Securities Law & Instruments


Mutual Reliance Review System for Exemptive Relief Applications - Takeover bid -Employment agreement entered into between offeror and selling security holder who isa senior officer of offeree - Decision granted that employment agreement is being madefor reasons other than to increase the value of the consideration paid to the sellingsecurity holder for his shares and that the employment agreement may be entered intodespite the prohibition against collateral benefits.

Applicable Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 97(2) and 104(2)(a).







WHEREAS The Toronto-Dominion Bank (the "Filer") proposes to make a take-overbid (the "Offer") to acquire all of the issued and outstanding common shares (the "CommonShares") of CT Financial Services Inc. ("CT Financial Services");

AND WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of the provinces of Ontario, British Columbia, Alberta, Manitoba,Saskatchewan, Quebec, Nova Scotia and Newfoundland (the "Jurisdictions") has receivedan application from the Filer for a decision under the securities legislation of theJurisdictions (the "Legislation") that the employment agreement (the "EmploymentAgreement") which the Filer has entered into, or may hereafter enter into, with EdmundClark ("Clark") currently an employee of CT Financial Services, (the "Key Principal") inrespect of the Key Principal's employment with the Filer following successful completionof the Offer is made for reasons other than to increase the value of the consideration paidto the Key Principal for his Common Shares and that the Employment Agreement may beentered into notwithstanding the requirement contained in the Legislation which prohibits,in the context of a take-over bid, the entering into of any collateral agreement with anyholder of the offeree issuer that has the effect of providing to the holder a considerationof greater value than that offered to the other holders of the same class of securities;

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


AND WHEREAS the Filer has represented to the Decision Makers as follows:

1. The Filer is a Canadian chartered bank existing under the Bank Act (Canada). TheFiler is a reporting issuer or the equivalent in all provinces of Canada and itscommon shares are listed for trading on the Toronto, Canadian Venture, Winnipeg,London, New York and Tokyo stock exchanges. The head office of the Filer islocated in Toronto, Ontario.

2. On January 10, 2000, the Filer made an all-cash offer to acquire all of the issuedand outstanding Common Shares at $67.00 per Common Share.

3. The Offer was made by way of a take-over bid circular prepared in accordance withapplicable securities laws, which was sent to all shareholders of CT FinancialServices on or about January 10, 2000. The Offer is conditional upon, among otherthings, there being validly deposited under the Offer and not withdrawn at the expirytime at least 90% of the Common Shares to which the Offer relates (calculated ona fully diluted basis).

4. CT Financial Services, a holding company, oversees a group of companies whichtogether operate as a Canadian personal financial services institution under thebrand name "Canada Trust". CT Financial Services was continued under theCanada Business Corporations Act on November 5, 1987.

5. The authorized capital of CT Financial Services consists of an unlimited number ofCommon Shares, an unlimited number of first preference shares and an unlimitednumber of second preference shares, of which there were 119,372,551 CommonShares, 6,000,000 first preference shares and 2,000,000 second preference shareswere outstanding as at December 31, 1998. The Common Shares are listed andposted for trading on the Toronto Stock Exchange.

6. Imasco Limited ("Imasco") currently holds indirectly 98.2% of all Common Shares(the "Imasco Shares"). Pursuant to a transaction proposal agreement entered intobetween Imasco and British American Tobacco p.l.c. ("BAT") dated August 2, 1999,as amended and restated, BAT has agreed to acquire, subject to certain conditions,all of the outstanding shares of Imasco. Subject to successful completion of thatagreement, BAT has agreed to cause one of its wholly owned indirect subsidiariesto deposit all of the Imasco Shares to the Offer.

7. The Key Principal holds less than 1% of the outstanding Common Shares on a fully-diluted basis.

8. The principal terms of the Employment Agreement, which becomes effective uponthe consummation of the Offer, will be substantially the same as the Key Principal'sexisting employment terms with CT Financial Services, with the followingmodifications:

a. in lieu of continued participation in CT Financial Services long-term incentiveplan, the Key Principal will participate in the Filer's stock option plan; and

b. the Key Principal will receive awards of units in one of the Filer's long-termincentive programs. These units will mature in three years, provided the KeyPrincipal remains employed throughout that period, at which time the KeyPrincipal will be entitled to receive, for each unit, an amount equal to the 90day average trading price of the Filer's common shares on The TorontoStock Exchange.

9. Under current arrangements with CT Financial Services, the Key Principal isentitled to certain severance benefits if he chooses to resign on the change ofcontrol or within three years thereafter. These arrangements provide for paymentof two years compensation in such circumstances. The Filer has agreed that if theKey Principal voluntarily resigns at any time within three years after completion ofthe acquisition, the severance entitlements will continue to be honoured.

10. The Filer believes that the Key Principal has been an integral part of the successfuldevelopment of the CT Financial Services business and has substantial andvaluable experience and expertise in the financial services industry. The Filerviews the retention of the Key Principal as critical to making the Offer, as the KeyPrincipal has contributed to the development of the CT Financial Services businessand has performed significant work on CT Financial Services' current businessproducts and services. The Employment Agreement will be entered into primarilyfor the purpose of ensuring the Key Principal's continued participation in thesuccessful management and development of the CT Financial Services businesswithin the Filer's operations following the consummation of the Offer.

11. The Employment Agreement has been negotiated with the Key Principal at arm'slength and has been made on terms and conditions that are commerciallyreasonable. The salary entitlement for the Key Principal is commensurate with thesalary entitlement of a Filer's employee with similar levels of responsibility.

12. In the context of the Offer, where 98.2% of the Common Shares are committed tothe Filer, there is no incentive for the Filer to provide any minority shareholders withconsideration for his or her Common Shares which is greater than that provided toother holders of Common Shares.

13. The Employment Agreement is to be entered into for valid business reasonsunrelated to the Key Principal's holdings of Common Shares and not for thepurpose of conferring an economic or collateral benefit on the Key Principal that theother Shareholders do not enjoy, and is being made for reasons other than toincrease the value of the consideration to be paid to the Key Principal pursuant tothe Offer.

AND WHEREAS under the System, this MRRS Decision Document evidences thedecision 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 Maker under the Legislation is that the EmploymentAgreement is being made for reasons other than to increase the value of the considerationto be paid to the Key Principal for his Common Shares, and that the EmploymentAgreement may be entered into despite the requirement contained in the Legislation thatprohibits, in the context of a take-over bid, the entering into of any collateral agreementwith any holder of the offeree issuer that has the effect of providing to the holder aconsideration of greater value than that offered to the other holders of the same class ofsecurities.

January 27th, 2000.

"J. A. Geller"     "R. Stephen Paddon"