Toronto-Dominion Bank and TD Capital Trust III

Headnote

MI 11-102 and NP 11-203 as applicable -- capital trust established by bank to issue capital trust securities as cost-effective means of raising capital for Canadian bank regulatory purposes exempted from eligibility requirements to file a short form prospectus, certain form requirements and 10-day notice requirement -- trust is not currently a reporting issuer -- relief granted as disclosure regarding the bank is more relevant and bank has been reporting issuer for many years -- relief subject to conditions -- National Instrument 44-101 Short Form Prospectus Distributions -- relief also granted for temporary confidentiality of decision.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.3, 2.8.

Form 44-101F1 Short Form Prospectus, items 6 and 11.

August 22, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE "JURISDICTION")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

THE TORONTO-DOMINION BANK (THE "BANK")

AND TD CAPITAL TRUST III (THE "TRUST" AND,

TOGETHER WITH THE BANK, THE "FILERS")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision (the "Requested Relief") under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that:

A. the Trust be exempted from the following short form prospectus distribution requirements in connection with offerings by the Trust from time to time of Trust Capital Securities (as defined herein):

(i) the requirements of Part 2 of National Instrument 44-101 Short Form Prospectus Distributions ("NI 44-101"), which set forth the eligibility requirements to enable an issuer to file a prospectus in the form of a short form prospectus;

(ii) the disclosure requirements in Item 6 (Earnings Coverage Ratios) and Item 11 (Documents Incorporated by Reference), with the exception of Item 11.1(1)(5), of Form 44-101F1 of NI 44-101 ("Form 44-101F1") in respect of the Trust, as applicable; and

(iii) the requirement in Section 2.8 of NI 44-101 to file a notice of intention to file a short form prospectus no fewer than 10 business days prior to the filing of the Trust's first preliminary short form prospectus (the "Preliminary Prospectus");

B. the Trust is qualified to file a prospectus in the form of a short form prospectus in accordance with NI 44-101; and

C. the application of the Filers and this decision document be held in confidence by the principal regulator, subject to certain conditions.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in each of the provinces and territories of Canada other than Ontario.

Interpretation

The terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

"Bank Act" means the Bank Act (Canada);

"Tax Act" means the Income Tax Act (Canada);

Representations

This decision is based on the following facts represented by the Filers:

The Bank

1. The Bank is a Schedule 1 chartered bank subject to the provisions of the Bank Act (Canada). The head office of the Bank is located at P.O. Box 1, Toronto-Dominion Centre, Toronto, Ontario M5K 1A2.

2. The authorized share capital of the Bank consists of an unlimited number of: (i) common shares ("Bank Common Shares"); and (ii) Class A First Preferred Shares ("Bank Preferred Shares"), issuable in series.

3. The Bank Common Shares are listed and posted for trading on the Toronto Stock Exchange, the New York Stock Exchange and the Tokyo Stock Exchange.

4. The Bank is a reporting issuer, or the equivalent, in each province and territory of Canada that provides for a reporting issuer regime and is not, to the best of its knowledge, in default of any requirement of the securities legislation in such jurisdictions.

5. The Bank is qualified to use the short form prospectus system provided under NI 44-101.

The Trust

6. The Trust is a trust established under the laws of the Province of Ontario, pursuant to a declaration of trust dated August 20, 2008, as may be amended, restated and supplemented from time to time.

7. The Trust is proposing to do an initial public offering (the "Offering") of trust capital securities ("Trust Capital Securities") in each of the provinces and territories of Canada and may, from time to time, issue further series of Trust Capital Securities. It is currently anticipated that the first series of Trust Capital Securities will be designated as TD Capital Trust III Securities -- Series 2008 ("TD CaTS III -- Series 2008"). As a result of the Offering, the capital of the Trust will consist of TD CaTS III -- Series 2008 and special trust securities, issuable in series (the "Special Trust Securities; and, collectively with the TD CaTS III -- Series 2008, the "Trust Securities"). All of the Special Trust Securities will be held, directly or indirectly, by the Bank.

8. The Trust has been established for the purpose of effecting offerings of Trust Securities in order to provide the Bank with a cost-effective means of raising capital for Canadian bank regulatory purposes by means of: (i) creating and selling the Trust Securities; and (ii) acquiring and holding assets, which may consist of (a) residential mortgages (which may include CMHC insured or conventional first mortgages on residential property situated in Canada or such other first mortgages (or interests therein whether on a pooled basis or otherwise) on residential property situated in Canada, including, without limitation, privately insured residential mortgages or lines of credit secured by first mortgages on residential property situated in Canada, the debtor of which in each case is an individual resident in Canada for purposes of the Tax Act and so long as, in all cases, they are Eligible Investments (as defined below)), (b) undivided co-ownership interests in one or more pools of residential mortgages situated in Canada, (c) certain mortgage-backed securities in respect of residential property situated in Canada; and (d) to the extent that the assets of the Trust are not invested in the assets referred to above in (a), (b) or (c), money and certain debt obligations that are qualified investments under the Income Tax Act (Canada) for trusts governed by certain deferred income plans ("Eligible Investments" and collectively with items (a), (b) and (c), the "Trust Assets"). The Trust Assets will generate income for distribution to holders of Trust Securities. The Trust will not carry on any operating activity other than in connection with offerings of Trust Securities and in connection with the Trust Assets.

9. The Trust is not currently a reporting issuer in any province or territory of Canada. As a result of the Offering, it is anticipated that the Trust will become a reporting issuer, or the equivalent, in each of the provinces and territories of Canada that provide for a reporting issuer regime.

TD CaTS III -- Series 2008

10. Holders of TD CaTS III -- Series 2008 will be entitled to receive fixed, non-cumulative, indicated cash distributions (each, an "Indicated Distribution") on such date(s) as may be described in the prospectus for the Offering (the "Prospectus"). Each payment date for the Indicated Distribution in respect of the TD CaTS III -- Series 2008 (a "Distribution Date") will be either a "Regular Distribution Date" or a "Distribution Diversion Date". A Distribution Date will be a "Distribution Diversion Date" with the result that the Indicated Distribution will not be paid in respect of the TD CaTS III -- Series 2008 but, instead, the Trust will pay the net distributable funds of the Trust to the Bank as holder of the Special Trust Securities if: (i) the Bank has failed in the period to be described in the Prospectus to declare regular dividends on the Bank Preferred Shares of any series; or (ii) if no Bank Preferred Shares are then outstanding, the Bank has failed in the period to be described in the Prospectus to declare regular dividends on the Bank Common Shares. In all other cases, a Distribution Date will be a Regular Distribution Date, in which case holders of TD CaTS III -- Series 2008 will be entitled to receive the Indicated Distribution and the holder of the Special Trust Securities will be entitled to receive the net distributable income, if any, of the Trust remaining after payment of the Indicated Distribution.

11. Under a share exchange agreement ("Share Exchange Agreement") to be entered into among the Bank, the Trust and a party acting as exchange trustee, the Bank will agree, for the benefit of holders of TD CaTS III -- Series 2008, that in the event that the Trust fails on any Regular Distribution Date to pay the Indicated Distribution on the TD CaTS III -- Series 2008 in full, the Bank will not declare dividends of any kind on the Bank Preferred Shares or the Bank Common Shares until a period of time specified in the Prospectus has elapsed, unless the Trust first pays such Indicated Distribution (or the unpaid portion thereof) to holders of TD CaTS III -- Series 2008 (the "Dividend Stopper Undertaking"). Accordingly, it is in the interest of the Bank to ensure, to the extent within its control, that the Trust complies with its obligation to pay the Indicated Distribution on each Regular Distribution Date so as to avoid triggering the Dividend Stopper Undertaking.

12. The TD CaTS III -- Series 2008 will be automatically exchanged, without the consent of the holder, for a new series of newly issued Bank Preferred Shares upon the occurrence of certain stated events relating to the solvency of the Bank or actions taken by the Superintendent of Financial Institutions (the "Superintendent") in respect of the Bank.

13. The Trust may, subject to regulatory approval, at its option, on a date to be described in the Prospectus not prior to five years after the issue date for the TD CaTS III -- Series 2008 and on any Distribution Date thereafter, redeem the TD CaTS III -- Series 2008 without the consent of the holders thereof. The price payable in respect of any such redemption will include an early redemption compensation component (such price being the "Early Redemption Price") in the event of a redemption prior to a date to be specified in the Prospectus. The price payable in all other cases will be an amount equal to the original issue price per TD CaTS III -- Series 2008 together with any unpaid Indicated Distribution thereon (the "Redemption Price").

14. Upon the occurrence of certain regulatory or tax events affecting the Bank or the Trust (each a "Special Event") within five years of the date of issuance of the TD CaTS III -- Series 2008, the Trust may, at its option, without consent of the holders of the TD CaTS III -- Series 2008 but subject to regulatory approval, redeem all but not less than all of the TD CaTS III -- Series 2008 at the Early Redemption Price.

15. The Bank will covenant that it will maintain direct or indirect ownership of 100% of the outstanding Special Trust Securities. Subject to regulatory approval, the TD CaTS III -- Series 2008 will constitute Tier 1 capital of the Bank.

16. As long as any TD CaTS III -- Series 2008 are outstanding and are held by any person other than the Bank, or an affiliate of the Bank, the Trust may only be terminated with the approval of the Bank as holder, directly or indirectly, of the Special Trust Securities and with the approval of the Superintendent: (i) upon the occurrence of a Special Event prior to a date to be specified in the Prospectus; or (ii) for any reason on a date to be specified in the Prospectus or any other Distribution Date thereafter. Holders of TD CaTS III -- Series 2008 and the Bank and/or its affiliates, as holders of the Special Trust Securities, will rank pari passu in the distribution of the property of the Trust in the event of a termination of the Trust after the discharge of any creditor claims. As long as any TD CaTS III -- Series 2008 are outstanding and held by any person other than the Bank, or an affiliate thereof, the Bank will not approve the termination of the Trust unless the Trust has sufficient funds to pay the Early Redemption Price or the Redemption Price, as applicable.

17. The TD CaTS III -- Series 2008 will be non-voting except in limited circumstances, and Special Trust Securities will entitle the holder thereof to vote in all circumstances.

18. Except to the extent that the Indicated Distribution is payable to holders of TD CaTS III -- Series 2008, and other than in the event of a termination of the Trust, holders of TD CaTS III -- Series 2008 will have no claim or entitlement to the income of the Trust or its assets.

19. Pursuant to an administration and advisory agreement to be entered into between the trustee of the Trust (the "Trustee") and the Bank, the Trustee will delegate to the Bank certain of its duties in relation to the administration of the Trust. The Bank, as administrative agent, will provide advice and counsel with respect to management of the assets of the Trust and other matters as may be requested by the Trustee from time to time and will administer the day-to-day operations of the Trust.

20. The Trust may, from time to time, issue further series of Trust Capital Securities, the proceeds of which would be used to acquire additional Trust Assets.

21. Because of the terms of the Trust Capital Securities, the Share Exchange Agreement and the various covenants of the Bank, information about the affairs and financial performance of the Bank, as opposed to that of the Trust, is meaningful to holders of Trust Capital Securities.

22. It is expected that the TD CaTS III -- Series 2008 will receive an approved rating from an approved rating organization, as defined in NI 44-101.

23. At the time of the filing of any prospectus in connection with offerings of Trust Capital Securities (including the Offering):

(i) the prospectus will be prepared in accordance with the short form prospectus requirements of NI 44-101, except as varied by this decision or as permitted by the Legislation;

(ii) the Trust will comply with all of the filing requirements and procedures set out in NI 44-101 except as varied by this decision or as permitted by the Legislation;

(iii) the prospectus will incorporate by reference the documents that would be required to be incorporated by reference under Item 11 of Form 44-101F1 if the Bank were the issuer of such securities;

(iv) the prospectus disclosure required by Item 11 (other than Item 11.1(1)(5)) of Form 44-101F1 in respect of the Trust) will be addressed by incorporating by reference the Bank's public disclosure documents referred to in paragraph 23(iii) above; and

(v) the Bank will satisfy the criteria in section 2.2 of NI 44-101 if the word "issuer" is replaced with "Bank".

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Requested Relief is granted provided that:

(i) the Trust and the Bank, as applicable, comply with paragraph 23 above;

(ii) the Bank remains the direct or indirect beneficial owner of all of the outstanding Special Trust Securities;

(iii) the Bank, as holder of the Special Trust Securities, will not propose changes to the terms and conditions of any outstanding Trust Capital Securities offered and sold pursuant to a short form prospectus of the Trust filed under this decision that would result in such Trust Capital Securities being exchangeable for securities other than Bank Preferred Shares;

(iv) the Trust has minimal assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Trust Securities;

(v) the Trust issues a news release and files a material change report in accordance with Part 7 of NI 51-102, as amended, supplemented or replaced from time to time, in respect of any material change in the affairs of the Trust that is not also a material change in the affairs of the Bank;

(vi) the Trust becomes, on or before the filing of a preliminary prospectus in connection with the Offering, and thereafter remains, an electronic filer under NI 13-101;

(vii) following the Offering, the Trust is a reporting issuer in at least one jurisdiction of Canada;

(viii) following the Offering, the Trust files with the securities regulatory authority in each jurisdiction in which it becomes a reporting issuer all periodic and timely disclosure documents that it is required to have filed in that jurisdiction: (a) under all applicable securities legislation; (b) pursuant to an order issued by the securities regulatory authority; or (c) pursuant to an undertaking to the securities regulatory authority;

(ix) the Preliminary Prospectus is in respect of the Offering as described in paragraph 7 above; and

(x) the securities to be distributed (a) have received an approved rating on a provisional basis; (b) are not the subject of an announcement by an approved rating organization, of which the issuer is or ought reasonably to be aware, that the approved rating given by the organization may be down-graded to a rating category that would not be an approved rating, and (c) have not received a provisional or final rating lower than an approved rating from any approved rating organization.

The further decision of the principal regulator is that the application of the Filers and this decision shall be held in confidence by the principal regulator until the earlier of (i) the date that a preliminary short form prospectus is filed in respect of the Offering, and (ii) October 31, 2008.