Filed Pursuant to Rule 424(b)(3)

Registration No. 333-147304

 

 

PROPOSED MERGER TRANSACTION — YOUR VOTE IS VERY IMPORTANT

 

Commerce Bancorp, Inc., or Commerce, entered into a merger agreement with The Toronto-Dominion Bank, or TD, which provides for TD to acquire Commerce. If the merger is completed, you will receive $10.50 in cash and 0.4142 TD common shares (plus cash in lieu of any fractional share interests) for each share of Commerce common stock you hold immediately prior to the completion of the merger. Based on the closing price of TD common shares as reported on the New York Stock Exchange on October 1, 2007, the last trading day before public announcement of the merger, the merger consideration represented $42.37 in value for each share of Commerce common stock. Based on the closing price of TD common shares as reported on the New York Stock Exchange on January 3, 2008, the last practicable date before the date of this document, the merger consideration represented $38.89 in value for each share of Commerce common stock. The exchange ratio of 0.4142 TD common shares is fixed and will only be adjusted in limited circumstances. The exchange ratio will not be adjusted to reflect changes in the stock price of Commerce or TD. The dollar value of the stock consideration Commerce shareholders receive will change depending on changes in the market price of TD common shares and will not be known at the time you vote on the merger. TD’s common shares and Commerce’s common stock are listed on the New York Stock Exchange under the symbols “TD” and “CBH”, respectively, and TD’s common shares are also listed on the Toronto Stock Exchange under the symbol “TD”. You should obtain current market quotations for both securities. The merger will be a taxable transaction for Commerce shareholders for United States federal income tax purposes.

 

At Commerce’s special meeting of its shareholders, you will have the opportunity to vote on the approval of the plan of merger contained in the Agreement and Plan of Merger, or merger agreement, dated as of October 2, 2007, among Commerce, TD and Cardinal Merger Co., a wholly-owned subsidiary of TD. The special meeting of Commerce shareholders will be held at Commerce University, 4140 Church Road, Mt. Laurel, New Jersey, on February 6, 2008, at 4:00 p.m., local time, to vote on the approval of the plan of merger. Our board of directors unanimously recommends that you vote “FOR” the approval of the plan of merger.

 

Based on the number of shares of Commerce common stock outstanding as of the record date, TD expects to issue approximately 81 million TD common shares to Commerce shareholders upon completion of the merger. In addition, TD expects that additional TD common shares will be issuable in respect of converted Commerce stock options. However, any increase or decrease in the number of shares of Commerce common stock outstanding that occurs for any reason prior to completion of the merger would cause the actual number of TD common shares issued in the merger to change.

 

Your Vote Is Very Important. Approval of the plan of merger contained in the merger agreement requires the affirmative vote of a majority of the votes cast at the Commerce special meeting. Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card to us. If your shares are held in “street name,” you must instruct your broker in order to vote.

 

This proxy statement/prospectus contains detailed information about the special meeting, the proposed merger, documents related to the merger and other related matters, and we urge you to read it carefully, including the section entitled “Risk Factors” beginning on page 21.

 

We appreciate your continued support.

 

Sincerely,

 

Dennis M. DiFlorio

Chairman of Commerce Bank, N.A.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, NOR ANY U.S. STATE OR CANADIAN PROVINCIAL OR TERRITORIAL SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

The securities to be issued in the merger are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation, the Canada Deposit Insurance Corporation or any other governmental agency.

 

The date of this proxy statement/prospectus is January 4, 2008, and it is first being mailed or otherwise delivered to Commerce shareholders on or about January 7, 2008.

 

REFERENCES TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates important business and financial information about Commerce and TD from documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain documents related to Commerce and TD that are incorporated by reference in this proxy statement/prospectus, other than certain exhibits to the documents, without charge, by requesting them in writing or by telephone from the appropriate company.

 

 

In addition, if you have questions about the merger or the special meeting, need additional copies of this document or need to obtain proxy cards or other information related to the proxy solicitation, you may contact the appropriate contact listed below. You will not be charged for any of these documents that you request.

 

Morrow & Co., LLC

470 West Avenue

Stamford, CT 06902

Toll free telephone: (800) 573-4370

Brokers and banks, please call: (203) 658-9400

commercebank.info@morrowco.com

 

In order to receive timely delivery of requested documents in advance of the special meeting, you should make your request no later than January 30, 2008.

 

See “Where You Can Find More Information” beginning on page 108.

 

COMMERCE BANCORP, INC.

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 6, 2008

 

To the Shareholders of Commerce Bancorp, Inc.:

 

We will hold a special meeting of shareholders at 4:00 p.m., local time, on February 6, 2008 at Commerce University, 4140 Church Road, Mt. Laurel, New Jersey to consider and vote upon the following matters:

 

 

The close of business on December 14, 2007 has been fixed as the record date for determining those Commerce shareholders entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. Only Commerce shareholders of record at the close of business on that date are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. Approval of the two proposals described above requires the affirmative vote of a majority of the votes cast at the special meeting by Commerce shareholders. If you wish to attend the special meeting and your shares are held in the name of a broker, trust, bank or other nominee, you must bring with you a proxy or letter from the broker, trustee, bank or other nominee to confirm your beneficial ownership.

 

By order of the Board of Directors,

 

 

C. Edward Jordan, Jr.

Secretary

 

     January 4, 2008

 

 

 

TABLE OF CONTENTS

 

	•	0.4142 TD common shares; and
	•	$10.50 in cash.

	•	414 TD common shares;
	•	$10,500 in cash; and
	•	for the fractional TD common share, cash in U.S. dollars equal to 0.2 (the remaining fractional interest in a TD common share) multiplied by the average of the daily volume weighted averages of a TD common share on the Toronto Stock Exchange for the five trading days immediately preceding the date of completion of the merger, as such price is converted from Canadian dollars into U.S. dollars.

Commerce

Common Stock

Pro Forma Equivalent

TD

Commerce

(including the

Common Shares

Common Stock

$10.50 cash portion)

October 1, 2007

U.S.$76.94

U.S.$39.74

U.S.$42.37

January 3, 2008

68.54

37.86

38.89

	•	to approve the plan of merger contained in the merger agreement; and
	•	to approve the adjournment or postponement of the special meeting, if necessary or appropriate, including to solicit additional proxies.

	•	receipt of the required approval by the Commerce shareholders of the plan of merger;
	•	approval for the listing on the New York Stock Exchange and the Toronto Stock Exchange of the TD common shares to be issued in the merger;
	•	receipt of required regulatory approvals and the absence of any injunction or other legal prohibition or restraint against the merger; and
	•	the registration statement on Form F-4, which includes this proxy statement/prospectus, filed by TD with the SEC must have been declared effective by the SEC and no stop order suspending the effectiveness of the Form F-4 shall have been issued and no proceedings for that purpose shall have been initiated by the SEC and not withdrawn.

	•	the accuracy of the representations and warranties of Commerce as of the closing date of the merger, other than, in most cases, those failures to be true and correct that would not reasonably be expected to result in a material adverse effect on Commerce;
	•	performance in all material respects by Commerce of the obligations required to be performed by it at or prior to the effective time of the merger; and
	•	there being no action taken, or applicable legal or regulatory restriction or condition that would be reasonably likely to have a material adverse effect on Commerce or TD or which would result in an adverse impact on TD’s status as a “financial holding company” under the Bank Holding Company Act of 1956, as amended, or BHC Act (in the case of the condition related to TD’s financial holding company status, if such action is due to any fact or condition relating to Commerce).

	•	the accuracy of the representations and warranties of TD as of the closing date of the merger, other than, in most cases, those failures to be true and correct that would not reasonably be expected to result in a material adverse effect on TD; and
	•	performance in all material respects by TD of the obligations required to be performed by it at or prior to the effective time of the merger.

	•	by mutual written consent of TD and Commerce; or
	•	by either TD or Commerce if:

	—	any governmental entity which must grant a required regulatory approval has denied approval of the merger and this denial has become final and nonappealable or a governmental entity has issued a final nonappealable order prohibiting the consummation of the merger;
	—	the merger has not been completed by July 31, 2008, but neither TD nor Commerce may terminate the merger agreement for this reason if its breach of any obligation under the merger agreement has resulted in the failure of the merger to occur by that date;
	—	there is a breach by the other party of the merger agreement which would prevent satisfaction of a closing condition and the breach is not cured prior to 30 days after receipt of written notice of the breach or the breach cannot, by its nature, be cured prior to closing, but neither TD nor Commerce may terminate the merger agreement for this reason if it itself is then in material breach of the merger agreement; or
	—	the shareholders of Commerce fail to approve the plan of merger at the Commerce special meeting; or

	•	by TD if:

	—	the board of directors of Commerce has failed to recommend the merger and the approval of the plan of merger by the shareholders of Commerce or has withdrawn, amended or modified in any manner adverse to TD its recommendation, or if Commerce has materially breached its obligations under the “no solicitation” covenant of the merger agreement, or failed to call, give notice of, convene or hold a special meeting of shareholders to vote on approval of the plan of merger; or

	—	a tender offer or exchange offer for 20% or more of the outstanding shares of Commerce common stock has commenced (other than by TD), and the board of directors of Commerce recommends that the shareholders of Commerce tender their shares in such tender offer or exchange offer or otherwise fails to recommend that its shareholders reject such tender offer or exchange offer within ten business days.

Q:	What am I being asked to vote on?

A:

TD and Commerce have entered into a merger agreement pursuant to which TD has agreed to acquire Commerce. You are being asked to vote to approve the plan of merger contained in the merger agreement. Under the terms of the merger agreement, Cardinal Merger Co. will merge with and into Commerce, with Commerce continuing as the surviving corporation and a wholly-owned subsidiary of TD. In addition, you are also being asked to vote to approve a proposal to adjourn the special meeting if necessary or appropriate, including to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the plan of merger.

Q:	What will I receive if the merger is completed?

A:	Each Commerce shareholder of record will receive, in exchange for each share of Commerce common stock owned by such shareholder immediately prior to the merger, the following:

	•	0.4142 TD common shares (with cash being paid in lieu of the issuance of fractional shares); and

	•	$10.50 in cash.

Q:	Can the number of TD common shares to be issued in the merger for each share of Commerce common stock change between now and the time the merger is completed based on changes in the trading price of TD common shares?

A:

No. The exchange ratio is a fixed ratio, which means that it will not be adjusted if the trading price of TD common shares or Commerce common stock changes between now and the time the merger is completed. Therefore, the market value of TD common shares you will receive in the merger will depend on the price of TD common shares at the time the shares are issued. See “Risk Factors” beginning on page 21.

Q:	When and where is the Commerce special meeting?

A:	The Commerce special meeting will take place on February 6, 2008. The time and location of the meeting are specified on the cover page of this proxy statement/prospectus.

Q:	Who can vote at the special meeting?

A:	Holders of Commerce common stock as of the close of business on the record date of December 14, 2007 are entitled to vote at the special meeting. Beneficial owners as of the record date should receive instructions from their bank, broker or other nominee describing how to vote their shares.

Q:	What vote of Commerce shareholders is required in connection with the merger?

A:	The affirmative vote of a majority of the votes cast by the shareholders of Commerce common stock at the special meeting is required to approve the plan of merger.

Q:	What happens if I do not indicate my preference for or against approval of the merger agreement?

A:	If you submit a proxy without specifying the manner in which you would like your shares to be voted, your shares will be voted “FOR” approval of the plan of merger.

Q:	What happens if I do not vote at all?

A:

If you do not vote your shares with respect to the proposal to approve the plan of merger, it will have no effect on the outcome of the proposal. However, if the proposal to approve the plan of merger receives the required approval of Commerce’s shareholders and the merger is completed, your Commerce shares will be converted into the right to receive the merger consideration even though you did not vote. Additionally, if you do not vote

	your shares with respect to the proposal to approve the plan of merger, then your vote will not be counted toward the quorum requirement at the Commerce special meeting called for such purpose.

Q:	What do I need to do now?

A:

After carefully reading and considering the information contained in this document, please submit your proxy by telephone or via the Internet in accordance with the instructions set forth in the enclosed proxy card, or fill out, sign and date the proxy card and then mail your signed proxy card in the enclosed prepaid envelope, as soon as possible so that your shares may be voted at the special meeting. See “The Special Meeting” beginning on page 27.

Q:	If my shares are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee vote my shares for me?

A:

You should instruct your bank, broker or other nominee to vote your shares. If you do not instruct your bank, broker or other nominee, your bank, broker or other nominee will not be able to vote your shares. Please check with your bank, broker or other nominee and follow the voting procedures your bank, broker or other nominee provides. Your bank, broker or other nominee will advise you whether you may submit voting instructions by telephone or via the Internet. See “The Special Meeting — Proxies” beginning on page 27.

Q:	If my shares are held in the Commerce 401(k) Plan, what should I do?

A:

If you are a participant in the Commerce Bancorp, Inc. 401(k) Retirement Plan, you may give voting instructions for any Commerce shares held in your account to Registrar and Transfer Company, Commerce’s transfer agent, by completing and returning a voting instruction ballot distributed to plan participants along with this proxy statement/prospectus, or by telephone or via the Internet as described on your ballot. Commerce’s transfer agent will certify the total votes cast by plan participants for and against approval of the plan of merger to the trustee for the plan, for the purpose of having those shares voted in accordance with your instructions.

Q:	When do you expect the merger to be completed?

A:

We currently expect to complete the merger in February or March 2008. However, we cannot assure you when or if the merger will be completed. Among other things, we must first obtain the approval of the plan of merger by Commerce shareholders at the special meeting and the necessary regulatory approvals. See “The Merger — Regulatory Matters Related to the Merger and Stock Exchange Listings” beginning on page 61.

Q:	What are the material federal income tax consequences of the merger to Commerce shareholders?

A:

For a U.S. holder (as defined in “The Merger — Material United States Federal Income Tax Consequences” beginning on page 55), the merger will be treated for United States federal income tax purposes as a taxable sale by such holder of the shares of Commerce common stock that such holder surrenders in the merger. The material United States federal income tax consequences of the merger to U.S. holders are as follows:

	•	A U.S. holder will recognize gain or loss equal to the difference between (1) the sum of the cash consideration (including any cash received in lieu of fractional shares) and the fair market value of the TD common shares received in the merger and (2) such holder’s adjusted tax basis in the shares of Commerce common stock surrendered in the merger for TD common shares and cash;
	•	A U.S. holder’s aggregate tax basis in the TD common shares that such holder receives in the merger will equal the fair market value of such common shares at the time the merger is completed; and
	•	A U.S. holder’s holding period for the TD common shares that such holder receives in the merger should generally begin on the day after the completion of the merger.

Q:	May I change my vote after I have submitted a proxy?

A:	Yes. If you have not voted through your bank, broker or other nominee, there are three ways you can change your vote after you have submitted your proxy (whether by mail, telephone or the Internet):

	•	First, you may send a written notice to the corporate secretary of Commerce at the address below, stating that you would like to revoke your proxy.

	•	Second, you may complete and submit a new proxy card or vote again by telephone or the Internet. Your latest vote actually received by Commerce before the special meeting will be counted, and any earlier votes will be revoked.
	•	Third, you may attend the special meeting and vote in person. Any earlier proxy will thereby be revoked. However, simply attending the meeting without voting will not revoke an earlier proxy you may have given.

Q:	If I want to attend the special meeting, what do I do?

A:

You should come to Commerce University, 4140 Church Road, Mt. Laurel, New Jersey, at 4:00 p.m., local time, on February 6, 2008. If you hold your shares in “street name,” you will need to bring proof of ownership (by means of a recent brokerage statement, letter from your bank or broker or similar means) to be admitted to the meeting. Shareholders of record as of the record date for the special meeting can vote in person at the special meeting. If your shares are held in “street name,” then you are not the shareholder of record and you must ask your bank, broker or other nominee how you can vote at the special meeting.

Q:	Should I send in my stock certificates now?

A:	No. After we complete the merger, you will receive written instructions for exchanging your Commerce stock certificates for TD common shares and the cash merger consideration. Please do not send in your Commerce stock certificates with your proxy card.

Q:	What if I cannot find my stock certificates?

A:

There will be a procedure for you to receive the merger consideration in the merger, even if you have lost one or more of your Commerce stock certificates. This procedure, however, may take time to complete. In order to ensure that you will be able to receive the merger consideration promptly after the merger is completed, if you cannot locate your Commerce stock certificates after looking for them carefully, we urge you to contact Commerce’s transfer agent, Registrar and Transfer Company, as soon as possible and follow the procedure they explain to you for replacing your Commerce stock certificates. Registrar and Transfer Company can be

	reached at (866) 465-2630 or on their website at http://www.rtco.com, or you can write to them at the following address:

Q:	Are there risks I should consider in deciding whether to vote for the plan of merger?

A:	Yes. We have set forth a non-exhaustive list of risk factors that you should consider carefully in connection with the merger in the section entitled “Risk Factors” beginning on page 21.

Q:	Can I dissent and require appraisal of my shares?

A:	No. Under the NJBCA, Commerce’s shareholders are not entitled to appraisal rights in connection with the merger. See “The Merger — No Dissenters’ Rights of Appraisal” beginning on page 64.

Q:	Who can help answer my additional questions about the merger or voting procedures?

A:	If you have questions about the merger, you should contact:

		As at and for
		the Year Ended
		October 31, 2007
		(C$)				(U.S.$)(1)
Basic Earnings Per Share:
TD historical (Canadian GAAP)		C$	5.53			U.S.$	5.06
TD historical (U.S. GAAP)			5.64				5.16
TD pro forma combined (Canadian GAAP)(2)			5.00				4.57
TD pro forma combined (U.S. GAAP)(2)			5.09				4.66
Diluted Earnings Per Share:
TD historical (Canadian GAAP)			5.48				5.01
TD historical (U.S. GAAP)			5.59				5.11
TD pro forma combined (Canadian GAAP)(2)			4.92				4.50
TD pro forma combined (U.S. GAAP)(2)			5.02				4.59
Dividends Per Share:
TD historical and pro forma(3)			2.11				1.98
Book Value Per Share at Period End:
TD historical (Canadian GAAP)			29.23				30.78
TD historical (U.S. GAAP)			28.59				30.11
TD pro forma combined (Canadian GAAP)(2)			34.20				36.02
TD pro forma combined (U.S. GAAP)(2)			33.62				35.40

(1)		TD historical and pro forma combined amounts (except with respect to book value per share at period end) have been converted into U.S. dollars based on the average U.S. dollar/Canadian dollar exchange rate during the year ended October 31, 2007 of 1.0930. The average exchange rate is calculated as the average of the noon buying rate on the last day of each month during the period. The TD historical and pro forma combined book value per share at period end has been converted into U.S. dollars using the U.S. dollar/Canadian dollar exchange rate

		as at October 31, 2007 of 0.9496. TD historical and pro forma dividend amounts have been converted into U.S. dollars based on the exchange rate used on each dividend payment date as reported by the Federal Reserve Bank in the City of New York.

(2)		Pro forma combined amounts are calculated by adding together the historical amounts reported by TD and Commerce based on each entity’s most recent financial information as filed with the SEC, as adjusted for (i) estimated purchase accounting adjustments to be recorded in connection with the merger (consisting of fair value adjustments for assets acquired and liabilities assumed and adjustments for intangible assets established, and the resulting amortization/accretion of these adjustments over appropriate future periods) and (ii) the estimated number of TD common shares to be issued as of September 30, 2007, in connection with the merger based on the terms of the merger agreement. The pro forma adjustments assume completion of the transaction as at the beginning of the period indicated.

		TD pro forma combined results for the year ended October 31, 2007 were calculated using the latest annual financial information filed with the SEC. Commerce’s results for the twelve months ended September 30, 2007 have been used to calculate the TD pro forma combined results for the year ended October 31, 2007.

(3)		It is anticipated that the initial dividend rate will be equal to the current dividend rate of TD. Accordingly, pro forma combined dividends per TD common share represent the historical dividends per common share paid by TD.

		As at and for
		the Twelve Months Ended
		September 30, 2007
		(U.S.$)
Basic Earnings Per Share:
Commerce historical		$	0.89
Commerce pro forma equivalent (Canadian GAAP)			1.89
Commerce pro forma equivalent (U.S. GAAP)			1.93
Diluted Earnings Per Share:
Commerce historical			0.86
Commerce pro forma equivalent (Canadian GAAP)			1.86
Commerce pro forma equivalent (U.S. GAAP)			1.90
Dividends Per Share:
Commerce historical			0.52
Commerce pro forma equivalent			0.82
Book Value Per Share at Period End:
Commerce historical			15.17
Commerce pro forma equivalent (Canadian GAAP)			14.92
Commerce pro forma equivalent (U.S. GAAP)			14.66

		The New York Stock Exchange (U.S.$)																The Toronto Stock Exchange (C$)
		Commerce Common Stock								TD Common Shares								TD Common Shares
		High				Low				High				Low				High				Low
2002
Annual		$	25.25			$	18.05			$	28.60			$	15.77			$	45.03			$	25.17
2003
Annual			26.74				18.12				33.76				20.50				44.78				31.20
2004
Annual			33.83				23.35				41.69				31.16				50.10				42.54
2005
Annual			35.98				26.87				53.16				38.73				62.79				48.08
2006
Annual			41.20				31.20				60.57				49.52				70.21				55.62
First Quarter			37.16				31.86				58.07				51.49				66.85				60.20
Second Quarter			41.20				33.85				57.42				49.84				65.35				55.62
Third Quarter			37.59				31.20				60.26				49.52				66.93				56.00
Fourth Quarter			37.10				34.25				60.57				55.31				70.21				62.80
2007
First Quarter			36.15				30.45				61.45				57.13				71.61				67.21
Second Quarter			37.68				31.32				70.26				59.43				74.89				66.55
Third Quarter			39.62				32.17				77.63				59.43				77.10				64.02
Fourth Quarter			41.00				34.36				77.08				64.87				76.50				64.18
2008
First Quarter (through January 3, 2008)			38.11				37.53				69.94				67.69				69.37				67.05

																		The Toronto
		The New York Stock Exchange (U.S.$)																Stock Exchange (C$)
		Commerce Common Stock								TD Common Shares								TD Common Shares
		High				Low				High				Low				High				Low
July 2007		$	39.13			$	33.41			$	70.65			$	63.70			$	73.75			$	67.82
August 2007			38.10				32.17				68.90				59.43				72.50				64.02
September 2007			39.62				36.26				77.63				67.16				77.10				70.66
October 2007			41.00				38.29				77.08				69.65				76.50				67.75
November 2007			40.55				34.36				75.41				64.87				75.00				64.18
December 2007			39.96				37.43				74.64				68.33				74.69				68.00

										Commerce Common Stock
						Commerce				Pro Forma Equivalent
		TD Common				Common				(including the
		Shares (U.S.$)				Stock (U.S.$)				$10.50 cash portion) (U.S.$)
October 1, 2007		$	76.94			$	39.74			$	42.37
January 3, 2008			68.54				37.86				38.89

		Declared Dividends
		TD				TD				Commerce
		(C$)(1)				(U.S.$)(1)(2)				(U.S.$)
Fiscal Year Ended
2002		$	1.12			$	0.71			$	0.3075
2003			1.16				0.82				0.3425
2004			1.36				1.04				0.395
2005			1.58				1.29				0.45
2006			1.78				1.58				0.49
2007			2.11				1.98				0.52

(1)		Dividends declared during fiscal quarters ended January 31, April 30, July 31 and October 31.
(2)		TD dividends have been converted into U.S. dollars based on the exchange rate as reported by the Federal Reserve Bank in the City of New York on each dividend payment date.

		C$ per U.S.$1.00				U.S.$ per C$1.00
October 1, 2007 (the last trading day before public announcement of the merger)		C$	0.9929			U.S. $	1.0072
January 3, 2008			0.9905				1.0096

		Average Rate(1)
		C$ per U.S.$1.00				U.S.$ per C$1.00
Year Ended October 31,
2002		C $	1.5718			U.S. $	0.6362
2003			1.4379				0.6955
2004			1.3147				0.7606
2005			1.2134				0.8241
2006			1.1329				0.8827
2007			1.0930				0.9149

(1)		The average rate is calculated as the average of the noon buying rate as reported by the Federal Reserve Bank on the last day of each month during the period.

		High				Low
		(C$ per U.S.$1.00)
July 2007		C$	1.0689			C$	1.0372
August 2007			1.0754				1.0497
September 2007			1.0546				0.9959
October 2007			1.0002				0.9496
November 2007			1.0007				0.9168
December 2007			1.0216				0.9784

		Fiscal
		Year Ended October 31,
		2007				2006				2005				2004				2003
		(C$ in millions, except per share data and ratios)
Operations Data:
Interest income			17,852				15,569				12,776				11,132				11,202
Interest expense			10,928				9,198				6,768				5,359	*			5,765	*
Net interest income			6,924				6,371				6,008				5,773	*			5,437	*
Provision for (recovery of) credit losses			645				409				55				(386	)			186
Net interest income after credit loss provision			6,279				5,962				5,953				6,159	*			5,251	*
Other income			7,357				6,821	†			5,951	†			4,928	†			4,455	†
Non-interest expenses			8,975				8,815	†			8,844	†			8,052	†			8,395	†
Dilution gain (net)			0				1,559				0				0				0
Net income (loss)			3,997				4,603				2,229				2,232	*			989	*
Net income (loss) (U.S. GAAP basis)			4,108				4,618				2,144				1,881				1,162
Preferred dividends			20				22				0				0	*			0	*
Net income (loss) applicable to common shares			3,977				4,581				2,229				2,232				989
Net income (loss) applicable to common shares (U.S. GAAP basis)			4,053				4,559				2,089				1,828				1,098
Per Common Share:
Net income (basic)			5.53				6.39				3.22				3.41				1.52
Net income (basic) (U.S. GAAP basis)			5.64				6.36				3.02				2.79				1.69
Net income (fully diluted)			5.48				6.34				3.20				3.39				1.51
Net income (fully diluted) (U.S. GAAP basis)			5.59				6.31				3.00				2.77				1.68
Cash dividends declared(1)			2.11				1.78				1.58				1.36				1.16
Book value (period end)			29.23				26.77				22.29				19.31				17.64
Consolidated Balance Sheet (period end):
Total assets			422,124				392,914				365,210				311,027				273,532
Total assets (U.S. GAAP basis)			428,602				400,616				371,746				317,494				283,439
Loans (net)			175,915				160,608				152,243				123,924				118,058
Deposits			276,393				260,907				246,981				206,893				182,880
Subordinated notes			9,449				6,900				5,138				5,644				5,887
Total shareholders’ equity			21,404				19,632				15,866				12,668				11,576
Common shares outstanding (in millions)			717.8				717.4				711.8				655.9				656.3
Selected Ratios:
Return on total common equity			19.3				25.5				15.3				18.5				8.7
Net impaired loans net of specific allowance as a % of net loans			0.2				0.2	†			0.1	†			0.2	†			0.7	†
Efficiency ratio(2)			62.8				59.8	†			74.0	†			75.2	†*			84.9	†*
Provision for credit losses as a % of net average loans			0.37				0.25				0.04				(0.30	)			0.15
Tangible common equity as a % of risk-weighted assets(3)			7.4				9.1				7.4				9.0				6.9
Tier 1 capital to risk weighted assets(3)			10.3				12.0				10.1				12.6				10.5

		Fiscal
		Year Ended October 31,
		2007				2006				2005				2004				2003
		(C$ in millions, except per share data and ratios)
Total capital to risk-weighted assets(3)			13.0				13.1				13.2				16.9				15.6
Common dividend payout ratio			38.1				27.9				49.3				39.9				76.2

*		In accordance with Canadian GAAP, TD adopted amendments to the accounting standard on financial instruments — disclosure and presentation on a retroactive basis with restatement of prior period comparatives. The amounts disclosed above reflect these amendments.

†		These comparative amounts/ratios have been reclassified/recalculated to conform to the current period’s presentation.

(1)		Equivalent to U.S.$1.98 in fiscal 2007, U.S.$1.58 in fiscal 2006, U.S.$1.29 in fiscal 2005, U.S.$1.04 in fiscal 2004 and U.S.$0.82 in fiscal 2003, based on the noon exchange rates on each dividend payment date as reported by the Federal Reserve Bank in the City of New York.

(2)		Non-interest expenses, as a percentage of total revenue.

(3)		Risk-weighted assets are determined in accordance with applicable Canadian bank regulations.

		Nine Months Ended
		September 30,								Year Ended December 31,
		2007				2006				2006				2005				2004				2003				2002
		(U.S.$ in millions, except per share data and ratios)
Balance Sheet Data:
Total assets		$	49,994			$	43,304			$	45,272			$	38,466			$	30,502			$	22,712			$	16,404
Loans (net)			16,881				14,551				15,455				12,525				9,319				7,329				5,732
Securities available for sale			7,365				10,800				11,098				9,519				8,044				10,651				7,807
Securities held to maturity			14,441				14,246				14,885				13,005				10,464				2,490				763
Trading securities			7,310				93				106				143				169				170				326
Deposits			46,534				40,142				41,288				34,727				27,659				20,701				14,549
Long-term debt			—				—				—				—				200				200				200
Stockholders’ equity			2,938				2,715				2,801				2,309				1,666				1,277				918
Income Statement Data:
Net interest income		$	1,023			$	949			$	1,275			$	1,154			$	1,018			$	756			$	573
Provision for credit losses			49				24				34				19				39				32				33
Noninterest income			340				425				591				443				375				332				257
Noninterest expense			1,155				993				1,356				1,146				939				763				579
Income before income tax expense			159				357				476				431				415				293				218
Net income			107				236				299				283				273				194				145
Per Share Data:
Net income:
Basic		$	0.56			$	1.29			$	1.62			$	1.70			$	1.74			$	1.36			$	1.08
Diluted			0.54				1.23				1.55				1.61				1.63				1.29				1.01
Dividends declared			0.39				0.36				0.49				0.45				0.40				0.34				0.31
Book value			15.17				14.51				14.86				12.92				10.42				8.35				6.77
Average shares outstanding (in millions):
Basic			191				184				185				166				157				142				134
Diluted			198				193				194				179				173				157				149
Other Data:
Return on average assets			0.30	%			0.76	%			0.71	%			0.83	%			1.03	%			0.99	%			1.05	%
Return on average equity			4.89				12.61				11.65				14.90				18.78				18.81				18.50
Net interest margin(1)			3.21				3.39				3.35				3.77				4.28				4.36				4.69
Average loans to average deposits(1)			37.12				37.15				37.09				35.01				34.49				36.93				42.48
Dividend payout ratio			69.64				27.91				30.25				26.47				22.99				25.00				28.70
Stockholders’ equity to total assets			5.88				6.27				6.19				6.00				5.46				5.62				5.60
(1) Information with respect to interim periods has not previously been publicly disclosed.

		Nine Months Ended
		September 30,								Year Ended December 31,
		2007				2006				2006				2005				2004				2003				2002
		(U.S.$ in millions, except per share data and ratios)
Risk-based capital:
Tier 1			11.10				11.99				11.73				11.81				12.30				12.66				11.47
Total			11.86				12.71				12.44				12.58				13.25				13.62				12.51
Leverage ratio			5.81				6.08				6.18				6.04				6.19				6.61				6.37
Non-performing assets to total period-end assets			0.20				0.11				0.12				0.09				0.11				0.10				0.11
Net charge-offs to average loans outstanding			0.19				0.10				0.11				0.15				0.19				0.16				0.18
Non-performing loans to period-end loans			0.58				0.31				0.32				0.27				0.35				0.29				0.24
Allowance for credit losses to total end of year loans			1.09				1.05				1.03				1.12				1.43				1.51				1.56
Allowance for credit losses to non-performing loans			189.56				341.17				316.72				406.85				412.88				515.39				640.18

 

RISK FACTORS

 

In addition to the other information included or incorporated by reference in this proxy statement/prospectus, you should carefully consider the matters described below relating to the proposed merger in deciding whether to vote for approval of the plan of merger. Although TD and Commerce believe that the matters described below cover the material risks related to the merger, they may not contain all of the information that is important to you in evaluating the merger. Accordingly, we urge you to read this entire proxy statement/prospectus, including the appendices and the information included or incorporated by reference in this document. Please also refer to the additional risk factors identified in the periodic reports and other documents of TD and Commerce incorporated by reference into this proxy statement/prospectus and listed in the section entitled “Where You Can Find More Information” beginning on page 108.

 

Because the exchange ratio is fixed and the market price of TD common shares may fluctuate, you cannot be certain of the dollar value of the merger consideration that you will receive upon completion of the merger.

 

Upon completion of the merger, each Commerce shareholder of record will be entitled to receive, in exchange for each share of Commerce common stock owned by such shareholder (1) 0.4142 TD common shares, plus cash in lieu of any fractional share interests and (2) $10.50 in cash. Because the exchange ratio of 0.4142 TD common shares is fixed, the value of the TD common shares issued in the merger will depend on the market price of TD common shares at the time they are issued. There will be no adjustment to the fixed number of TD common shares to be issued to you based upon changes in the market price of TD common shares or Commerce common stock prior to the closing.

 

The market price of TD common shares at the time the merger is completed may vary from the price of TD common shares on the date the merger agreement was executed, on the date of this proxy statement/prospectus and on the date of the special meeting as a result of various factors that are beyond the control of TD and Commerce, including the following:

 

 

Certain institutional shareholders of Commerce may only be able to own shares of U.S. companies and therefore may not be permitted to hold TD common shares, and others may not wish to hold TD common shares for various reasons, including because TD is not a U.S. company. As a result, related sales are likely to occur prior to or following the completion of the merger. If the supply of TD common shares is significantly greater than the associated demand, the market price of TD common shares may decline significantly, in which case there can be no assurance that the market price would thereafter recover.

 

In addition to the approval of Commerce’s shareholders, completion of the merger is subject to receipt of regulatory approvals and satisfaction of other conditions that may not occur until some time after the special meeting. Therefore, at the time of the special meeting you will not know the precise U.S. dollar value of the merger

consideration you will become entitled to receive at the effective time of the merger. You are urged to obtain a current market quotation for TD common shares.

 

Upon completion of the merger, holders of Commerce common stock will become holders of TD common shares, and the market price for TD common shares may be affected by factors different from those that historically have affected Commerce.

 

Upon completion of the merger, holders of Commerce common stock will become holders of TD common shares. TD’s businesses differ from those of Commerce, and accordingly the results of operations of TD will be affected by some factors different from those currently affecting the results of operations of Commerce. For a discussion of the businesses of Commerce and TD and of some important factors to consider in connection with those businesses, see the documents incorporated by reference in this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 108.

 

The rights of Commerce shareholders will change as a result of the merger.

 

Following the completion of the merger, Commerce shareholders will no longer be shareholders of Commerce, a New Jersey corporation, but will instead be shareholders of TD, a Canadian chartered bank. There will be important differences between your current rights as a shareholder of Commerce, on the one hand, and the rights to which you will be entitled as a shareholder of TD, on the other hand.

 

For a more detailed discussion of the differences in the rights of shareholders of Commerce and TD, see “Comparison of Shareholder Rights” beginning on page 92.

 

We may fail to realize the anticipated benefits of the merger, and the integration process could adversely impact TD’s and Commerce’s ongoing operations.

 

Commerce and TD entered into the merger agreement with the expectation that the merger would result in various benefits, including, among other things, revenue growth, synergies, ongoing cost savings and operating efficiencies, an expanded footprint and client base, continuation of successful de novo branching, cross-selling opportunities and enhanced market share. The success of the merger will depend, in part, on our ability to realize such anticipated benefits from combining the businesses of Commerce and TD. The anticipated benefits and cost savings of the merger may not be realized fully or at all or may take longer to realize than expected. Failure to achieve anticipated benefits could result in increased costs and decreases in the amounts of expected revenues of the combined company.

 

Commerce and TD have operated independently and until the completion of the merger will continue to operate independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers and employees or to achieve the anticipated benefits of the merger. Integration of the businesses entails information technology systems conversions, which involve operational risks and may result in customer dissatisfaction and defection. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Commerce and TD during the transition period. The integration may take longer than anticipated and may have unanticipated adverse results relating to Commerce’s or TD’s existing business. Additionally, TD may not be able to effectively integrate services, technologies or Commerce’s key personnel.

 

Some directors and executive officers of Commerce have interests in the merger that may differ from the interests of shareholders including, if the merger is completed, the receipt of financial and other benefits.

 

When considering the recommendation of Commerce’s board of directors, you should be aware that some executive officers and directors of Commerce may have interests in the merger that are different from your interests. For example, some executive officers (some of whom are also directors) are parties to employment agreements with Commerce (which were amended and restated in contemplation of the merger) that provide, among other things, cash payments in the case of a change of control (such as the completion of the merger). In addition, upon completion of the merger, all outstanding unvested stock options, including those held by executive officers and

directors, will become vested and exercisable, account balances under Commerce’s Supplemental Executive Retirement Plan will vest, and benefits under Commerce’s director retirement plan will become payable upon termination of the director, regardless of the director’s length of service. These and some other additional interests of Commerce directors and executive officers may create potential conflicts of interest and cause some of these persons to view the proposed merger differently than you view it, as a shareholder. These interests are described in more detail in the section entitled “The Merger — Interests of Commerce’s Executive Officers and Directors in the Merger” beginning on page 50.

 

The merger is subject to the receipt of consents and approvals from government entities that may impose conditions that could have an adverse effect on TD.

 

We cannot complete the merger unless we receive various consents, orders, approvals and clearances from the Federal Reserve Board, the Superintendent of Financial Institutions of Canada and other bank regulatory, antitrust and other authorities in the U.S. These authorities may impose conditions on the completion of the merger or require changes to the terms of the merger. While TD and Commerce do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of imposing additional costs on or limiting the revenues of TD following the merger, any of which may have an adverse effect on TD. See “The Merger — Regulatory Matters Related to the Merger and Stock Exchange Listings” beginning on page 61 and “Proposal No. 1: The Merger Agreement — Conditions to the Merger” beginning on page 77. In addition, if any action is taken or legal or regulatory restrictions or conditions deemed applicable to the merger that would be reasonably likely to have a material adverse effect on Commerce or TD or, in certain circumstances, which would have an adverse impact on TD’s status as a “financial holding company” under the BHC Act, TD may elect not to consummate the merger.

 

Commerce’s shareholders may receive a lower return on their investment after the merger.

 

Although Commerce and TD believe that the merger will create financial, operational and strategic benefits for the combined company and its shareholders, these benefits may not be achieved. The combination of Commerce’s and TD’s businesses, even if conducted in an efficient, effective and timely manner, may not result in combined financial performance that is better than what each company would have achieved independently if the merger had not occurred.

 

Upon completion of the merger, TD may not be able to retain key employees or efficiently manage the larger and broader organization resulting from the merger, which could adversely affect the operation and financial condition of TD following the merger.

 

The success of TD following the completion of the merger will depend in part on the ability of TD to retain key employees of both TD and Commerce and successfully manage the broader organization resulting from the combination of TD and Commerce. Competition for qualified individuals may be intense and key individuals may depart because of issues relating to the uncertainty and difficulty of integration or a general desire not to remain with TD. Furthermore, TD will face challenges inherent in efficiently managing an increased number of employees over large, geographically diverse areas. Accordingly, no assurance can be given that TD will be able to retain key employees or successfully manage the larger and more diverse combined organization, which could result in disruption to the combined company’s business and negatively impact the combined company’s operations and financial condition.

 

TD’s consolidated results of operations may be negatively impacted by foreign currency fluctuations.

 

A substantial portion of TD’s consolidated revenues following the transaction will be earned in non-Canadian currencies, primarily U.S. dollars. For purposes of financial reporting under Canadian GAAP, revenues and expenses denominated in non-Canadian currencies are translated into Canadian dollars at the average exchange rates prevailing during the year. TD will continue to report its financial results in Canadian dollars in accordance with Canadian GAAP. The revenues that are earned in currencies other than Canadian dollars are subject to unpredictable fluctuations if the values of non-Canadian currencies change relative to the Canadian dollar. Such

fluctuations could decrease TD’s revenues earned in non-Canadian currencies and have a material adverse impact on its business.

 

TD may, subject to certain limitations, terminate the merger agreement or be entitled not to complete the merger due to events relating to certain regulatory orders to which Commerce and/or its subsidiaries are subject.

 

On June 28, 2007, Commerce announced that Commerce Bank, N.A. agreed to a Consent Order with the Office of the Comptroller of the Currency, or the OCC, relating to, among other things, corporate governance, related party transactions and policies and procedures for real estate-related transactions. On the same date, Commerce announced that it and the Federal Reserve Bank of Philadelphia entered into a Memorandum of Understanding, or an MOU, whereby the board of directors agreed, among other things, to take all actions necessary to ensure that Commerce complies fully with the Consent Order and to ensure that all corporate-wide policies and procedures that address related party real estate transactions and other related party transactions are consistent with the Consent Order. A material failure by Commerce to comply with these regulatory orders could, subject to certain limitations, give TD the right to terminate the merger agreement. In addition, if the existence of these regulatory orders has a material adverse effect on TD’s status as a financial holding company, then, subject to certain limitations, TD may not be obligated to complete the merger.

 

TD expects to maintain its status as a “foreign private issuer” in the U.S. and thus will be exempt from a number of rules under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, and will be permitted to file less information with the SEC than a company incorporated in the United States.

 

As a “foreign private issuer,” TD is exempt from rules under the Exchange Act that impose disclosure requirements, as well as procedural requirements, for proxy solicitations under Section 14 of the Exchange Act. In addition, TD’s officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act. Moreover, TD is not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, nor is it generally required to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information. Accordingly, there may be less information concerning TD publicly available than there is for U.S. public companies such as Commerce. In addition, TD is permitted, under a multi-jurisdictional disclosure system adopted by the United States and Canada, to prepare its disclosure documents in accordance with Canadian disclosure requirements, including preparing its financial statements in accordance with Canadian generally accepted accounting principles, which differ in some respects from U.S. generally accepted accounting principles.

 

Applicable laws restrict the purchase, sale and transfer of TD’s securities.

 

The Bank Act of Canada contains restrictions on the purchase or other acquisition, issue, transfer and voting of TD shares. Under the terms of these restrictions, no person is permitted to acquire any shares of TD if the acquisition would cause the person to have a “significant interest” in any class of shares of TD, without obtaining the prior approval of the Minister of Finance of Canada. In addition, TD is not permitted to record any transfer or issue of shares of TD if the transfer or issue would cause the person to have a significant interest in TD, unless prior approval is obtained from the Minister of Finance. No person who has a significant interest in TD may exercise any voting rights attached to the shares held by that person, unless that prior approval of the Minister of Finance for the acquisition of the significant interest was obtained. For these purposes, a person is deemed to have a significant interest in a class of shares of TD where the aggregate of any shares of that class beneficially owned by that person, any entity controlled by that person and by any person acting jointly or in concert with that person exceeds 10% of all of the outstanding shares of that class of shares of TD. If a person contravenes any of these restrictions, the Minister of Finance may, by order, direct that person to dispose of all or any portion of those shares.

 

In addition, under the Bank Act of Canada, in respect of TD, the Minister of Finance may only approve the acquisition of up to 30% of the shares of any class of non-voting shares and up to 20% of the shares of any class of voting shares and provided, in each case, that the person acquiring those shares does not have any direct or indirect influence over TD that, if exercised, would result in that person having control in fact of TD. For these purposes, the

shares beneficially owned by that person, any entity controlled by that person and by any person acting jointly or in concert with that person with respect to TD shares are aggregated. In addition, the Bank Act of Canada prohibits banks, including TD, from recording a transfer or issuing shares of any class to Her Majesty in right of Canada or of a province, an agent of Her Majesty, a foreign government or an agent of a foreign government.

 

The restrictions contained in the Bank Act of Canada and the Canadian government’s policies may deter, delay or prevent a future acquisition of a “significant interest” in TD and will prevent the acquisition of control of TD, including transactions that could be perceived by TD’s shareholders as advantageous to them. For further information, please see the section entitled “Description of TD Share Capital — Limitations Affecting Holders of TD Common Shares” beginning on page 91.

 

TD is chartered under the laws of Canada and a substantial portion of its assets are, and many of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the United States in Canada.

 

TD is chartered under the laws of Canada. A substantial portion of TD’s assets are located outside the United States, and many of TD’s directors and officers and some of the experts named in this proxy statement/prospectus are residents outside of the United States. As a result, it may be difficult for investors to effect service within the United States upon TD and those directors, officers and experts, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of TD and such directors, officers or experts under the United States federal securities laws. There is uncertainty as to the enforceability in Canada by a court in original actions, or in actions to enforce judgments of United States courts, of the civil liabilities predicated upon the United States federal securities laws.

 

The merger agreement contains provisions that may discourage other companies from trying to acquire Commerce for greater merger consideration.

 

The merger agreement contains provisions that may discourage a third party from submitting a business combination proposal to Commerce that might result in greater value to Commerce’s shareholders than the proposed merger. These provisions include a general prohibition on Commerce from soliciting any acquisition proposal or offers for competing transactions and the requirement that Commerce pay a termination fee of up to $332 million (or, if a final stipulation of settlement is entered into with respect to the litigation settlement described under “The Merger — Litigation Relating to the Merger”, $255 million) if the merger agreement is terminated in specified circumstances. For further information, please see the section entitled “Proposal No. 1: The Merger Agreement — Termination Fees and Expenses” beginning on page 79.

 

TD required Commerce to agree to these provisions as a condition to TD’s willingness to enter into the merger agreement. These provisions, however, might discourage a third party that might have an interest in acquiring all or a significant part of Commerce from considering or proposing an acquisition, even if that party were prepared to pay consideration with a higher per share price than the current proposed merger consideration. Furthermore, the termination fee may result in a potential competing acquiror proposing to pay a lower per share price to acquire Commerce than it might otherwise have proposed to pay.

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

Some of the statements contained or incorporated by reference in this proxy statement/prospectus, including those relating to TD’s and Commerce’s strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “will,” “should,” “may” or similar expressions, are forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the U.S. Securities Act of 1933, as amended, or Securities Act. Without limiting the generality of the preceding sentence, statements contained in the sections “The Merger — Commerce’s Reasons for the Merger,” “— Opinion of Commerce’s Financial Advisor,” and “— TD’s Reasons for the Merger” include forward-looking statements. These statements are not historical facts but instead represent only TD’s and/or Commerce’s expectations, estimates and projections regarding future events.

 

The forward-looking statements contained or incorporated by reference in this proxy statement/prospectus are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. The future results and shareholder values of TD and Commerce may differ materially from those expressed in the forward-looking statements contained or incorporated by reference in this proxy statement/prospectus due to, among other factors, the matters set forth under “Risk Factors” beginning on page 21, the parties’ ability to obtain the regulatory and other approvals required for the merger on the terms and within the time expected, the risk that TD will not be able to integrate successfully the businesses of Commerce or that such integration will be more time consuming or costly than expected, the risk that expected synergies and benefits of the merger will not be realized within the expected time frame or at all, the risk of deposit attrition, increased operating costs, customer loss, employee loss and business disruption following the merger and the factors detailed in each company’s filings with the SEC, including the factors detailed in TD’s Form 40-F for its fiscal year ended October 31, 2007, TD’s reports on Form 6-K and Commerce’s annual report on Form 10-K for the year ended December 31, 2006 and Commerce’s quarterly reports on Form 10-Q and current reports on Form 8-K.

 

We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this proxy statement/prospectus, in the case of forward-looking statements contained in this proxy statement/prospectus, or the dates of the documents incorporated by reference into this proxy statement/prospectus, in the case of forward-looking statements made in those incorporated documents. Neither TD nor Commerce undertakes any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events, except as required by law.

 

THE SPECIAL MEETING

 

This section contains information for Commerce shareholders about the special meeting that Commerce has called to allow its shareholders to consider and approve the plan of merger contained in the merger agreement. Commerce is mailing this proxy statement/prospectus to its shareholders on or about January 7, 2008. Together with this proxy statement/prospectus, Commerce is sending a notice of the special meeting and a form of proxy that Commerce’s board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the meeting.

 

Date, Time and Place

 

The special meeting will be held on February 6, 2008, at 4:00 p.m. local time at Commerce University, 4140 Church Road, Mt. Laurel, New Jersey.

 

Matters to be Considered

 

At the special meeting, Commerce shareholders will be asked to:

 

 

Proxies

 

If you are a registered shareholder (that is, you hold stock certificates registered in your own name), you may attend the special meeting and vote in person, or you may vote by proxy. You may vote by proxy by completing and returning the proxy card accompanying this proxy statement/prospectus or by telephone or through the Internet by following the instructions described on your proxy card. If your shares are held through a bank, broker or other nominee (that is, if your shares are held in “street name”), you will receive separate voting instructions from your bank, broker or other nominee with your proxy materials. Although most banks, brokers and other nominees offer telephone and Internet voting, availability and specific processes will depend on their voting arrangements. You can revoke a proxy at any time before the vote is taken at the special meeting by submitting a properly executed proxy of a later date by mail, telephone or Internet, or by attending the special meeting and voting in person. Communications about revoking Commerce proxies should be addressed to:

 

Commerce Bancorp, Inc.
Commerce Atrium
1701 Route 70 East
Cherry Hill, New Jersey 08034-5400
Attention: C. Edward Jordan, Jr., Secretary

 

If your shares are held in street name, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies.

 

All shares represented by valid proxies that Commerce receives through this solicitation, and that are not revoked, will be voted in accordance with the instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the approval of the plan of merger and “FOR” the proposal to adjourn or postpone the special meeting, if necessary or appropriate, including to solicit additional proxies. Commerce’s board of directors is currently unaware of any other matters that may be presented for action at the special meeting. If other matters properly come before the special meeting, or at any adjournment or postponement of the meeting, Commerce intends that shares represented by properly submitted proxies will be voted, or not voted, by and in accordance with the best judgment of the persons named as proxies on the proxy card.

 

Solicitation of Proxies

 

Commerce will bear the entire cost of soliciting proxies from its shareholders, except that TD and Commerce will share equally the costs of filing, printing and mailing this proxy statement/prospectus. In addition to solicitation of proxies by mail, Commerce will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of Commerce common stock and secure their voting instructions, if necessary. Commerce will reimburse the record holders for their reasonable expenses in taking those actions.

 

Commerce has also made arrangements with Morrow & Co., LLC to assist in soliciting proxies in connection with approval of the plan of merger and in communicating with shareholders and has agreed to pay it $10,000 plus disbursements for these services. Proxies may also be solicited by directors, officers and employees of Commerce in person or by telephone or other means, for which such persons will receive no special compensation.

 

Record Date and Quorum

 

Commerce’s board of directors has fixed the close of business on December 14, 2007 as the record date for determining the Commerce shareholders entitled to receive notice of and to vote at the special meeting. At that time, 195,548,790 shares of Commerce common stock were outstanding, held by approximately 54,500 holders of record.

 

The presence, in person or by properly executed proxy, of the holders of a majority of the aggregate outstanding shares of Commerce common stock is necessary to constitute a quorum at the special meeting. Pursuant to the NJBCA, abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.

 

Vote Required

 

Approval of the plan of merger and approval of the proposal relating to the adjournment or postponement of the special meeting, if necessary or appropriate, including to solicit additional proxies, require the affirmative vote of a majority of the votes cast by Commerce shareholders entitled to vote at the special meeting. Only Commerce shareholders are entitled to vote at the special meeting. You are entitled to one vote for each full share of Commerce common stock you held as of the record date.

 

As of the record date, directors and executive officers of Commerce and their affiliates owned (directly or indirectly) and had the right to vote approximately 16.4 million shares of Commerce common stock, representing approximately 8.4% of the shares of Commerce common stock entitled to be voted at the special meeting, and directors and executive officers of TD and their affiliates owned (directly or indirectly) and had the right to vote less than 1% of the shares of Commerce common stock entitled to be voted at the special meeting. Commerce currently expects that its directors and executive officers will vote such shares “FOR” the approval of the plan of merger and “FOR” the proposal to adjourn or postpone the special meeting, if necessary or appropriate, including to solicit additional proxies.

 

Commerce’s board of directors urges Commerce shareholders to complete, date and sign the accompanying proxy card and return it promptly in the enclosed postage paid envelope, or to vote by telephone or through the Internet.

 

Under the NJBCA, abstentions or broker non-votes are not counted as votes cast and, therefore, will have no effect on the vote to approve the plan of merger or on any proposal to be considered at the special meeting.

 

Participants in Commerce Employee Plans

 

If you own shares of Commerce common stock in the Commerce Bancorp, Inc. 401(k) Retirement Plan, such shares will be voted solely by the trustee of such plan pursuant to the terms of such plan and the instructions received by the trustee from plan participants. The trustees of such plan will not disclose the confidential voting directions of any individual participant or beneficiary to Commerce. If you own shares of Commerce common stock in such plan, you will be receiving a separate letter from the trustee of such plan explaining the voting process with respect to such shares and you will be provided with instructions on how to direct the trustee to vote those shares.

 

Voting by Telephone or Through the Internet

 

Many shareholders of Commerce have the option to submit their proxies or voting instructions by telephone or electronically through the Internet instead of submitting proxies by mail on the enclosed proxy card. Please note that there are separate arrangements for using the telephone and the Internet depending on whether your shares are registered in Commerce’s stock records in your name or in the name of a brokerage firm or bank. You should check your proxy card or the voting instruction form forwarded by your broker, bank or other holder of record to see which options are available.

 

Commerce shareholders of record may submit proxies:

 

 

Please note that although there is no charge to you for voting by telephone or electronically through the Internet, there may be costs associated with electronic access such as usage charges for Internet service providers and telephone companies. Commerce does not cover these costs; they are solely your responsibility. The telephone and Internet voting procedures being made available to you are valid forms of granting proxies under the NJBCA.

 

Delivery of Proxy Materials

 

To reduce the expenses of delivering duplicate proxy materials to Commerce shareholders, Commerce is relying upon SEC rules that permit us to deliver only one proxy statement/prospectus to multiple shareholders who share an address unless we receive contrary instructions from any shareholder at that address. If you share an address with another shareholder and have received only one proxy statement/prospectus, you may call us at (856) 751-9000 or write us as specified below to request a separate copy of this document and we will promptly send it to you at no cost to you:

 

Commerce Bancorp, Inc.
Commerce Atrium
1701 Route 70 East
Cherry Hill, New Jersey 08034-5400
Attention: C. Edward Jordan, Jr., Secretary

 

Recommendations of Commerce’s Board of Directors

 

Commerce’s board of directors has unanimously approved the plan of merger. The board of directors believes that the merger and the merger agreement are advisable and in the best interests of Commerce and its shareholders, and unanimously recommends that Commerce shareholders vote “FOR” the approval of the plan of merger and “FOR” the proposal to adjourn or postpone the special meeting, if necessary or appropriate, including to solicit additional proxies.

 

INFORMATION ABOUT THE COMPANIES

 

The Toronto-Dominion Bank

Toronto Dominion Centre

P.O. Box 1

Toronto, Ontario, Canada M5K 1A2

(416) 982-8222

 

TD is a Canadian chartered bank formed through the amalgamation of The Bank of Toronto (established 1855) and The Dominion Bank (established 1869). TD and its subsidiaries are collectively known as TD Bank Financial Group. In Canada and around the world, TD serves more than 14 million customers in four key businesses operating in a number of locations in key financial centers around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust as well as TD’s global insurance operations (excluding the U.S.); Wealth Management, including TD Waterhouse Canada, TD Waterhouse U.K. and TD’s investment in TD Ameritrade; U.S. Personal and Commercial Banking through TD Banknorth; and Wholesale Banking, including TD Securities. TD also ranks among the world’s leading online financial services firms, with more than 4.5 million online customers. TD had C$422.1 billion (U.S. $444.5 billion based on the noon buying rate as reported by the Federal Reserve Bank in the City of New York at October 31, 2007) in assets as at October 31, 2007 and is headquartered in Toronto, Canada.

 

Additional information about TD can be found on its website at http://www.td.com. The information provided on TD’s website is not part of this proxy statement/prospectus and is not incorporated herein by reference.

 

Additional information about TD and its subsidiaries is included in documents incorporated by reference into this document. For more information, see the section entitled “Where You Can Find More Information” on page 108.

 

Cardinal Merger Co.

c/o The Toronto-Dominion Bank

New York Branch

31 West 52nd Street

New York, NY 10019-6101

(212) 827-7000

 

Cardinal Merger Co. is a New Jersey corporation and an indirect wholly-owned subsidiary of TD. Cardinal Merger Co. was organized solely for the purpose of effecting the merger with Commerce described in this proxy statement/prospectus. It has not and will not carry on any activities other than in connection with the merger agreement. Cardinal Merger Co. will not survive the merger.

 

Commerce Bancorp, Inc.

1701 Route 70 East

Cherry Hill, New Jersey 08034-5400

(856) 751-9000

 

Commerce Bancorp, Inc., a New Jersey business corporation, is a regional financial services leader, anchored by the financial strength of its banking subsidiaries, Commerce Bank, N.A. and Commerce Bank/North, and augmented by CBIS and Commerce Capital Markets, Inc. With assets of more than $49 billion as of September 30, 2007, Commerce is the largest bank headquartered in New Jersey, serving Metropolitan Philadelphia, New Jersey, New York, Connecticut, Delaware, Washington, D.C., Virginia, Maryland and Southeast Florida. Commerce is a growth retailer selling convenience, and has successfully developed and implemented a unique retail strategy. This retail approach to banking uses a chain concept and features standardized facilities, standardized hours, standardized service and aggressive marketing. Commerce is “America’s Most Convenient Bank” with over 450 convenient branch locations which are open seven days a week.

Commerce is a bank holding company registered with the Board of Governors of the Federal Reserve System under the BHC Act. As such, Commerce and its subsidiaries are subject to supervision, examination and reporting requirements of the BHC Act and the regulations of the Federal Reserve Board.

 

Additional information about Commerce can be found on its website at http://www.commerceonline.com. The information provided on Commerce’s website is not part of this proxy statement/prospectus and is not incorporated herein by reference.

 

Additional information about Commerce and its subsidiaries is included in documents incorporated by reference into this document. For more information, see the section entitled “Where You Can Find More Information” on page 108.

THE MERGER

 

The following discussion contains material information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement included as an Appendix to this document. We urge you to read carefully this entire document, including the merger agreement included as an Appendix to this document, for a more complete understanding of the merger.

 

TD’s and Commerce’s boards of directors have approved the merger agreement. The merger agreement provides for the acquisition of Commerce by TD through the merger of Cardinal Merger Co., an indirect wholly-owned subsidiary of TD, with and into Commerce, with Commerce as the surviving corporation. Following the merger, Commerce will operate as an indirect wholly-owned subsidiary of TD.

 

In the merger, each share of Commerce common stock will be converted into the right to receive 0.4142 TD common shares, plus cash in lieu of any fractional share interests and $10.50 in cash for each such share. TD common shares issued and outstanding at merger completion will remain outstanding and those stock certificates will be unaffected by the merger. TD’s common shares will continue to trade on the New York Stock Exchange and the Toronto Stock Exchange under The Toronto-Dominion Bank name with the symbol “TD” following the merger.

 

See “Proposal No. 1: The Merger Agreement” for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

 

Background of the Merger

 

For many years, Commerce’s basic strategy has focused on an aggressive program of organic, deposit-focused growth based on de novo branch expansion. As a result, Commerce did not seek out or participate in significant merger and acquisition transactions.

 

In January 2007, Commerce reported that it was subject to an investigation by the OCC and the Federal Reserve Bank of Philadelphia regarding related-party transactions and various other matters. In June 2007, Commerce entered into a Consent Order with the OCC, and a Memorandum of Understanding with the Federal Reserve Bank of Philadelphia, regarding related-party transactions and various other matters. During the period of the investigation and prior to Commerce’s entry into the Consent Order in June 2007, the OCC’s process for approval of Commerce applications for de novo branches, which is at the heart of Commerce’s strategic plan, had become far more prolonged as the OCC imposed various new requirements on the branch application and approval process. In connection with Commerce’s entry into these enforcement orders, Vernon W. Hill, II, the founder and long-time Chief Executive Officer of Commerce, who was largely responsible for establishing Commerce’s strategy, was terminated. Following the former chief executive officer’s termination, the market price of Commerce’s stock increased significantly and there were various news articles speculating about a possible sale of Commerce. Goldman Sachs made a presentation to the board of directors about the potential market reaction to the termination of Mr. Hill. In the weeks following Mr. Hill’s termination, Commerce and its advisors were contacted by a number of financial institutions, including TD, about Commerce’s status.

 

As a result of the impact of the regulatory actions, as well as other key business considerations, Commerce’s board of directors began to review whether a strategic combination with a larger institution should be explored. Among the business challenges that the Commerce board of directors considered were Commerce’s ability to sustain, over time, a price-to-earnings ratio that historically exceeded the ratio of almost all other banking institutions, its declining net interest margin due primarily to the flattening of the yield curve, its ability to improve its relatively low return on assets and equity, the absence of a strong lending presence in its markets, its low non-interest income relative to its peers, its hampered ability to open branches expeditiously due to the regulatory actions, which reduced its rate of deposit growth, increased competition from larger banks that were attempting to follow Commerce’s service model, which was potentially affecting the growth of low-cost deposits, a slowdown in core, low-cost deposit growth on a “same store” basis, the changes that would need to be made in its business and the ability of Commerce to sustain the business and implement these changes, particularly in view of concerns about the ability to retain senior management given, among other things, Commerce’s regulatory issues and Mr. Hill’s termination. The Commerce board of directors considered these factors in light of Commerce’s strong historic

record of de novo branch expansion, deposit growth and increases in market share. Although Commerce’s board of directors believed that each of the business challenges, as well as the regulatory issues, could have been resolved, such resolutions would have required substantial investments of money and personnel and would have diverted management’s attention from day-to-day operation of the business for a lengthy period of time.

 

Given these considerations, the board of directors held meetings on July 8, 2007 and July 17, 2007 to consider Commerce’s prospects and challenges as a standalone company and the strategic options that might otherwise be available. Prior to the meeting on July 17, 2007, Commerce representatives approached Goldman Sachs and asked Goldman Sachs to make a presentation at the July 17 board meeting about Commerce’s strategic alternatives. These meetings were attended by representatives of Sullivan & Cromwell LLP, which served as special counsel to Commerce’s board of directors in reviewing its strategic options and had advised the board of directors on issues relating to the regulatory actions. At the July 17 meeting, among other things, Goldman Sachs assisted the board of directors in reviewing the strategic alternatives available to Commerce and potential strategic partners and advised the board of directors that the significant increase in Commerce’s stock price that immediately followed the announcement of the chief executive officer’s termination may have reflected market speculation of a potential sale of Commerce. After extensive discussion by the board of directors and the presentations by Commerce’s advisors, on July 17 the board of directors determined to hire Goldman Sachs and directed Goldman Sachs to identify potential strategic partners for Commerce. Prior to being hired, Goldman Sachs advised the board of directors that it provides a number of investment banking services to many banking institutions on a regular basis, and had previously provided such services to TD, including advising TD on its two-stage acquisition of TD Banknorth.

 

In late July 2007, Mr. George Norcross, a member of the Commerce board of directors and Chairman and Chief Executive Officer of Commerce Banc Insurance Services, Inc., or CBIS, the insurance agency subsidiary of Commerce, requested consideration by Commerce management of a possible sale of CBIS to Mr. Norcross and others. On July 24, 2007, Mr. Norcross sent a letter to the Commerce board of directors offering to purchase CBIS, although no specific terms were mentioned. Mr. Norcross had discussed the possibility of such a transaction earlier in the year with Mr. Hill. Mr. Norcross retained outside counsel to advise him on any potential sale of CBIS and recused himself from board discussions regarding any such sale. The board of directors created a special committee of independent directors to consider Mr. Norcross’s proposal, comprised of Mr. Morton N. Kerr, Mr. John K. Lloyd and Mr. Joseph S. Vassalluzzo. In addition, the board of directors retained Goldman Sachs to advise the board of directors on whether such a sale would adversely impact Commerce’s strategic initiatives and determined to obtain a fairness opinion from Goldman Sachs in connection with any potential sale of CBIS. However, further consideration of Mr. Norcross’s proposal was terminated upon the subsequent withdrawal of the proposal, orally on August 21, 2007 and in writing on August 27, 2007, as described below.

 

In late July and early August 2007, Goldman Sachs had initial conversations with 17 larger banking institutions (in terms of market capitalization). Goldman Sachs eventually identified four institutions, including TD, which it believed were most likely to be interested in a transaction involving paying a premium to Commerce’s then-current market price. A number of the remaining 13 potential bidders indicated either that their business models were not compatible with Commerce’s unique business model or that they would not be willing to pay a premium to Commerce’s then-current market price given the current market environment. Between August 6 and August 10, 2007, one-on-one meetings were arranged between each of the four identified institutions and Goldman Sachs. At these meetings, the institutions were provided with an opportunity to ask questions regarding certain historical business model and financial information that was provided to the institutions prior to the meetings. Each of the four identified institutions signed a confidentiality agreement with Commerce prior to attending these meetings or receiving any information.

 

A one-on-one meeting with TD and Goldman Sachs took place on August 7, 2007. Representatives of TD attending that meeting included Mr. Bharat Masrani, President and Chief Executive Officer of TD Banknorth, Mr. Stephen Boyle, Chief Financial Officer of TD Banknorth, and Mr. Riaz Ahmed, TD’s Senior Vice President Corporate Development. During that meeting, the TD representatives expressed the view that Commerce’s customer-service philosophy was similar to TD’s own and would likely be considered a key part of TD’s U.S. banking strategy after completion of a potential merger.

 

Shortly after the meetings with the four identified institutions, one of the four informed Goldman Sachs of its conclusion that, although it was impressed with Commerce’s deposit generation and continued growth, Commerce was not a good fit with the institution’s current branch strategy. A second institution informed Goldman Sachs that it decided not to expand its operations into the mid-Atlantic region. The remaining two parties, one of which was TD, submitted preliminary written indications of interest shortly thereafter. TD’s preliminary indication of interest stated that, subject to completion of due diligence and confirmation of various assumptions provided by Goldman Sachs, it would be willing to pay a price within a range that represented a premium to Commerce’s then-current market price with a mix of TD common shares and cash. The other interested party indicated that it would be willing to pay a price approximately equivalent to Commerce’s then-current market price, with the form of consideration to be determined.

 

On August 21, 2007, representatives from Goldman Sachs and Sullivan & Cromwell met with Commerce’s board of directors to review the preliminary written indications of interest. The board of directors noted that the price range in TD’s preliminary indication of interest of $42 to $46 per share with up to 30% in cash was materially greater than that indicated by the other institution and that the anticipated benefits to Commerce, its shareholders and its other constituencies, including its employees, customers and the communities that it serves, of a transaction with TD (including the opportunity to provide an expanded range of sophisticated products and services to customers over a broader footprint, as well as access to greater financial resources to support future growth) were in the aggregate significantly greater than the anticipated benefits of a transaction with the other institution. In addition, the board of directors concluded that the execution risk of pursuing a transaction with TD was less than with the other institution. Goldman Sachs also informed the board of directors that the other institution had advised Goldman Sachs that it was not willing to pay a meaningfully higher price than proposed in its preliminary indication of interest and that any higher price would appear to be significantly dilutive to the other institution. After the other institution was informed that its initial indication of interest was insufficient, it made no attempt to increase its proposal. Goldman Sachs updated the board of directors on the market environment, including the significant disruptions in the debt and housing markets and the general effects of those disruptions on financial institution stocks and the interest of other institutions in a business combination with Commerce. The board of directors also discussed with Goldman Sachs the fact that, notwithstanding the widespread speculation that Commerce would be sold, no other potential purchasers had approached Commerce to engage in substantive discussions about a potential business combination. After extensive discussion and deliberation, the board of directors instructed Commerce’s management to focus its efforts on a strategic transaction with TD, and authorized further due diligence by TD. Up to this time, none of the discussions Commerce had with the various institutions proceeded beyond the exploratory stage and no understanding with respect to the definitive terms of a transaction was reached during these discussions.

 

At its August 21 meeting, the Commerce board of directors formed, upon the recommendation of Mr. Joseph Buckelew, Chairman of the Commerce board of directors, a special committee, or the Special Committee, to oversee the process for a possible strategic transaction. The Special Committee members also included Mr. Donald T. DiFrancesco, Mr. Lloyd and Mr. Joseph T. Tarquini, Jr., as well as Mr. Buckelew as a non-voting member. Mr. Norcross was chosen to chair the Special Committee by the board of directors based on his skill and experience in negotiating acquisition transactions. Thereafter, Mr. Norcross was the principal liaison of the Special Committee with Commerce’s financial and legal advisors and TD. During the August 21 meeting and following his appointment to the Special Committee, Mr. Norcross voluntarily withdrew his request for consideration of a sale of CBIS to him and other members of CBIS management so he could focus his efforts and attention on the Commerce sale process and minimize any potential conflict of interest. Mr. Norcross formalized this withdrawal in writing on August 27, 2007. At the time of the withdrawal, no terms for a transaction had been proposed by Mr. Norcross or otherwise discussed by Mr. Norcross and Commerce, and prior Commerce board discussions were limited to preliminary consideration of a process for consideration of the proposal and whether or not a sale of CBIS would affect Commerce’s strategic options. As part of its diligence process, TD learned of Mr. Norcross’s indication of interest with respect to CBIS.

 

On August 22, 2007, Commerce invited TD to conduct due diligence. From August 29 until September 20, 2007, TD conducted its due diligence investigation with respect to Commerce’s business, legal, tax, regulatory and other matters. The process included meetings with Commerce management. Commerce, with the assistance of

Goldman Sachs and Sullivan & Cromwell, conducted a due diligence investigation with respect to TD’s business, legal, tax, regulatory and other matters.

 

Throughout this process, the Special Committee was in frequent contact with representatives of Goldman Sachs and Sullivan & Cromwell. The Special Committee had frequent telephonic updates and kept Commerce’s board of directors informed about developments through telephonic updates. Mr. William M. Tambussi, of Brown & Connery, LLP, and Mr. Richard Alexander, of Arnold & Porter LLP, each counsel to Commerce, and representatives of Goldman Sachs and Sullivan & Cromwell often participated in these updates.

 

Between September 21 and September 23, Commerce and TD, and their respective financial advisors, engaged in further discussions regarding the purchase price and form of consideration. These discussions focused on, among other things, potential losses in Commerce’s securities portfolio as a result of recent sharp declines in the bond markets and slower low-cost deposit growth in Commerce’s stores, and the potential adverse effect these events could have on Commerce’s future earnings. As a result of these factors, TD indicated that it was now prepared to offer only $35 to $38 per share.

 

Following additional discussions, the parties and their advisors agreed to meet in Toronto to determine if an agreement on price could be reached. Mr. Norcross, as Chairman of the Special Committee, and representatives from Goldman Sachs and Sullivan & Cromwell attended these meetings on behalf of Commerce on September 24 and 25. At the conclusion of the meetings, TD expressed a willingness to offer $42 per share, provided that this price could be supported by additional due diligence investigation, and that the transaction could be structured on terms that would be financially attractive to TD’s shareholders. TD also indicated that the consideration for the transaction would consist entirely of securities of TD and that it was considering offering, for a small portion of the consideration, some form of security other than TD common shares. In connection with these meetings, TD was advised that Mr. Norcross remained interested in pursuing a possible purchase of CBIS and wanted to establish a process for the consideration of such a transaction following the announcement of the merger. However, no discussions of the economic terms of any potential transaction involving CBIS occurred at this time.

 

On September 26, 2007, after further discussions and information sharing among the parties, TD informed Commerce that it was prepared to pay Commerce $42 per share with the consideration to consist entirely of TD common shares based on a fixed exchange ratio to be established shortly before announcement of a transaction. TD also informed Commerce that its ability to offer this price would be subject to the transaction being done on a taxable basis for U.S. federal income tax purposes and with TD being satisfied with the actions Commerce had determined to take to reduce the potential interest rate and other risk in its investment securities portfolio.

 

In September, Commerce’s management had begun considering restructuring its investment securities portfolio before the issue was raised by TD, and management now accelerated that process. Goldman Sachs and its affiliates and other financial institutions later acted as counterparty as principal for their own account in hedging or trading transactions in connection with the restructuring.

 

On September 27, 2007, Simpson Thacher & Bartlett LLP, counsel to TD, provided a draft merger agreement to Sullivan & Cromwell, and the parties and their respective legal counsel negotiated the terms of the merger agreement through October l, 2007 while due diligence investigations continued. The parties and their respective counsel negotiated, among other things, the scope of the representations and warranties made by Commerce, the scope of the covenants governing the operation of Commerce’s business pending completion of the merger, the restrictions on Commerce’s ability to engage in discussions of strategic transactions with third parties, the conditions to completion of the merger, the circumstances under which the merger agreement could be terminated or abandoned and the amount of and circumstances under which a termination fee would be payable by Commerce to TD.

 

Between September 27 and October 1, the parties and their advisors also engaged in extensive discussions regarding the basis for establishing the fixed exchange ratio, the form of consideration and other key terms. Commerce advised TD of the various actions that it had determined to take with respect to its balance sheet, with the intention of reducing the exposure to changes in interest rates. In addition, after extensive discussions, Commerce and TD agreed to a taxable structure for the transaction and further agreed that a portion of the consideration would be provided in cash so as to enable Commerce’s shareholders to have the ability to pay taxes on the transaction

without the necessity of selling TD shares that they acquired. In addition, the parties and their advisors worked to finalize amended, or in some cases new, employment agreements for certain Commerce executives (including all executive officers), the key terms of which had been approved by the Commerce board of directors in July 2007. In addition, the parties discussed a process for considering a sale of CBIS to Mr. Norcross and other members of CBIS’s management following execution of the merger agreement, as well as terms related to the sale of CBIS in Mr. Norcross’s amended and restated employment agreement. The Commerce board of directors was kept informed of the progress of the negotiations.

 

By the afternoon of October 1, 2007, TD and Commerce had reached agreement on the basic terms and conditions of the merger agreement, including per share consideration consisting of $10.50 in cash (or approximately 25% of the total consideration) and a fixed exchange ratio of 0.4142 of a TD common share, which, based on TD’s closing price on September 28, 2007, represented $31.84 (or approximately 75% of the total consideration), for a total of $42.34 per Commerce share.

 

A special meeting of Commerce’s board of directors took place on the afternoon of October 1, 2007 to consider the terms and conditions of the proposed merger. At this meeting, the board members were updated on the proposed merger by representatives of the Special Committee, senior management of Commerce, Goldman Sachs and Sullivan & Cromwell. Senior management described their views of TD based on their meetings with TD, their view of the fit between the two organizations and the benefits and risks of remaining independent. Representatives of Sullivan & Cromwell discussed the legal framework for the transaction, explaining the fiduciary duties and responsibilities of the board of directors in considering the proposed transaction and describing the key terms of the proposed merger agreement, including the termination fee, the provisions relating to responses by Commerce to third-party acquisition proposals and the fact that the transaction was taxable. Representatives of Goldman Sachs reviewed with the board additional information, including financial information regarding the two companies and the results of the reverse due diligence on TD. Representatives of Goldman Sachs rendered to the board of directors its oral opinion (subsequently confirmed in writing) that, as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the stock consideration and cash consideration to be received by the holders of Commerce common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders. Mr. Tambussi described proposed employment arrangements for certain Commerce executives and Mr. Alexander discussed regulatory issues, including the potential that regulatory restrictions on branch expansion would be further reduced as a result of the merger. After further deliberation and numerous questions by members of the board of directors, including consideration of the impact of the taxable nature of the transaction on Commerce’s shareholder base (which was largely institutional), the board unanimously approved the merger agreement and authorized the execution thereof, subject to satisfactory resolution of outstanding contractual issues related to the merger agreement. The directors also unanimously recommended that Commerce shareholders vote to approve the plan of merger.

 

On October 1, 2007, and through the early morning of October 2, 2007, senior management of Commerce and TD, along with their respective financial advisors and legal counsel, finalized the remaining terms of the merger agreement and of the employment agreements for 21 members of Commerce’s senior management. In addition, the parties finalized the procedural terms regarding consideration of a possible sale of CBIS to Mr. Norcross and other members of CBIS’s management following the announcement of the merger, including the requirement that TD consent to the CBIS sale.

 

Before the opening of business on October 2, 2007, Commerce and TD executed the merger agreement, issued a joint press release publicly announcing the merger and held a joint meeting, conference call and webcast to announce the merger.

 

On December 31, 2007, as described on page 52, Commerce completed the sale of CBIS to a group led by Mr. Norcross.

 

Commerce’s Reasons for the Merger

 

In deciding to enter into the merger agreement and to recommend approval of the plan of merger to Commerce’s shareholders, the board of directors considered a number of factors, including the factors listed below. In view of the number and wide variety of factors considered in connection with its evaluation of the merger,

the board of directors did not attempt to quantify or otherwise assign weights to the information and specific factors it considered in reaching its determination, and individual directors may have given different weights to different information and factors. The board of directors viewed its approval and recommendation as being based on the totality of the information and factors presented to and considered by it. In reaching its decision, the board of directors consulted with the Special Committee and senior management of Commerce, with Goldman Sachs with respect to the financial aspects of the merger and with Commerce’s legal advisors with respect to the merger agreement and related issues. The board of directors did not attempt to form any conclusions as to whether any particular line item analysis provided by Goldman Sachs did or did not by itself support the board of directors’ determination.

 

Strategic Alternatives

 

The board of directors believed that the value to be received by Commerce shareholders in the merger was greater than the value inherent in Commerce remaining as an independent entity currently and for the foreseeable future after taking into account the investment required to successfully pursue a strategy of remaining independent and the related business, regulatory and market risks. As discussed above, prior to discussions with TD, the board of directors had considered Commerce’s long-term prospects, including its long-term financial plan, as a stand-alone company and various strategic opportunities, including the sale of Commerce. The Commerce board of directors considered the challenges facing Commerce, including its ability to sustain its historically high price-to-earnings ratio given the market conditions, as well Commerce’s continued ability to grow aggressively through de novo branching after the regulatory actions. Accordingly, the board of directors determined that a sale of Commerce at the price offered by TD would be a better alternative than a continued strategy of independence.

 

Financial Terms of the Merger

 

Commerce’s board of directors concluded that the per share merger consideration was fair to Commerce’s shareholders based upon Commerce’s current financial condition and future prospects, TD’s current financial condition and future prospects and the board’s assessment of the future prospects of the combined company. In arriving at this conclusion, the board of directors, together with Commerce’s senior management and legal and financial advisors, evaluated the strategic alternative of independence and took note of the fact that no other potential purchaser had been willing to pay the same price as TD and that the special geographic and business fit between Commerce and TD may have enabled TD to pay a price that others could not. In addition, the board of directors took into account the fact that the merger consideration represented a significant premium over the historical average trading price of Commerce common stock during recent periods, including a premium of roughly 25% over Commerce’s market price on June 28, 2007, the day prior to the announcement of the resignation of the former chief executive officer. In this regard, the board of directors considered the financial information presented by Goldman Sachs over the course of multiple meetings and Goldman Sachs’ fairness opinion. Please see the section entitled “The Merger — Opinion of Commerce’s Financial Advisor” beginning on page 40.

 

Commerce’s board of directors also considered the form of the merger consideration to be received in the merger by the holders of Commerce common stock (the right to receive 0.4142 TD common shares and $10.50 in cash for each share of Commerce common stock). The board of directors considered the certainty of the value of the cash component of the merger consideration and the relationship of the value of the stock component to the market price of TD common shares, as well as the ability of holders of Commerce common stock to become holders of TD common shares and participate in the future prospects of the combined businesses of Commerce and TD.

 

Commerce’s board of directors also considered the taxable nature of the transaction in terms of its impact on shareholders and the inclusion of cash to enable those Commerce shareholders who are taxpaying entities or individuals to pay taxes resulting from the merger, as well as the nature of Commerce’s shareholder base.

 

Effect on Customers and Communities Served

 

Commerce’s board of directors considered the post-merger organizational structure and operation of Commerce, including the limited geographic overlap between TD’s U.S. bank subsidiary and Commerce and the similarities between Commerce’s customer service oriented model and that of TD’s Canadian operations. The board

of directors believed the merger presented a special opportunity to preserve Commerce’s unique brand and business model after the merger. As a result, the board of directors anticipated that although changes following the merger are inevitable, the TD merger offered the opportunity to provide a similar high quality service model for Commerce’s customers and communities.

 

The Banking Industry and Market Condition

 

Commerce’s board of directors considered the current environment of the banking industry, including:

 

 

TD’s Financial Condition, Prospects and Industry Reputation

 

Commerce’s board of directors considered, among other things:

 

 

Commerce’s board of directors also took into consideration TD’s worldwide reputation in the financial services industry and the breadth of TD’s operations and resources as the second largest bank in Canada, as measured by deposits, and the eighth largest bank in North America, as measured by market capitalization. The board of directors took particular note of the complementary cultures of Commerce and TD, both of which emphasize the importance of high quality customer service and the similarity of their retail banking business models with their emphasis on growth. The board considered the opportunities these similarities provided to continue the Commerce model and tradition.

 

Expected Synergies

 

Commerce’s board of directors considered the complementary strengths of the businesses of Commerce and TD, and the benefits to be provided by an increased scale of operations and expanded product offerings. Together, the combined business will operate more than 2,000 branches in North America, making it the seventh largest bank in North America as measured by branch locations, with approximately one-quarter of a trillion dollars in deposits. The board of directors believes the merger will enable the combined businesses to:

 

 

 

 

 

Treatment of Commerce Employees

 

Commerce’s board of directors considered the treatment of Commerce employees as contemplated by the merger agreement, including the proposed conversion of options to acquire Commerce common stock into options to acquire TD common shares, the commitment to continue Commerce employee benefit plans (which, at least until December 31, 2008, will be as favorable, in the aggregate, as plans provided by Commerce as of October 2, 2007) until employees become eligible to participate in employee benefit plans maintained by TD Banknorth and with service credit for purposes of eligibility, participation, vesting and levels of benefits. The board of directors also considered the limited geographic overlap between Commerce and TD Banknorth and viewed a transaction with TD as an opportunity for Commerce’s employees to work at a larger and more diversified organization with broader career opportunities.

 

Certain Terms of the Merger Agreement

 

Commerce’s board of directors considered the terms of the merger agreement including the nature and scope of the closing conditions and the potential for incurring a termination fee in the event the merger agreement is terminated under certain circumstances. The board of directors also considered the fact that the termination fee and other provisions of the merger agreement might discourage third parties from seeking to acquire Commerce and otherwise increase the cost of such an acquisition but would not preclude the board of directors from evaluating a proposal for an alternative transaction. The board of directors took into account that the terms of the termination fee were the subject of negotiations between the parties and that the fee would generally be payable only in limited circumstances. The board of directors also considered that, as a percentage of the merger consideration, the termination fee was within the range of termination fees provided for in recent comparable acquisition transactions at the time the merger agreement was executed. The board of directors also considered the fact that each of the parties is entitled to seek equitable relief to prevent breaches and enforce the provisions of the merger agreement.

 

Opinion of Commerce’s Financial Advisor

 

Commerce’s board of directors considered the opinion of Goldman Sachs, to the effect that, as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the stock consideration and cash consideration to be received by the holders of Commerce common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders. Goldman Sachs’ opinion is further described in the section entitled “The Merger — Opinion of Commerce’s Financial Advisor,” beginning on page 40.

 

Interests of Commerce’s Board of Directors and Management

 

Commerce’s board of directors also considered the fact that members of the board of directors and of Commerce’s management have interests in the merger that are different from those of Commerce shareholders generally. Please see the section entitled “The Merger — Interests of Commerce’s Executive Officers and Directors in the Merger” beginning on page 50.

 

Closing and Integration Risks

 

Commerce’s board of directors considered the risks and costs that the merger might not be completed, the potential impact of the restrictions under the merger agreement on Commerce’s ability to take certain actions during the period prior to the closing of the merger, the potential for diversion of management and employee attention and for increased employee attrition during that period and the potential effect of these factors on Commerce’s business and its relationships with customers. The board of directors also took into account the likelihood that the merger would be approved by the appropriate banking and regulatory authorities and the shareholders of Commerce in a timely manner and without unacceptable conditions.

 

The board of directors weighed the foregoing advantages and opportunities against the challenges inherent in the combination of two significant business enterprises operating in a highly-regulated industry. The board of directors realized that there can be no assurance about future results, including results expected or considered in the factors listed above, such as assumptions regarding the long-term value of Commerce as an independent entity and of the combined company, the financial strength and future prospects of Commerce, TD and the combined company

and any expected synergies. However, the board of directors concluded that the potential positive factors outweighed the negative factors, including the potential risks of completing the merger. This explanation of the board of directors’ reasons for the merger and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 26.

 

Opinion of Commerce’s Financial Advisor

 

Goldman Sachs rendered its oral opinion to the Commerce board of directors, which was subsequently confirmed in writing, that as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the stock consideration and cash consideration to be received by the holders of Commerce common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders.

 

The full text of the written opinion of Goldman Sachs, dated October 2, 2007, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is included as Appendix B to this proxy statement/prospectus. Goldman Sachs provided its opinion for the information and assistance of the Commerce board of directors in connection with its consideration of the merger. Goldman Sachs’ opinion is not a recommendation as to how any holder of Commerce common stock should vote with respect to the merger.

 

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

 

Goldman Sachs also held discussions with members of the senior management of each of Commerce and TD regarding their assessment of the strategic rationale for, and the potential benefits of, the merger, and the past and current business operations, financial condition and future prospects of Commerce and TD. In addition, Goldman Sachs reviewed the reported price and trading activity for Commerce common stock and TD common shares, compared certain financial and stock market information for Commerce and TD with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the banking industry and performed such other studies and analyses, and considered such other factors, as it considered appropriate.

 

Goldman Sachs relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it. Goldman Sachs assumed, with the consent of Commerce, that the internal financial analyses and forecasts for Commerce and TD prepared by the managements of Commerce and TD

were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the managements of Commerce and TD. Goldman Sachs did not receive or review individual credit files, nor did it make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of Commerce or TD or any of their respective subsidiaries, and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect to such portfolios and, accordingly, Goldman Sachs assumed that the allowances for losses are, in the aggregate, adequate to cover those losses. It also assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Commerce or TD or on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs’ opinion does not address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion does not address the underlying business decision of Commerce to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to Commerce. In addition, Goldman Sachs did not express any opinion as to the prices at which the TD common shares will trade at any time. Goldman Sachs’ opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

 

The following is a summary of the material financial analyses delivered by Goldman Sachs on October 1, 2007 to the Commerce board of directors in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before September 28, 2007, and is not necessarily indicative of current market conditions.

 

Transaction Multiples Analysis

 

Based upon the 0.4142 TD common shares and $10.50 in cash to be received in respect of each share of Commerce common stock, the C$76.30 closing market price of the TD common shares on September 28, 2007 and a currency exchange ratio of 0.9923 Canadian dollars per U.S. dollar as of September 28, 2007, Goldman Sachs calculated that each share of Commerce common stock would be converted into TD common shares and cash with an implied transaction value of $42.34.