custodian, bailee,agent or other similar intermediary of the Trust or any holderof the Asset-Backed Securities or in a similar capacity;

(C) administers or services a material portion of the financialassets in the pool or provides administrative or managerialservices to the Trust, or has agreed to do so, on a conditionalbasis or otherwise, if: (i) finding a replacement provider of theservices at a cost comparable to the cost of the currentprovider is not reasonably likely; (ii) a replacement provider ofthe services is likely to achieve materially worse results thanthe current provider; (iii) the current provider of the services islikely to default in its service obligations because of its currentfinancial conditions; or (vi) the disclosure is otherwise material;

(D) provides a guarantee, alternative credit support or other creditenhancement to support the obligations of the Trust under theAsset-Backed Securities or the performance of some or all ofthe financial assets in the pool, or has agreed to do so; or

(E) lends to the Trust in order to facilitate the timely payment orrepayment of amounts payable under the Asset-BackedSecurities, or has agreed to do so;

(v) the general business activities and material responsibilities under theAsset-Backed Securities of a person or company referred to inparagraph (b) (iv) of this paragraph 13;

(vi) the terms of any material relationship between (i) the persons orcompanies referred to in paragraph (b)(iv) of this paragraph 13 andany of their respective affiliates, and (ii) the Trust and any of itsaffiliates;

(vii) any provisions relating to termination of services or responsibilities ofany of the persons or companies referred to in paragraph (b)(iv) ofthis paragraph 13 and the terms on which a replacement may beappointed, and

(viii) any risk factors associated with the Asset-Backed Securities,including disclosure of material risks associated with changes ininterest rates or prepayment levels, and any circumstances wherepayments on the Asset-Backed Securities could be impaired ordisrupted as a result of any reasonably foreseeable event that maydelay, divert or disrupt the cash flows dedicated to service the Asset-Backed Securities;

provided that, if any of the foregoing information will be disclosed in aProspectus Supplement, it may be omitted from the corresponding ShelfProspectus; and

(c) each preliminary and Shelf Prospectus will contain a statementthat the Trust undertakes that it will not distribute Asset-Backed Securities of a type that at the time of distribution havenot previously been distributed by prospectus in a Jurisdiction("Novel Asset-Backed Securities") without pre-clearing with theapplicable Decision Maker the disclosure to be contained in aProspectus Supplement pertaining to the distribution of suchNovel Asset-Backed Securities; and

(d) each preliminary Short Form Prospectus, Short FormProspectus, preliminary Shelf Prospectus and ShelfProspectus will disclose any factors or considerationspreviously identified by the Approved Rating Organization asgiving rise to unusual risks associated with the securities to bedistributed;

14. each Prospectus Supplement will be prepared in accordance with the ShelfProcedures and will include all of the shelf information pertaining to the distributionof Asset-Backed Securities which was omitted from the Shelf Prospectus;

AND WHEREAS under the System this MRRS Decision Document evidences thedecisions of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that theEligibility Requirements under the POP Requirements shall not apply to the Bank and theTrust in connection with the Offerings and that the Trust may participate in the POPSystem and may utilise the Shelf and PREP Procedures solely to distribute Asset-BackedSecurities with an Approved Rating from time to time and for the purposes of any suchdistributions to utilize AIFs, a preliminary Short Form Prospectus, Short Form Prospectus,Preliminary Shelf Prospectus or Shelf Prospectus, as the case may be, ProspectusSupplements and any necessary supporting documents, with such amendments from theform requirements of the POP Requirements and the Shelf Procedures, as applicable, asare set forth herein, provided that:

A. the Trust complies with paragraphs 11, 12, 13 and 14 hereof;

B. except as otherwise provided herein, the Trust complies with all of the filingrequirements and procedures set out in the POP Requirements, Shelf Proceduresand PREP Procedures, as applicable;

C. the Trust files an undertaking before or concurrently with each preliminary ShelfProspectus which states that:

(a) the Trust will not distribute under the Shelf Prospectus Novel Asset-BackedSecurities without pre-clearing the disclosure pertaining to the distributionof such Novel Asset-Backed Securities in any Prospectus Supplement withthe applicable Decision Maker; and

(b) the Trust shall not distribute such Novel Asset-Backed Securities in anyjurisdiction unless:

(i) the draft Prospectus Supplement or, if more than one ProspectusSupplement is to be used, the draft Prospectus Supplementspertaining to the distribution of such Novel Asset-Backed Securitieshave been delivered to the applicable Decision Maker in substantiallyfinal form; and

(ii) either:

(A) the applicable Decision Maker has confirmed his or heracceptance of each draft Prospectus Supplement insubstantially final form or in final form; or

(B) 21 days has elapsed since the date of delivery of each draftProspectus Supplement in substantially final form to theapplicable Decision Maker and the applicable Decision Makerhas not provided written comments on the draft ProspectusSupplement;

D. for each director and executive officer of the Trust for whom the Trust has notpreviously delivered to the Decision Makers the following information, the Trustshall file with each AIF a statement containing such individual's:

 

(a) full name;

(b) position with or relationship to the Trust;

(c) employer's name and address, if other than the Trust;

(d) full residential address;

(e) date and place of birth; and

(f) citizenship; and

an authorization of such individual for the collection of personal information;

E. the Trust files with each AIF an eligibility certificate, executed on behalf of the Trustby an officer of the Administrative Agent certifying that the Trust satisfies theeligibility requirements set out in paragraphs 11(b) or 11(d) hereof, and whichmakes reference to this Decision;

F. in the case of an Offering made under the POP System that is not an offering underthe Shelf Procedures, at the time of filing its preliminary Short Form Prospectus theAsset-Backed Securities have:

(a) received an Approved Rating, on a provisional basis;

(b) not been subject of an announcement by an Approved Rating Organizationof which the Trust is or ought to be aware that the Approved Rating given bythe organization may be down-graded to a rating category that would be anApproved Rating; and

(c) not received a provisional or final rating lower than an Approved Rating fromany Approved Rating Organization;

G. in the case of an Offering under the Shelf Procedures, at the time of the filing of itspreliminary Shelf Prospectus and Shelf Prospectus, the Trust has reasonablegrounds for believing that:

(a) all Asset-Backed Securities that it may distribute under the Shelf Prospectuswill receive an Approved Rating from at least one Approved RatingOrganization; and

(b) no Asset-Backed Securities that it may distribute under the Shelf Prospectuswill receive a rating lower than an Approved Rating from any ApprovedRating Organization;

H. the Trust files with its preliminary Short Form Prospectus or preliminary ShelfProspectus an eligibility certificate, executed on behalf of the Trust by an officer ofthe Administrative Agent certifying that the Trust satisfies all of the criteria on whichthe Trust is relying in order to be qualified to file the prospectus in the form of ashort form prospectus, and which makes reference to this Decision; and

I. this decision will automatically expire, upon the later of proposed NationalInstrument 44-101 and Proposed National Instrument 44-102 coming into force andbeing adopted as a rule in Ontario.

June 27th, 2000.

"Margo Paul"