Securities Law & Instruments

Headnote

Exemptions from most continuous disclosure requirementsgranted to a Trust on specified conditions, including the conditionsthat the Bank remains a reporting issuer and security holdersof the Trust receive the continuous disclosure documents ofthe parent company. Because of the terms of the Trust, a securityholder's return depends upon the financial condition of theBank and not that of the Trust. Trust offered Trust units tothe public in order to provide the parent company with a costeffective means of raising capital for Canadian bank regulatorypurposes. No distributions are payable on the Trust units, ifthe Bank fails to pay dividends on its preferred shares or onits common shares, if no preferred shares are outstanding. Ifdistributions are not paid, the Bank is prevented from payingdividends on its preferred shares. Trust units are redeemableby the Trust and are exchangeable at the option of the holderfor a series of shares of the Bank. Holders of Trust units haveno claim or entitlement to the income of the Trust or the assetsheld by the Trust.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 77, 78,79, 80(b)(iii), 81.

Applicable Ontario Rules Cited

OSC Rule 51-501- AIF and MD&A OSC Rule 52-501-Financial Statements.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN, MANITOBA,

ONTARIO, QUEBEC, NOVA SCOTIAAND NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

THE TORONTO-DOMINION BANKAND

TD CAPITAL TRUST II

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the Decision Maker, and collectivelythe Decision Makers) in each of the Provinces of Ontario, BritishColumbia, Alberta, Saskatchewan, Manitoba, Quebec, Nova Scotiaand Newfoundland and Labrador (the Jurisdictions) has receivedan application (the Application) from The Toronto-Dominion Bank(the Bank) and TD Capital Trust II (the Trust) for a decision,pursuant to the securities legislation of the Jurisdictions(the Legislation), that the requirements contained in the Legislationto:

(a) file interim financial statements andaudited annual financial statements (collectively, FinancialStatements) with the Decision Makers and deliver such statementsto the security holders of the Trust;

(b) make an annual filing (an Annual Filing)with the Decision Makers in lieu of filing an informationcircular, where applicable;

(c) file an annual report (an Annual Report)and an information circular with the Decision Maker in Quebecand deliver such report or information circular to the securityholders of the Trust resident in Quebec; and

(d) file an annual information form (anAIF) and management's discussion and analysis (MD&A)of the financial condition and results of operation of theTrust with the Decision Makers in Ontario, Saskatchewanand Quebec and send such MD&A to security holders ofthe Trust, where applicable (collectively, the AIF and MD&ARequirements);

shall not apply to the Trust, subject to certainterms and conditions;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the System),the Ontario Securities Commission is the Principal Regulatorfor this application;

AND WHEREAS, unless otherwise definedthe terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice 14-101;

AND WHEREAS the Bank and the Trust haverepresented to the Decision Makers that:

The Bank

1. The Bank is a bank under the Bank Act(Canada) and such act is its charter.

2. The authorized share capital of the Bankconsists of an unlimited number of (i) common shares (BankCommon Shares); and (ii) non-cumulative Class A First PreferredShares (Bank Preferred Shares), issuable in series.

3. The Bank is a reporting issuer or the equivalentin each of the provinces and territories of Canada providingfor such a regime and is not, to its knowledge, in defaultof any requirement under the Legislation.

4. The Bank Common Shares are listed and postedfor trading on the Toronto Stock Exchange, the New York StockExchange, the Tokyo Stock Exchange and the London Stock Exchange.

The Trust

5. The Trust is an open-end trust establishedunder the laws of the Province of Ontario by The Canada TrustCompany (the Trustee), as trustee, pursuant to a declarationof trust dated September 10, 2002 (as amended and restatedas of October 22, 2002, the Declaration of Trust).

6. The outstanding securities of the Trustconsist of: (i) Special Trust Securities - Series 2002-1 (Special Trust Securities); and (ii) TD Capital Trust II Securities- Series 2012-1 ( TD CaTS II). The Special Trust Securitiesand the TD CaTS II are collectively referred to herein asthe Trust Securities. The TD CaTS II and the Special TrustSecurities are not quoted or listed on any exchange or organizedmarket.

7. The Trust is a reporting issuer or theequivalent in each of the Jurisdictions providing for sucha regime as a result of having filed a (final) prospectusdated October 15, 2002 (the Prospectus) and the issuance ofa final MRRS Decision Document in relation to the Prospectusand is not, to its knowledge, in default of any requirementof the Legislation.

8. The Trust was established solely for thepurpose of effecting a public offering of TD CaTS II (theOffering) and possible future offerings of TD Capital TrustII Securities in order to provide the Bank with a cost effectivemeans of raising capital for Canadian financial institutionregulatory purposes by means of: (i) creating and sellingthe Trust Securities; and (ii) acquiring and holding assets,which consist primarily of a senior deposit note issued bythe Bank (the Bank Deposit Note). The Bank Deposit Note willgenerate income for distribution to holders of the Trust Securities.The Trust does not and will not carry on any operating activityother than in connection with the Offering and any futureofferings.

TD CaTS II

9. The Trust distributed 350,000 TD CaTS IIin the Jurisdictions under the Prospectus. The Trust alsoissued and sold 2,000 Special Trust Securities, which arevoting securities of the Trust, to the Bank in connectionwith the Offering.

10. Holders of TD CaTS II are entitled toreceive fixed, semi-annual non-cumulative distributions (each,an Indicated Yield) on the basis described below (the Distributions).Each semi-annual payment date for the Indicated Yield in respectof the TD CaTS II (a Distribution Date) will be either a RegularDistribution Date or a Distribution Diversion Date. A DistributionDate will be a "Distribution Diversion Date", withthe result that the Indicated Yield will not be paid in respectof the TD CaTS II but, instead, the Trust will pay the netdistributable funds of the Trust to the Bank as holder ofthe Special Trust Securities, if: (i) the Bank has failedin the period described in the Prospectus to declare regulardividends on its Bank Class A Preferred Shares (as hereinafterdefined) of any series or on its Bank Parity Preferred Shares(as hereinafter defined) (if any); or (ii) if no Bank ClassA Preferred Shares or Bank Parity Preferred Shares are thenoutstanding and the Bank has failed in the period describedin the Prospectus to declare regular dividends on its BankJunior Preferred Shares (as hereinafter defined); or (iii)if no Bank Junior Preferred Shares are then outstanding andthe Bank has failed in the period described in the Prospectusto declare regular dividends on its Bank Common Shares. Inall other cases, a Distribution Date will be a Regular DistributionDate, in which case holders of TD CaTS II will be entitledto receive the Indicated Yield and the Bank as holder of theSpecial Trust Securities will be entitled to receive the netdistributable income, if any, of the Trust remaining afterpayment of the Indicated Yield. "Bank Class A PreferredShares" means the Bank Preferred Shares (including theClass A First Preferred Shares, Series A2 (the Bank PreferredShares Series A2) and the Class A First Preferred Shares,Series A3 (the Bank Preferred Shares Series A3)). "BankParity Preferred Shares" means preferred or preferenceshares issued by the Bank ranking pari passu with theBank Class A Preferred Shares. "Bank Junior PreferredShares" means preferred or preference shares issued bythe Bank ranking junior to the Bank Class A Preferred Shares.The Bank Class A Preferred Shares, Bank Common Shares, BankParity Preferred Shares and Bank Junior Preferred Shares arehereinafter referred to as the "Bank Dividend RestrictedShares".

11. Under a Share Exchange Agreement enteredinto among the Bank, the Trust and a party acting as ExchangeTrustee (the Share Exchange Agreement), the Bank has agreed,for the benefit of the holders of TD CaTS II, that in theevent that the Trust fails on any Regular Distribution Dateto pay the Indicated Yield on the TD CaTS II in full, theBank will not pay dividends on the Bank Dividend RestrictedShares until a specified period of time has elapsed, unlessthe Trust first pays such Indicated Yield (or the unpaid portionthereof) to holders of TD CaTS II. Accordingly, it is in theinterest of the Bank to ensure, to the extent within its control,that the Trust complies with its obligation to pay the IndicatedYield on each Regular Distribution Date.

12. Under the terms of the TD CaTS II andthe Share Exchange Agreement, the TD CaTS II may be exchanged,at the option of the holders of TD CaTS II, for newly issuedBank Preferred Shares Series A2. The TD CaTS II will be automaticallyexchanged, without the consent of the holder, for Bank PreferredShares Series A3 upon the occurrence of certain stated eventsrelating to the solvency of the Bank or actions taken by theSuperintendent of Financial Institutions (the Superintendentand regulatory approval means the approval of the Superintendent)in respect of the Bank (the Automatic Exchange).

13. The terms of the Bank Preferred SharesSeries A2 provide, among other things, that such shares areexchangeable at the option of the holder for Bank Common Sharesat certain times and in certain circumstances, but in anyevent the Bank Preferred Shares Series A2 are not exchangeableinto Bank Common Shares until June 30, 2013. This exchangeright is not operative at any time that an event giving riseto the Automatic Exchange in respect of the TD CaTS II hasoccurred and is continuing.

14. The Trust may, subject to regulatory approval,on December 31, 2007 and on any Distribution Date thereafter,redeem the TD CaTS II. The price payable in respect of anysuch redemption will include an early redemption compensationcomponent (such price being the Early Redemption Price) inthe event of a redemption of TD CaTS II prior to December31, 2012 (the Early Redemption Date). The price payable inall other cases will be $1,000 per TD CaTS II together withany unpaid Indicated Yield thereon (the Redemption Price).

15. Upon the occurrence of certain regulatoryor tax events affecting the Bank or the Trust, the Trust may,subject to regulatory approval, redeem at any time all butnot less than all of the TD CaTS II at the Early RedemptionPrice (if the TD CaTS II are redeemed prior to the Early RedemptionDate) and at the Redemption Price (if the TD CaTS II are redeemedon or after the Early Redemption Date).

16. The Bank has covenanted, under the ShareExchange Agreement, that the Bank will maintain direct ownershipof 100% of the outstanding Special Trust Securities. As aresult, the financial results of the Trust will be consolidatedwith those of the Bank. Subject to regulatory approval, theTD CaTS II constitute Tier 1 Capital of the Bank.

17. As long as any TD CaTS II are outstandingand are held by any person other than the Bank, the Trustmay only be terminated with the approval of the Bank as holderof the Special Trust Securities and with the approval of theSuperintendent: (i) upon the occurrence of a Special Eventprior to December 31, 2007; or (ii) for any reason on December31, 2007 or any Distribution Date thereafter. Holders of eachseries of outstanding Trust Securities will rank pari passuin the distribution of the property of the Trust in the eventof a termination of the Trust, after the discharge of anycreditor claims. As long as any TD CaTS II are outstanding,the Bank will not approve the termination of the Trust unlessthe Trust has sufficient funds to pay the Early RedemptionPrice in the case of a termination prior to the Early RedemptionDate, or the Redemption Price in the case of a terminationat any other time.

18. As set forth in the Declaration of Trust,the TD CaTS II are non-voting except in limited circumstancesand Special Trust Securities entitle the holders to vote.

19. Except to the extent that the Distributionsare payable to TD CaTS II holders, and other than in the eventof termination of the Trust (as set forth in the Declarationof Trust), TD CaTS II holders have no claim or entitlementto the income of the Trust or the assets held by the Trust.

20. Under an Administration Agreement enteredinto between the Trustee and the Bank, the Trustee has delegatedto the Bank certain of its obligations in relation to theadministration of the Trust. The Bank, as administrative agent,will provide advice and counsel with respect to the administrationof the day-to-day operations of the Trust and other mattersas may be requested by the Trustee from time to time.

21. The Trust has not requested relief forthe purposes of filing a short form prospectus pursuant toNational Instrument 44-101 Short Form Prospectus Distributions(NI 44-101) (including, without limitation, any relief thatwould allow the Trust to use the Bank's AIF as a current AIFof the Trust) and no such relief is provided by this DecisionDocument from any of the requirements of NI 44-101.

22. The Trust may, from time to time, issuefurther series of TD Capital Trust II Securities, the proceedsof which would be used to acquire additional deposit notesfrom the Bank.

23. Because of the terms of the TD CaTS II,the Share Exchange Agreement and the various covenants ofthe Bank, information about the affairs and financial performanceof the Bank, as opposed to that of the Trust, is meaningfulto holders of TD CaTS II. The Bank's filings and the deliveryof the same material delivered to shareholders of the Bankwill provide holders of TD CaTS II and the general investingpublic with all information required in order to make an informeddecision relating to an investment in TD CaTS II. Informationregarding the Bank is relevant both to an investor's expectationof being paid the Indicated Yield on the TD CaTS II as wellas the return of the investor's principal.

AND WHEREAS under the System this MRRSDecision Document evidences the decision of the Decision Makers(collectively, the Decision);

AND WHEREAS the Decision Makers are satisfiedthat the tests contained in the Legislation that provides theDecision Maker with the jurisdiction to make the Decision havebeen met;

THE DECISION of the Decision Makers underthe Legislation is that the requirement contained in the Legislation:

(a) to file Financial Statements with theDecision Makers and deliver such statements to holders ofTrust Securities;

(b) to make an Annual Filing, where applicable,with the Decision Makers in lieu of filing an informationcircular; and

(c) to file an Annual Report and an informationcircular with the Decision Maker in Quebec and deliver suchreport or information circular to holders of Trust Securitiesresident in Quebec;

shall not apply to the Trust for so long as:

(i) the Bank remains a reporting issuerunder the Legislation;

(ii) the Bank files with the Decision Makers,in electronic format under the Trust's SEDAR profile, thedocuments listed in clauses (a) to (c) above of this Decision,at the same time as they are required under the Legislationto be filed by the Bank;

(iii) the Trust pays all filing fees thatwould otherwise be payable by the Trust in connection withthe filing of the documents referred to in clauses (a) to(c) above of this Decision;

(iv) the Bank sends its Financial Statementsand Annual Filing, where applicable, to holders of TrustSecurities and its Annual Report to holders of Trust Securitiesresident in the Province of Quebec at the same time andin the same manner as if the holders of Trust Securitieswere holders of the Bank Common Shares;

(v) all outstanding securities of the Trustare either TD Capital Trust II Securities or Special TrustSecurities; and

(vi) the rights and obligations (other thanthe economic terms thereof) of holders of additional seriesof TD Capital Trust II Securities are the same in all materialrespects as the rights and obligations of the holders ofTD CaTs II - Series 2012-1 at the date hereof; and

(vii) the Bank is the beneficial owner ofall Special Trust Securities.

and provided that this Decision shall expire30 days after the date a material adverse change occurs in theaffairs of the Trust.

December 19, 2002.

"Mary Theresa McLeod"                    "RobertL. Shirriff"

AND THE FURTHER DECISION of the DecisionMakers in Ontario, Saskatchewan and Quebec is that the AIF andMD&A Requirements shall not apply to the Trust for so longas:

(i) the conditions set out in clauses (i),(v), (vi) and (vii) of the Decision above are complied with;

(ii) the Bank files its AIF and its annualand interim MD&A with the Decision Makers, as applicable,in electronic format under the Trust's SEDAR profile atthe same time as they are required under the Legislationto be filed by the Bank;

(iii) the Trust pays all filing fees thatwould otherwise be payable by the Trust in connection withthe filing of the documents referred to in clauses (a) to(c) above of this Decision;

(iv) the Bank sends its annual and interimMD&A and its AIF, as applicable, to holders of TrustSecurities at the same time and in the same manner as ifthe holders of Trust Securities were holders of Bank CommonShares;

and provided that this Decision shall expire30 days after the date a material adverse change occurs in theaffairs of the Trust.

December 19, 2002.

"John Hughes"