fv4za
As
filed with the Securities and Exchange Commission on
August 24, 2010
Registration
No. 333-167443
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment
No. 1
to
Form F-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
The Toronto-Dominion Bank
(Exact name of registrant as specified in its charter)
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CANADA
(State or other jurisdiction of
incorporation or organization)
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6029
(Primary Standard Industrial
Classification Code Number)
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13-5640479
(I.R.S. Employer Identification
Number) |
Toronto-Dominion Centre, P.O. Box 1, Toronto, Ontario, M5K 1A2, (416) 982-8222
(Address, including zip code, and telephone number, including area code, of registrants principal executive offices)
Brendan OHalloran
The Toronto-Dominion Bank
New York Branch
31 West 52nd Street
New York, NY 10019-6101
(212) 827-7000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
With copies to:
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Lee A. Meyerson, Esq.
Ellen R. Patterson, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
(212) 455-2000
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Christopher A. Montague, Esq.
The Toronto-Dominion Bank
Toronto-Dominion Centre, P.O.
Box 1
Toronto, Ontario M5K 1A2
(416) 982-8222
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Nicholas G. Demmo, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
(212) 403-2000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
The registrant hereby amends this registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Securities and Exchange Commission, acting pursuant to
Section 8(a), may determine.
The
information contained in this proxy statement/prospectus is not
complete and may be changed. A registration statement relating
to these securities has been filed with the Securities and
Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration
statement becomes effective. This proxy statement/prospectus is
not an offer to sell these securities, and is not soliciting an
offer to buy these securities, nor shall there be any sale
of these securities, in any jurisdiction where such offer,
solicitation or sale is not permitted or would be unlawful prior
to registration or qualification under the securities laws of
any such jurisdiction.
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SUBJECT TO COMPLETION, DATED
AUGUST 24, 2010
PROPOSED
MERGER TRANSACTION YOUR VOTE IS VERY
IMPORTANT
The South Financial Group, Inc., or TSFG, entered into a merger
agreement with The Toronto-Dominion Bank, or TD, which provides
for TD to acquire TSFG. If the merger is completed, you will
receive either $0.28 in cash, if a cash election is made, or
0.004 TD common shares (plus cash in lieu of any fractional
share interests) for each share of TSFG common stock you hold
immediately prior to the completion of the merger. The exchange
ratio of 0.004 TD common shares for the stock consideration
option 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 TSFG or TD. The dollar
value of the stock consideration TSFG shareholders may 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. Based on the closing price of TD common shares as
reported on the New York Stock Exchange on May 14, 2010,
the last trading day before public announcement of the merger,
the stock consideration represented approximately $0.28 in value
for each share of TSFG common stock, and based on the closing
price of TD common shares as reported on the New York Stock
Exchange on August 23, 2010, the last practicable date
before the date of this document, the stock consideration
represented approximately $0.2682 in value for each share of
TSFG common stock. TDs common shares are listed on the New
York Stock Exchange and the Toronto Stock Exchange under the
symbol TD, and TSFGs common stock is listed on
the Nasdaq Capital Market under the symbol TSFG. You
should obtain current market quotations for both securities. We
believe that the merger will be a taxable transaction for TSFG
shareholders for United States federal income tax purposes.
At TSFGs 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 May 16, 2010, among TSFG, TD and
Hunt Merger Sub, Inc., a wholly-owned subsidiary of TD. The
special meeting of TSFG shareholders will be held at Poinsett
Plaza,
2nd
Floor, 104 South Main Street, Greenville, SC 29601, on
September 28, 2010, at 10:30 a.m. local time, to vote on
the approval of the plan of merger. The TSFG board of
directors unanimously recommends that you vote FOR
the approval of the plan of merger.
In connection with entering into the merger agreement, TSFG and
TD also entered into a share purchase agreement, pursuant to
which, on August 23, 2010, TD acquired 100 newly issued
shares of TSFGs Series M Preferred Stock for
consideration of 1,000 TD common shares. The Series M
Preferred Stock that was issued to TD will vote together with
TSFG common stock as a single class and represent 39.9% of the
total voting power of holders of TSFG capital stock entitled to
vote at the special meeting (including with respect to approval
of the plan of merger contained in the merger agreement).
Your vote is very important. A majority of the
votes entitled to be cast on the plan of merger contained in the
merger agreement, consisting of all outstanding shares of TSFG
common stock and the Series M Preferred Stock, voting
together as a single class, constitutes a quorum for transacting
business at the special meeting. Approval of the plan of merger
contained in the merger agreement requires the affirmative vote
of a majority of the votes entitled to be cast at the special
meeting by the holders of TSFG common stock and the
Series M Preferred Stock, voting together as a single
class. TD will vote its shares of Series M Preferred Stock
in favor of approval of the plan of merger contained in the
merger agreement at the special meeting. An abstention or
failure to vote or to instruct your broker how to vote will have
the same effect as voting against the plan of merger contained
in the merger agreement. Whether or not you plan to attend the
meeting, please promptly return your completed proxy so that
your shares are voted at the meeting. 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 23.
We appreciate your continued support.
Sincerely,
H. Lynn Harton
President and Chief Executive Officer
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 August 24,
2010, and it is first being mailed or otherwise delivered to
TSFG shareholders on or about August 26, 2010.
REFERENCES
TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business
and financial information about TSFG 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 TSFG 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.
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The South Financial Group, Inc.
Investor Relations
104 South Main Street
Poinsett Plaza, 6th Floor
Greenville, SC 29601
(888) 592-3001
investor@thesouthgroup.com
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TD Bank Financial Group
Investor Relations
TD Tower,
15th Floor
66 Wellington Street West
Toronto, Ontario, Canada M5K 1A2
(416) 308-9030
tdir@td.com
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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.
Innisfree
M&A Incorporated
501 Madison Avenue
New York, NY 10022
Toll free telephone: (877) 717 3929
Brokers and banks, please call: (212) 750 5833
In order to receive timely delivery of requested documents in
advance of the special meeting, you should make your request no
later than September 21, 2010.
See Where You Can Find More Information beginning
on page 96.
THE SOUTH
FINANCIAL GROUP, INC.
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
To Be Held on September 28, 2010
To the
Shareholders of The South Financial Group, Inc.:
We will hold a special meeting of shareholders at 10:30 a.m.
local time, on September 28, 2010 at Poinsett Plaza,
2nd
Floor, 104 South Main Street, Greenville, SC 29601 to consider
and vote upon the following matters:
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a proposal to approve the plan of merger contained in the
Agreement and Plan of Merger, dated as of May 16, 2010,
among The South Financial Group, Inc., The Toronto-Dominion Bank
and Hunt Merger Sub, Inc., pursuant to which Hunt Merger Sub,
Inc. will merge with and into The South Financial Group, Inc.,
whereupon the separate corporate existence of Hunt Merger Sub,
Inc. will cease and TSFG will survive as a wholly-owned
subsidiary of TD, as more fully described in the attached proxy
statement/prospectus. A copy of the Agreement and Plan of Merger
is included as Appendix A to the proxy
statement/prospectus; and
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a proposal to approve the adjournment or postponement of the
special meeting, if necessary or appropriate, including to
solicit additional proxies.
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The close of business on August 23, 2010 has been fixed as
the record date for determining those TSFG shareholders entitled
to notice of, and to vote at, the special meeting and any
adjournments or postponements of the special meeting. Only the
holders of record of TSFG common stock and the Series M
Preferred Stock 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 plan of merger contained in the merger agreement
requires the affirmative vote of a majority of the votes
entitled to be cast at the special meeting by the holders of
TSFG common stock and the Series M Preferred Stock, voting
together as a single class. The Series M Preferred Stock
was issued to TD prior to the record date for the special
meeting of TSFG shareholders and represents 39.9% of the total
voting power of holders of TSFG capital stock entitled to vote
at the special meeting (including on the approval of the plan of
merger contained in the merger agreement). TD is the sole holder
of all shares of Series M Preferred Stock and is required
to vote these shares in favor of approving the plan of merger
contained in the merger agreement. 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,
William P. Crawford, Jr.
Secretary
August 24, 2010
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF
SHARES YOU OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING IN PERSON, PLEASE VOTE YOUR PROXY BY TELEPHONE
OR THROUGH THE INTERNET, AS DESCRIBED ON THE ENCLOSED PROXY
CARD, OR COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE SPECIAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD OR VOTED BY TELEPHONE OR THROUGH THE
INTERNET. PLEASE VOTE AT YOUR FIRST OPPORTUNITY.
TSFGS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR APPROVAL OF THE PLAN OF MERGER AND
FOR APPROVAL OF ANY ADJOURNMENT OR POSTPONEMENT OF
THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, INCLUDING TO
PERMIT FURTHER SOLICITATION OF PROXIES.
TABLE OF
CONTENTS
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Page
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96
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A-1
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B-1
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EX-5.1 |
EX-23.2 |
EX-23.3 |
Ex-99.2 |
EX-99.3 |
ii
SUMMARY
This summary highlights material information from this proxy
statement/prospectus. It may not contain all of the information
that may be important to you. You should carefully read this
entire document, including the appendices and the other
documents to which this document refers you, for a more complete
understanding of the matters being considered at the special
meeting. In addition, we incorporate by reference into this
document important business and financial information about TD
and TSFG. You may obtain the information incorporated by
reference into this document without charge by following the
instructions in the section entitled Where You Can Find
More Information beginning on page 96. Where
applicable, each item in this summary includes a page reference
directing you to a more complete description of that item. All
references in this proxy statement/prospectus to dollars, $ or
U.S.$ are to U.S. dollars and all references to C$ are to
Canadian dollars.
The
Merger (Page 32)
The merger agreement provides for TDs direct wholly-owned
subsidiary, Hunt Merger Sub, Inc., to merge with and into TSFG,
with TSFG surviving the merger as a wholly-owned subsidiary of
TD.
TSFG
Shareholders Will Have the Right to Elect to Receive Cash or TD
Common Shares in the Merger (Page 58)
If the merger is completed, you will be entitled to receive as
merger consideration, in exchange for each share of TSFG common
stock you own immediately prior to the merger, either:
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$0.28 in cash, which we refer to as the cash consideration, if a
cash election is effectively made with respect to such
share; or
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0.004 TD common shares, plus cash in lieu of any fractional
share interests, which we refer to as the stock consideration.
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For example, if you own 1,000 shares of TSFG common stock
and you do not make a cash election for any of your shares, when
the merger has been completed you will receive 4 TD common
shares. If after the merger has been completed, you hold fewer
than 100 TD common shares, you will have a so-called odd
lot rather than a round lot. Trading in odd
lots may be more difficult
and/or
expensive than trading in round lots. If there were fractional
shares, you would receive cash in U.S. dollars in an amount
equal to the fractional interest in a TD common share
multiplied by the average of the daily volume weighted average
price 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. If you own 1,000 shares of TSFG
common stock and you do make a cash election with respect to all
of your shares, when the merger has been completed you would
receive $280.00 in cash.
The exchange ratio relating to the TD common shares you will
receive is a fixed ratio, which means it will not be adjusted
based on any changes in the trading price of TD common shares or
TSFG common stock between now and the time the merger is
completed. Therefore, the market value of the TD common shares
you will receive in the merger in exchange for any shares of
TSFG common stock for which you do not make a cash election will
depend on the price of the TD common shares at the time the
merger is completed and will not be known at the time
TSFG shareholders vote on the merger. For information on
recent market prices of the TD common shares and TSFG common
stock, see Comparative Per Share Market Price and Dividend
Information beginning on page 16. See also Risk
Factors beginning on page 23.
In order to make a cash election with respect to any or all of
your shares of TSFG common stock, you must submit a properly
completed form of cash election, together with the stock
certificates representing the shares you wish to exchange for
cash consideration, a book-entry delivery of shares or a
guarantee of delivery as described in the form of cash election
by September 28, 2010, the date of the special meeting of
TSFG shareholders, unless completion of the merger will occur
more than four business days following the date of the special
meeting, in which case the election deadline will be extended
until two business days before the completion of the merger. If
it is determined that the election deadline will not be the date
of the special meeting of TSFG shareholders, TD and TSFG will
publicly announce the election deadline at least five business
days prior to the anticipated completion date of the merger. If
you do not properly make a cash election by the election
deadline, your shares of TSFG common stock will be exchanged for
stock consideration. If you wish to elect to receive the cash
consideration for any or all of your shares of TSFG common stock
and your shares are held in street name, you must
follow the instructions your broker or bank provides.
Treatment
of TSFG Stock Options and Other Equity Based Awards (Page
55)
At the effective time of the merger, all outstanding TSFG equity
awards (except for TSFG restricted stock units) will be
converted into the right to receive corresponding TD equity
awards, adjusted to reflect the exchange
1
ratio and outstanding TSFG restricted stock units will be
converted into the right to receive $0.28 per share subject to
such restricted stock unit.
Certain TSFG options may be terminated, pursuant to their terms
and conditions, upon completion of the merger or shortly
thereafter.
Comparative
Per Share Market Price and Dividend Information (Page
16)
The table below sets forth closing sale prices of TD common
shares as reported on the New York Stock Exchange Composite Tape
and shares of TSFG common stock as reported on the Nasdaq Global
Select Market and Nasdaq Capital Market, respectively, on
May 14, 2010, the last trading day before the public
announcement of the merger, and August 23, 2010, the last
practicable trading day before the distribution of this proxy
statement/prospectus. Also, assuming no cash election is made,
the table sets forth the implied value of the stock
consideration for each share of TSFG common stock on each of
these dates, as determined by multiplying the applicable closing
sale price of TD common shares on the New York Stock Exchange by
the exchange ratio for the stock consideration of 0.004. We urge
you to obtain current market quotations for both TD common
shares and TSFG common stock. As previously disclosed, the
listing of TSFGs common stock has been transferred from
the Nasdaq Global Select Market to the Nasdaq Capital Market as
of June 7, 2010.
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Implied Value of
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Stock Consideration for
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TD
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TSFG
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One Share of TSFG
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Common Stock
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Common Stock
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Common Stock
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May 14, 2010
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U.S.$
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70.89
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U.S.$
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0.67
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U.S.$
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0.28
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August 23, 2010
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U.S.$
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67.05
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U.S.$
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0.2760
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U.S.$
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0.2682
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Opinion
of TSFGs Financial Advisor (Page 37 and
Appendix B)
On May 16, 2010, Morgan Stanley & Co.
Incorporated, or Morgan Stanley, TSFGs financial advisor
in connection with the merger, rendered its oral opinion,
subsequently confirmed in writing, to TSFGs board of
directors that, as of such date and based upon and subject to
the assumptions, considerations, qualifications and limitations
set forth in the written opinion, the consideration to be
received by the holders of shares of TSFGs common stock
pursuant to the merger agreement was fair, from a financial
point of view, to such holders. The full text of Morgan
Stanleys written fairness opinion, dated May 17,
2010, is attached as Appendix B to this proxy
statement/prospectus. TSFGs shareholders are encouraged to
read the Morgan Stanley opinion, as well as the description of
the assumptions made, procedures followed, factors considered
and limitations on the review undertaken by Morgan Stanley in
rendering its opinion set forth in the section of this proxy
statement/prospectus entitled The Merger
Opinion of TSFGs Financial Advisor beginning on
page 37.
Morgan Stanley addressed its opinion to TSFGs board of
directors, and the opinion does not constitute a recommendation
to any shareholder as to how to vote at the special meeting or
as to any other action that a shareholder should take with
respect to the merger.
Material
United States Federal Income Tax Consequences to Holders of TSFG
Common Stock (Page 46)
For a U.S. holder (as defined in The
Merger Material United States Federal Income Tax
Consequences), we believe that the merger will be a
taxable transaction. Accordingly, for United States federal
income tax purposes, a U.S. holder will generally recognize
gain or loss equal to the difference between (1) the sum of
any cash consideration (including any cash received in lieu of
fractional shares) and the fair market value of any TD common
shares received in the merger and (2) such holders
adjusted tax basis in the shares of TSFG common stock
surrendered in the merger for TD common shares
and/or cash.
The merger will generally not be a taxable transaction to a
non-U.S. holder
for United States federal income tax purposes unless such
non-U.S. holder
has certain connections to the United States.
Holders
of TSFG Common Stock Do Not Have Dissenters Rights of
Appraisal (Page 56)
Under applicable South Carolina law, the holders of TSFG common
stock are not entitled to any dissenters rights of
appraisal in connection with the merger.
TSFGs
Board of Directors Unanimously Recommends that You Vote
FOR the Approval of the Plan of Merger
(Page 35)
TSFGs board of directors determined that the merger, the
merger agreement and the transactions contemplated by the merger
agreement are advisable and in the best interests of TSFG and
its shareholders and has unanimously approved the plan of merger
contained in the merger agreement. For the factors considered by
the TSFG board of directors in reaching its decision to approve
the plan of merger, see the section entitled The
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Merger TSFGs Reasons for the Merger
beginning on page 35. TSFGs board of directors
unanimously recommends that TSFG shareholders vote
FOR the approval of the plan of merger.
Your
Rights as a Holder of TD Common Shares Will Be Different
from Your Rights as a Holder of TSFG Common Stock
(Page 84)
The conversion of your shares of TSFG common stock into TD
common shares
and/or cash
in the merger will result in changes from your current rights as
a TSFG shareholder, which generally are governed by the South
Carolina Business Corporation Act, or the SCBCA, and TSFGs
organizational documents, to your rights as a TD shareholder,
which generally will be governed by the Bank Act of Canada and
TDs organizational documents.
TSFG
Executive Officers and Directors Have Financial and Other
Interests in the Merger that are Different from or in Addition
to Your Interests (Page 43)
Some executive officers and directors of TSFG may have financial
interests in the merger that are in addition to,
and/or
different from, your interests. The independent members of the
TSFG board of directors were aware of and considered these
interests, among other matters, in evaluating and negotiating
the merger and the merger agreement and recommending to the
shareholders that the merger agreement be adopted.
Certain of TSFGs executive officers, including each of its
named executive officers, are party to employment and
supplemental executive retirement agreements with TSFG. These
agreements have been amended to eliminate any severance or other
benefits that would have otherwise been paid out in the case of
qualifying terminations of employment in connection with or
following the change in control as a result of the TD merger.
TSFGs executive officers have entered into new offer
letter agreements with TD that will become effective upon the
completion of the merger and provide certain benefits, including
a one-time retention bonus payment, subject to the executive
officers continued employment.
These interests are described in more detail in the section
entitled The Merger Interests of TSFG s
Executive Officers and Directors in the Merger beginning
on page 43.
The
Companies
The Toronto-Dominion Bank
Toronto-Dominion Centre
P.O. Box 1
Toronto, Ontario, Canada M5K 1A2
(416) 982-8222
TD and its subsidiaries are collectively known as TD Bank
Financial Group, or TDBFG. TDBFG is the sixth largest bank in
North America by branches and serves more than 18 million
customers in four key businesses operating in a number of
locations in key financial centres around the globe: Canadian
Personal and Commercial Banking, including TD Canada Trust and
TD Insurance; Wealth Management, including TD Waterhouse and an
investment in TD AMERITRADE Holding Corporation (TD Ameritrade);
U.S. Personal and Commercial Banking, including TD Bank,
Americas Most Convenient Bank; and Wholesale Banking,
including TD Securities. TDBFG also ranks among the worlds
leading online financial services firms, with more than
6 million online customers. TDBFG had C$574 billion in
assets on April 30, 2010. The Toronto-Dominion Bank trades
under the symbol TD on the Toronto and New York
Stock Exchanges.
Additional information about TD can be found on its website at
http://www.td.com.
The information provided on TDs website is not part of
this proxy statement/prospectus and is not incorporated herein
by reference.
Additional
Information Relating to Certain Prior Disclosures of
TD
The discussion set forth under Capital
Structure Ratings in the Annual Information
Form filed as Exhibit 99.1 to TDs Annual Report on
Form 40-F
for the year ended October 31, 2009 , Liquidity
Risk Funding in the Managements
Discussion and Analysis attached as Exhibit 99.2 to
TDs Annual Report on
Form 40-F
for the year ended October 31, 2009,
Managements Discussion and Analysis
Liquidity Risk in the
1st
Quarter 2010 Report to Shareholders attached as
Exhibit 99.1 to TDs Report of Foreign Issuer on
Form 6-K
filed with the SEC on March 4, 2010 that attached as an
exhibit TDs
1st
Quarter 2010 Report to Shareholders, and Managements
Discussion and Analysis Liquidity Risk in the
2nd
Quarter 2010 Report to Shareholders attached as
Exhibit 99.1 to TDs Report of Foreign Issuer on
Form 6-K
filed with the SEC on May 27, 2010 that attached as an
exhibit TDs
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2nd Quarter
2010 Report to Shareholders, which reports are incorporated by
reference into this proxy statement/prospectus, is amended by
supplementing such discussion with the following additional
information:
Credit ratings are important to TDs borrowing costs and
ability to raise funds. A ratings downgrade could potentially
result in higher financing costs and reduce access to capital
markets. A lowering of credit ratings may also affect TDs
ability to enter into normal course derivative or hedging
transactions and impact the costs associated with such
transactions. TD regularly reviews the level of increased
collateral its trading counterparties would require in the event
of a downgrade of TDs credit rating. TD believes that the
impact of a one notch downgrade would be minimal and could be
readily managed in the normal course of business, but more
severe downgrades could have a more significant impact by
increasing TDs cost of borrowing and/or requiring TD to
post additional collateral for the benefit of its trading
counterparties. Credit ratings and outlooks provided by the
ratings agencies reflect their views and are subject to change
from time to time, based on a number of factors, including
TDs financial strength, competitive position and liquidity
as well as factors not entirely within TDs control,
including the methodologies used by the rating agencies and
conditions affecting the financial services industry generally.
The information contained under Capital
Structure Ratings in the Annual Information
Form with respect to the description of ratings categories of
various ratings agencies is issuer-related disclosure required
by Canadian law and was based solely on public statements by the
respective ratings agencies available on their respective public
websites.
Hunt Merger Sub, Inc.
c/o The
Toronto-Dominion Bank
New York Branch
31 West 52nd Street
New York, NY
10019-6101
(212) 827-7000
Hunt Merger Sub, Inc. is a South Carolina corporation and a
wholly-owned subsidiary of TD. Hunt Merger Sub, Inc. was
organized solely for the purpose of effecting the merger with
TSFG described in this proxy statement/prospectus. It has not
carried on any activities other than in connection with the
merger agreement.
The South Financial Group, Inc.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, South Carolina 29601
(864) 255-7900
TSFG is a bank holding company focused on serving small
businesses, middle market companies, and retail customers in the
Carolinas and Florida. At June 30, 2010, it had
approximately $11.6 billion in total assets and
176 branch offices. TSFG operates Carolina First Bank,
which conducts banking operations in North Carolina and South
Carolina (as Carolina First Bank), and in Florida (as Mercantile
Bank). At June 30, 2010, approximately 44% of TSFGs
total customer deposits were in South Carolina, 45% were in
Florida, and 11% were in North Carolina. Additional information
about TSFG can be found on its website at
http://www.thesouthgroup.com.
The information provided on TSFGs website is not part of
this proxy statement/prospectus and is not incorporated herein
by reference.
The
Special Meeting of TSFG Shareholders (Page 27)
The TSFG special meeting will be held at 10:30 a.m. local
time, on September 28, 2010, at Poinsett Plaza,
2nd Floor,
104 South Main Street, Greenville, SC 29601. At the TSFG
special meeting, TSFG shareholders will be asked:
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to approve the plan of merger contained in the merger
agreement; and
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to approve the adjournment or postponement of the special
meeting, if necessary or appropriate, including to solicit
additional proxies.
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Record Date. The close of business on
August 23, 2010 has been fixed as the record date for
determining those TSFG shareholders entitled to notice of, and
to vote at, the special meeting and any adjournments or
postponements of the special meeting. Only the holders of record
of TSFG common stock and of the Series M Preferred Stock at
the close of business on that date are entitled to notice of,
and to vote at, the special meeting and
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any adjournments or postponements of the special meeting. TSFG
shareholders may cast one vote at the special meeting for each
share of TSFG common stock that was owned at the close of
business on August 23, 2010.
At the record date, there were 216,401,091 shares of TSFG
common stock outstanding and entitled to vote at the special
meeting. Directors and executive officers of TSFG and their
affiliates had the right to vote 4,018,003 shares of TSFG
common stock at the special meeting, or approximately 1.12% of
the voting power of the outstanding TSFG capital stock entitled
to vote at the special meeting (after giving effect to the
issuance of the Series M Preferred Stock). All of the
members of the TSFG board of directors have indicated their
intention as of August 23, 2010 to vote the shares of TSFG
common stock they own (or have the power to vote or direct the
vote), if any, as of the record date in favor of the approval of
the plan of merger contained in the merger agreement. In
addition, as of the record date for the special meeting, TD held
100 shares of Series M Preferred Stock of TSFG that
will vote as a single class with TSFGs common stock and
have voting power equal to 39.9% of the total voting power of
holders of TSFG capital stock entitled to vote. In addition, TD
also owns 10,000,000 shares of TSFG common stock, which it
acquired in open market purchases, representing (together with
the Series M Preferred Stock) 42.7% of the total voting
power of holders of TSFG capital stock entitled to vote at the
special meeting. TD is required to vote its shares of
Series M Preferred Stock, and has informed TSFG that it
intends to vote its shares of TSFG common stock, in favor of the
proposal to approve the plan of merger contained in the merger
agreement.
Required Vote. Approval of the plan of merger
contained in the merger agreement requires the affirmative vote
of a majority of the votes entitled to be cast at the special
meeting by the holders of TSFG common stock and the
Series M Preferred Stock, voting together as a single
class. Approval of the proposal relating to the adjournment or
postponement of the special meeting, if necessary or
appropriate, including to solicit additional proxies requires
the affirmative vote of a majority of the votes cast on such
proposal at the special meeting by the holders of TSFG common
stock and the Series M Preferred Stock, voting together as
a single class, even if less than a quorum. We urge you to vote.
TD
Shareholder Approval
TD shareholders are not required to approve the plan of merger
or the issuance of TD common shares as part of the merger
consideration.
The
Merger Agreement (Page 58)
The merger agreement is described beginning on page 58 and
is included as Appendix A to this proxy
statement/prospectus. We urge you to read the merger agreement
in its entirety because it is the legal document governing the
merger. The merger agreement has been included to provide
investors and security holders with information regarding its
terms. It is not intended to provide any other factual
information about TSFG or TD or any of their respective
subsidiaries or affiliates. All descriptions in this summary and
elsewhere in this document of the terms and conditions of the
merger are qualified by reference to the merger agreement.
Completion
of the Merger is Subject to Conditions (Page 69)
The respective obligations of each of TD and TSFG to complete
the merger are conditioned upon the satisfaction or waiver of
the following conditions:
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receipt of the requisite affirmative vote by the TSFG
shareholders of the merger agreement;
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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;
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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; and
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receipt of required regulatory approvals and the absence of any
injunction or other legal prohibition or restraint against the
merger.
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TDs obligation to complete the merger is subject to the
satisfaction or waiver of a number of conditions, including the
following:
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the accuracy of the representations and warranties of TSFG 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 TSFG;
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performance in all material respects by TSFG of the obligations
required to be performed by it at or prior to the effective time
of the merger;
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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 TSFG or TD (assuming, for this
purpose, that TD is an entity the size of TSFG in terms of
financial metrics);
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TDs purchase from the United States Department of the
Treasury and ownership of all right, title and interest in all
of the issued and outstanding shares of TSFGs
Series 2008-T
Preferred Stock and the associated warrant issued to the United
States Department of the Treasury in connection with the
issuance of the
Series 2008-T
Preferred Stock for an aggregate cash purchase price of
$130,579,218.75 and otherwise on terms and conditions reasonably
acceptable to TD; and
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no occurrence of an exchange event (as defined in the applicable
trust declaration) with respect to the Series 2000A
Cumulative Fixed Rate Preferred Shares of Carolina First
Mortgage Loan Trust or the Series 2002C Cumulative Floating Rate
Preferred Shares of Carolina First Mortgage Loan Trust.
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TSFGs obligation to complete the merger is subject to the
satisfaction or waiver of the following conditions:
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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
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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.
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The
Merger Agreement May Be Terminated Under Some Circumstances
(Page 70)
The merger agreement may be terminated at any time before the
completion of the merger, whether before or after approval of
the plan of merger by TSFG shareholders, in any of the following
circumstances:
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by mutual written consent of TD and TSFG; or
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by either TD or TSFG if:
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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;
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the merger has not been completed by February 17, 2011, but
neither TD nor TSFG 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;
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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 45 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 TSFG may
terminate the merger agreement for this reason if it itself is
then in material breach of the merger agreement; or
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the shareholders of TSFG fail to approve the plan of merger at
the TSFG special meeting; or
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the board of directors of TSFG has failed to recommend the
merger and the approval of the plan of merger by the
shareholders of TSFG or has withdrawn, amended or modified in
any manner adverse to TD its recommendation (or has resolved to
take any of the foregoing actions), whether or not permitted
under the merger agreement, or if TSFG 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;
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a tender offer or exchange offer for 15% or more of the
outstanding shares of TSFG common stock has commenced (other
than by TD), and the board of directors of TSFG recommends that
the shareholders of TSFG 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; or
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TSFG has not received written approval, within 21 days
after the date of the merger agreement, by The NASDAQ Stock
Market LLC of TSFGs use of the exception provided in
Listing Rule 5635(f) (Financial
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Viability Exception) to permit the issuance of the
Series M Preferred Stock by TSFG to TD as contemplated by
the share purchase agreement without a vote of TSFGs
shareholders. As described in Nasdaq Matters, TSFG
issued the Series M Preferred Stock to TD on
August 23, 2010 and TD has determined to proceed with the
merger, notwithstanding Nasdaqs interpretation that the
exception provided by Listing Rule 5635(f) is not available
for the issuance of the Series M Preferred Stock. On
August 23, 2010, TSFG received notice from Nasdaq of the
commencement of delisting proceedings, as discussed under
The Merger Nasdaq Matters on
page 57.
TSFG May
Be Required to Pay a Termination Fee Under Some Circumstances
(Page 71)
If the merger agreement is terminated under certain
circumstances, including circumstances involving a change in
recommendation by TSFGs board of directors, TSFG will be
required to pay TD a termination fee of $7.62 million. The
termination fee could discourage other companies from seeking to
acquire or merge with TSFG.
TD and
TSFG Entered into a Share Purchase Agreement (Page 72)
On May 16, 2010, TSFG and TD, in connection with entering
into the merger agreement, entered into a share purchase
agreement, pursuant to which TD agreed to purchase 100 newly
issued shares of TSFGs Series M Preferred Stock,
which will vote together with TSFG common stock as a single
class and represent 39.9% of the total voting power of holders
of TSFG capital stock entitled to vote, for consideration of
1,000 TD common shares. TD and TSFG completed the transactions
contemplated by the share purchase agreement on August 23,
2010.
As of August 23, 2010, the record date for the special
meeting, taking into account the Series M Preferred Stock
and the 10,000,000 shares of TSFG common stock held by TD,
TD had the power to vote approximately 42.7% of the total voting
power of shares entitled to vote on the approval of the plan of
merger contained in the merger agreement.
TD and
the United States Department of the Treasury Entered into a
Securities Purchase Agreement (Page 72)
On May 18, 2010, the Treasury Department and TD, in
connection with TD entering into the merger agreement, entered
into a securities purchase agreement, pursuant to which,
immediately prior to completion of the merger, the Treasury
Department will sell to TD its $347 million of TSFG
Series 2008-T
Preferred Stock and the associated warrant acquired under the
Treasurys Capital Purchase Program and discharge all
accrued but unpaid dividends on that stock for total cash
consideration of approximately $130.6 million.
TD
Purchases of TSFG Common Stock (Page 72)
Following the announcement of the execution of the merger
agreement and as contemplated by the press release announcing
the transaction, TD has purchased shares of TSFG common stock on
the open market. As of the record date, TD has acquired
10,000,000 shares of TSFG common stock, representing
approximately 4.6% of the total outstanding shares of TSFG
common stock, at an average price of $0.2760. TD may make
additional purchases of shares of TSFG common stock prior to the
special meeting of TSFG shareholders, subject to the
restrictions contained in the stipulation of settlement
described under The Merger Litigation Relating
to the Merger, market conditions, applicable securities
laws and receipt of any necessary regulatory approvals. TD has
informed TSFG that it intends to vote its shares of TSFG common
stock in favor of the proposal to approve the plan of merger
contained in the merger agreement at the special meeting of TSFG
shareholders.
Regulatory
Approvals Required for the Merger (Page 52)
BHC Act. TD is required to obtain the approval
of the Board of Governors of the U.S. Federal Reserve
System, which we refer to as the Federal Reserve Board, under
the BHC Act for the acquisition of control of TSFG. TD received
such approval from the Federal Reserve Board on July 22,
2010. Such approval required TSFG to enter into an agreement to
divest certain branches in the Palatka banking market prior to
consummation of the merger and TSFG did so on August 8,
2010.
Bank Act of Canada. Under the Bank Act of
Canada, the consent of the Superintendent of Financial
Institutions of Canada is required in order for TD to hold a
substantial investment in TSFG as a result of the purchase of
the Series M Preferred Stock and to acquire control of
TSFG, as a result of the merger. Approval is also required
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for TD to issue its common shares for non-cash consideration as
part of the consideration to be distributed to TSFG shareholders
in connection with the merger. TD has filed the necessary
applications with the Superintendent of Financial Institutions
of Canada for the aforementioned approvals. Approval was also
required for TD to issue its common shares for non-cash
consideration in order to purchase the TSFG shares of
Series M Preferred Stock, which approval was received on
July 7, 2010.
Other Regulatory Approvals. TD has filed an
application with, and has obtained the conditional approval of,
the State Board of Financial Institutions of the State of South
Carolina. Applications and notifications may be filed with
various other state regulatory authorities.
While we believe that the requisite regulatory approvals for the
merger will be received, there can be no assurances that such
approvals will be received on a timely basis, or as to our
ability to obtain the approvals on satisfactory terms or the
absence of litigation challenging such approvals. There can
likewise be no assurances that U.S., Canadian or state
regulatory authorities will not attempt to challenge the merger
on antitrust grounds or for other reasons, or, if such a
challenge is made, as to the result of such challenge. The
obligations of TD and TSFG to complete the merger are
conditioned upon the receipt of all required regulatory
approvals (and, in the case of TDs obligation to complete
the merger, the receipt of these approvals without the
imposition of any condition or restriction that would reasonably
be expected to have a material adverse effect on TSFG or TD
(assuming, for this purpose, that TD is an entity the size of
TSFG in terms of financial metrics)).
Nasdaq
Matters (Page 57)
As discussed under The Merger Background of
the Merger, TSFGs audit committee determined that
the issuance of the Series M Preferred Stock to TD without
a shareholder vote was necessary to avoid seriously jeopardizing
the financial viability of TSFG, as contemplated by Nasdaq
Rule 5635(f). Following announcement of the merger,
however, the staff of Nasdaq informed TSFG that it has
interpreted Rule 5635(f) to not apply in the specific
context of the merger. This interpretation, which TSFG
understands was an issue of first impression for Nasdaq, is
contrary to determinations by the New York Stock Exchange in
similar circumstances with respect to its comparable shareholder
approval rules.
Because there is no process for appealing this conclusion other
than as part of the delisting appeal process, because the TD
preferred share issuance remains an important requirement under
the terms of the proposed transaction, and because the TSFG
board determined that the issuance is in the best interests of
TSFG, its shareholders and other constituents, TSFG completed
the issuance of the Series M Preferred Stock to TD on
August 23, 2010. On August 23, 2010, TSFG received a letter
from Nasdaq stating that TSFG had failed to comply with Nasdaq
Listing Rules 5635(b), 5635(d) and 5640 and had taken action
that raises public interest concerns under Listing Rule 5100.
The letter stated that TSFGs common stock would be
delisted from Nasdaq on September 1, 2010 unless TSFG requested
a hearing before the Nasdaq Listing Qualifications Hearing Panel
prior to August 30, 2010. In response to the letter, TSFG
intends to request an oral hearing before the Nasdaq Listing
Qualifications Hearing Panel to appeal the Nasdaq staffs
delisting determination. Meanwhile, TSFGs common stock
will continue to trade on the NASDAQ Capital Market until a
written decision is rendered by the Nasdaq Listing
Qualifications Hearing Panel. TSFG cannot predict the timing or
outcome of this process, but if shares of TSFG common stock were
to be delisted prior to completion of the merger, the trading
price and liquidity levels would likely be negatively impacted.
Litigation
Relating to the Merger (Page 43)
The parties to certain litigation in connection with the merger
have entered into a stipulation of settlement, as discussed
under The Merger Litigation Relating to the
Merger on page 43.
8
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND RELATED
MATTERS
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What am I being asked to vote on? |
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TD and TSFG have entered into a merger agreement pursuant to
which TD has agreed to acquire TSFG. You are being asked to vote
to approve the plan of merger contained in the merger agreement.
Under the terms of the merger agreement, Hunt Merger Sub, Inc.
will merge with and into TSFG, with TSFG 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. |
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What will I receive if the merger is completed? |
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Each TSFG shareholder of record will receive, in exchange for
each share of TSFG common stock owned by such shareholder
immediately prior to the merger, either: |
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$0.28 in cash, if a cash election is effectively
made with respect to such share; or
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0.004 TD common shares, plus cash in lieu of any
fractional share interests.
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How do I make a cash election? |
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A form of cash election is included with this proxy
statement/prospectus. TSFG shareholders should carefully review
and follow the instructions in the form of cash election. To
make a cash election, TSFG shareholders must properly complete,
sign and send the form of cash election and the stock
certificates representing the shares of TSFG common stock you
wish to exchange for the cash consideration, a book-entry
delivery of shares or a guarantee of delivery as described on
the form of cash election to BNY Mellon Shareowner Services, the
exchange agent, at the following address: |
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BNY Mellon Shareowner Services |
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480 Washington Boulevard |
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Jersey City, NJ
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The exchange agent must receive the form of cash election and
the stock certificates representing the shares of TSFG common
stock for which a cash election is made, a book-entry delivery
of shares or a guarantee of delivery as described in the form of
cash election by the election deadline. The election deadline
will be 5:00 p.m., New York City time, on
September 28, 2010, the date of the special meeting of TSFG
shareholders, unless the completion of the merger will occur
more than four business days following the date of the special
meeting, in which case the election deadline will be extended
until two business days before the completion of the merger.
If it is determined that the election deadline will not be the
date of the special meeting of TSFG shareholders, TD and TSFG
will publicly announce the election deadline at least five
business days prior to the anticipated completion date of the
merger. |
|
|
|
|
|
If you own shares of TSFG common stock in street
name through a bank, broker or other financial institution
and you wish to make a cash election, you should seek
instructions from the financial institution holding your shares
concerning how to make your cash election. |
|
Q: |
|
Can TSFG shareholders make a cash election for a portion of
their shares of TSFG common stock and receive stock
consideration for the rest? |
|
A: |
|
Yes. The form of cash election provides for a cash election to
be made for all or any portion of a shareholders shares of
TSFG common stock. |
|
Q: |
|
Can TSFG shareholders change their cash election after the
form of cash election has been submitted? |
|
A: |
|
Any form of cash election may be revoked by the TSFG shareholder
submitting it only by written notice received by the exchange
agent prior to 5:00 p.m., New York City time, on the
election deadline. If a form of cash election is revoked, any
certificate for shares of TSFG common stock to which the form of
cash election relates will be promptly returned by the exchange
agent to the TSFG shareholder. |
9
|
|
|
Q: |
|
What if a TSFG shareholder does not submit a form of cash
election or it is not received? |
|
A: |
|
If the exchange agent does not receive a properly completed form
of cash election from you before the election deadline, together
with the stock certificates representing the shares you wish to
exchange for cash, properly endorsed for transfer, a book-entry
delivery of shares or a guarantee of delivery as described in
the form of cash election, then your shares of TSFG common stock
will be exchanged for stock consideration. You bear the risk
of delivery and should send any form of cash election by courier
or by hand to the appropriate addresses shown in the form of
cash election. |
|
Q: |
|
If I will be receiving stock consideration, can the number of
TD common shares to be issued in the merger for each share of
TSFG 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 TSFG 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 23. |
|
|
|
Q: |
|
When and where is the TSFG special meeting? |
|
|
|
A: |
|
The TSFG special meeting will be held at Poinsett Plaza,
2nd Floor,
104 South Main Street, Greenville, SC 29601 on
September 28, 2010 at 10:30 a.m. local time. |
|
|
|
Q: |
|
Who can vote at the special meeting? |
|
|
|
A: |
|
Holders of TSFG common stock and Series M Preferred Stock
as of the close of business on the record date of
August 23, 2010 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 is the quorum requirement for the TSFG special
meeting? |
|
A: |
|
A majority of the votes entitled to be cast on the plan of
merger, consisting of all outstanding shares of TSFG common
stock and the Series M Preferred Stock, voting together as
a single class, constitutes a quorum for transacting business at
the special meeting. |
|
Q: |
|
What vote of TSFG shareholders is required in connection with
the merger? |
|
A: |
|
The affirmative vote of a majority of the votes entitled to be
cast by the holders of TSFG common stock and Series M
Preferred Stock, voting together as a single class, at the
special meeting is required to approve the plan of merger
contained in the merger agreement. |
|
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 contained in the
merger agreement and FOR the proposal to adjourn or
postpone the special meeting, if necessary or appropriate,
including to solicit additional proxies. |
|
Q: |
|
What happens if I abstain from voting or do not vote at
all? |
|
A: |
|
The affirmative vote of a majority of the votes entitled to be
cast by the holders of TSFG common stock and Series M
Preferred Stock, voting together as a single class, at the
special meeting is required to approve the plan of merger
contained in the merger agreement. If you do not vote, or you
abstain from voting, your shares with respect to the proposal to
approve the plan of merger, it will have the same effect as a
vote against the approval of the plan of merger contained in the
merger agreement. If the proposal to approve the plan of merger
contained in the merger agreement receives the required approval
of TSFGs shareholders and the merger is completed, your
shares of TSFG common stock will be converted into the right to
receive the merger consideration even though you did not vote. |
|
|
|
|
|
The affirmative vote of a majority of the votes cast by the
holders of the TSFG common stock and Series M Preferred
Stock, voting together as a single class, at the special meeting
is required to approve the proposal to adjourn or postpone the
special meeting, if necessary or appropriate, including to
solicit additional proxies. If |
10
|
|
|
|
|
you do not vote, or you abstain from voting, your shares with
respect to the proposal to approve such adjournment or
postponement, it will have no effect on such proposal. |
|
|
|
Additionally, if you do not vote your shares with respect to the
proposal to approve the plan of merger contained in the merger
agreement or the proposal to adjourn or postpone the special
meeting, if necessary or appropriate, including to solicit
additional proxies, then your vote will not be counted toward
the quorum requirement at the TSFG 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 TSFG 401(k) Plan, what should I
do? |
|
|
|
A: |
|
If you are a participant in The South Financial Group, Inc.
401(k) Plan, you may give voting instructions for any shares of
TSFG common stock held in your account to Ellen Philip
Associates, Inc., TSFGs 401(k) Plan Tabulator, 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.
TSFGs 401(k) Plan Tabulator 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: |
|
If my shares are held in the TSFG Deferred Compensation Plan,
will I be allowed to vote these shares in the merger? |
|
|
|
A: |
|
If you participate in the 2005 Executive and Director Deferred
Compensation Plan (the Deferred Compensation Plan),
you will not be entitled to vote any shares of TSFG common stock
held for your benefit under such plan. The trustee of the
Deferred Compensation Plan may, in its discretion, vote any
shares of TSFG common stock held under the plan. |
|
|
|
Q: |
|
When do you expect the merger to be completed? |
|
|
|
A: |
|
We currently expect to complete the merger shortly after the
special meeting, assuming all regulatory approvals have been
received. 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 TSFG 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 52. |
|
|
|
Q: |
|
What are the material United States federal and Canadian
income tax consequences of the merger to TSFG shareholders? |
|
|
|
A: |
|
For a U.S. holder (as defined in The Merger
Material United States Federal Income Tax Consequences
beginning on page 46), we believe that the merger will be
treated for United States federal income tax purposes as a
taxable sale by such holder of the shares of TSFG common stock
that such holder surrenders in |
11
|
|
|
|
|
the merger. Accordingly, the expected material United States
federal income tax consequences of the merger to U.S. holders
are as follows: |
|
|
|
A U.S. holder will generally recognize gain or loss
equal to the difference between (1) the sum of any cash
consideration (including any cash received in lieu of fractional
shares) and the fair market value of any TD common shares
received in the merger and (2) such holders adjusted
tax basis in the shares of TSFG common stock surrendered in the
merger for TD common shares and/or cash;
|
|
|
|
|
|
A U.S. holders aggregate tax basis in the TD
common shares, if any, 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. holders holding period for the TD
common shares, if any, that such holder receives in the merger
should generally begin on the day after the completion of the
merger.
|
|
|
|
|
|
The merger will generally not be a taxable transaction to a
non-U.S.
holder for United States federal income tax purposes unless such
non-U.S.
holder has certain connections to the United States. |
|
|
|
|
|
See The Merger Material United States Federal
Income Tax Consequences beginning on page 46. |
|
|
|
|
|
The merger should not give rise to Canadian income tax liability
for TSFG shareholders who are not residents of Canada for
Canadian income tax purposes. See The Merger
Material Canadian Federal Income Tax Considerations
beginning on page 50. |
|
|
|
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 TSFG at the address below, stating that
you would like to revoke your proxy.
|
The South Financial Group, Inc.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, SC 29601
Attn: William P. Crawford, Jr.
|
|
|
|
|
Second, you may complete and submit a new proxy card
or vote again by telephone or the Internet. Your latest vote
actually received by TSFG 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.
|
If you have instructed a bank, broker or other nominee to vote
your shares, you must follow the directions you receive from
your bank, broker or other nominee in order to change or revoke
your vote.
|
|
|
Q: |
|
If I want to attend the special meeting, what do I do? |
|
|
|
A: |
|
You should come to Poinsett Plaza,
2nd
Floor, 104 South Main Street, Greenville, SC 29601, at
10:30 a.m., local time, on September 28, 2010. 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: |
|
If you are making a cash election, you should send in your TSFG
stock certificates to the exchange agent with your form of cash
election. If you are NOT making a cash election with respect to
your shares of TSFG common stock, after the completion of the
merger, you will receive a letter of transmittal for you to use
in |
12
|
|
|
|
|
surrendering any TSFG stock certificates you have at the time of
the completion of the merger. Please DO NOT send your TSFG 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 TSFG 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 TSFG stock certificates
after looking for them carefully, we urge you to contact
TSFGs transfer agent, Registrar and Transfer Company, as
soon as possible and follow the procedure they explain to you
for replacing your TSFG stock certificates. Registrar and
Transfer Company can be reached at
(800) 368-5948
or on their website at
http://www.rtco.com,
or you can write to them at the following address: |
Registrar
and Transfer Company
10 Commerce Drive
Cranford, NJ
07016-3572
|
|
|
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 23. |
|
|
|
Q: |
|
Can I dissent and require appraisal of my shares? |
|
|
|
A: |
|
No. Under South Carolina law, TSFGs shareholders are
not entitled to appraisal rights in connection with the merger.
See The Merger No Dissenters Rights of
Appraisal beginning on page 56. |
|
|
|
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: |
Innisfree
M&A Incorporated
501 Madison Avenue
New York, NY 10022
Toll free telephone: (877) 717 3929
Brokers and banks, please call: (212) 750 5833
COMPARATIVE
PER SHARE DATA
The following tables present, as at the dates and for the
periods indicated, selected historical and pro forma
consolidated per share financial information of TD and TSFG.
You should read this information in conjunction with, and the
information is qualified in its entirety by, the consolidated
financial statements and accompanying notes of TD and TSFG
incorporated into this proxy statement/prospectus by reference.
See Where You Can Find More Information beginning on
page 96.
The pro forma amounts in the tables below are presented for
informational purposes only. You should not rely on the pro
forma combined or pro forma equivalent amounts as being
necessarily indicative of the financial position or results of
operations of TD or TSFG that would have actually occurred had
the transaction been effective during the periods presented or
of the future financial position or results of operations of TD
or TSFG. The combined financial information as at or for the
periods presented may have been different had the transaction
actually been effective as at or during those periods. The pro
forma information, although helpful in illustrating the
financial characteristics of the combined company under one set
of assumptions, does not reflect the benefits of expected cost
savings, opportunities to earn additional revenue, the impact of
restructuring and merger-related costs, or other factors that
may result as a consequence of the merger and, accordingly, does
not attempt to predict or suggest future results.
13
TD
Historical and Pro Forma Common Share Data
The following table presents, in Canadian dollars and in
U.S. dollars, the earnings per share, dividends per share
and book value per share with respect to TD on a historical
basis and pro forma combined basis giving effect to the
transaction and assuming that no TSFG shareholder makes a cash
election. The TD pro forma combined amounts are presented as if
the transaction had been effective for the period presented
based on the purchase method of accounting. The TD pro forma
combined amounts do not include any cost savings or revenue
enhancements which may arise from the transaction, and do not
include restructuring or integration costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at and for the
|
|
|
|
|
Six Months Ended
|
|
As at and for the Year Ended
|
|
|
April 30, 2010
|
|
October 31, 2009
|
|
|
(C$)(2)
|
|
(U.S.$)(1)
|
|
(C$)
|
|
(U.S.$)(1)
|
|
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TD historical (Canadian GAAP)
|
|
C$
|
2.76
|
|
|
US$
|
2.65
|
|
|
C$
|
3.49
|
|
|
US$
|
2.98
|
|
TD historical (U.S. GAAP)
|
|
|
2.33
|
|
|
|
2.24
|
|
|
|
4.25
|
|
|
|
3.63
|
|
TD pro forma combined (Canadian GAAP)(3)
|
|
|
2.29
|
|
|
|
2.20
|
|
|
|
2.53
|
|
|
|
2.15
|
|
TD pro forma combined (U.S. GAAP)(3)
|
|
|
1.86
|
|
|
|
1.79
|
|
|
|
3.29
|
|
|
|
2.80
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TD historical (Canadian GAAP)
|
|
|
2.74
|
|
|
|
2.63
|
|
|
|
3.47
|
|
|
|
2.97
|
|
TD historical (U.S. GAAP)
|
|
|
2.31
|
|
|
|
2.22
|
|
|
|
4.23
|
|
|
|
3.62
|
|
TD pro forma combined (Canadian GAAP)(3)
|
|
|
2.28
|
|
|
|
2.19
|
|
|
|
2.52
|
|
|
|
2.14
|
|
TD pro forma combined (U.S. GAAP)(3)
|
|
|
1.85
|
|
|
|
1.78
|
|
|
|
3.28
|
|
|
|
2.79
|
|
Dividends Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TD historical and pro forma(4)
|
|
|
1.22
|
|
|
|
1.17
|
|
|
|
2.44
|
|
|
|
2.09
|
|
Book Value Per Share at Period End:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TD historical (Canadian GAAP)
|
|
|
40.35
|
|
|
|
39.89
|
|
|
|
41.13
|
|
|
|
38.18
|
|
TD historical (U.S. GAAP)
|
|
|
39.54
|
|
|
|
39.08
|
|
|
|
39.89
|
|
|
|
37.02
|
|
TD pro forma combined (Canadian GAAP)(3)
|
|
|
39.92
|
|
|
|
39.47
|
|
|
|
40.23
|
|
|
|
37.39
|
|
TD pro forma combined (U.S. GAAP)(3)
|
|
|
39.11
|
|
|
|
38.67
|
|
|
|
38.98
|
|
|
|
36.24
|
|
|
|
|
(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 six months ended
April 30, 2010 of 1.040 and the year ended October 31,
2009 of 1.170. The average exchange rate is calculated as the
average of the noon rate on each day during the period as
reported by the Bank of Canada. 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 April 30, 2010 of 1.012 at
October 31, 2009 of 1.077. 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 Bank of Canada. |
|
|
|
(2) |
|
TSFG balances included in the pro forma combined amounts (except
with respect to book value per share at period end) have been
converted into Canadian dollars based on the average U.S.
dollar/Canadian dollar exchange rate during the six months ended
June 30, 2010 of 1.034 and the year ended December 31,
2009 of 1.142. The average exchange rate is calculated as the
average of the noon rate of each day during the period as
reported by the Bank of Canada. |
|
|
|
(3) |
|
Pro forma combined amounts are calculated by adding together the
historical amounts reported by TD and TSFG based on each
entitys 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 upon close of
the transaction 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 six months ended
April 30, 2010 and year ended October 31, 2009 were
calculated using the latest annual financial information filed
with the SEC. TSFGs results for the six months |
14
|
|
|
|
|
ended June 30, 2010 and the twelve months ended
December 31, 2009 have been used to calculate the TD pro
forma combined results for the six months ended April 30,
2010 and the year ended October 31, 2009. |
|
|
|
(4) |
|
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. |
TSFG
Historical Share Data and Unaudited Pro Forma Equivalent Share
Data
The following table presents, in U.S. dollars, the earnings
per share, dividends per share and book value per share with
respect to TSFG on a historical basis and pro forma equivalent
basis. The pro forma equivalent amounts with respect to the TSFG
common stock are calculated by multiplying the corresponding TD
pro forma combined amount (which is described and presented
under TD Historical and Pro Forma Common Share
Data beginning on page 14) by the exchange ratio
of 0.004 TD common shares constituting the stock consideration,
and assume no TSFG shareholder makes a cash election. Since TSFG
and TD have different fiscal years, the pro forma equivalent for
the six months ended June 30, 2010 has been compared with
TDs six months ended April 30, 2010 and the pro forma
equivalent for fiscal year ended December 31, 2009 has been
compared with TDs fiscal year ended October 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
As at and for
|
|
As at and for
|
|
|
the Six Months
|
|
the Year Ended
|
|
|
Ended June 30,
|
|
December 31,
|
|
|
2010
|
|
2009
|
|
|
(U.S.$)
|
|
(U.S.$)
|
|
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
|
TSFG historical
|
|
$
|
(1.86
|
)
|
|
$
|
(5.22
|
)
|
TSFG pro forma equivalent (Canadian GAAP)
|
|
|
0.01
|
|
|
|
0.01
|
|
TSFG pro forma equivalent (U.S. GAAP)
|
|
|
0.01
|
|
|
|
0.01
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
|
TSFG historical
|
|
|
(1.86
|
)
|
|
|
(5.22
|
)
|
TSFG pro forma equivalent (Canadian GAAP)
|
|
|
0.01
|
|
|
|
0.01
|
|
TSFG pro forma equivalent (U.S. GAAP)
|
|
|
0.01
|
|
|
|
0.01
|
|
Dividends Per Share:
|
|
|
|
|
|
|
|
|
TSFG historical
|
|
|
|
|
|
|
0.02
|
|
TSFG pro forma equivalent
|
|
|
0.00
|
|
|
|
0.01
|
|
Book Value Per Share at Period End:
|
|
|
|
|
|
|
|
|
TSFG historical(1)
|
|
|
1.31
|
|
|
|
3.06
|
|
TSFG pro forma equivalent (Canadian GAAP)
|
|
|
0.16
|
|
|
|
0.15
|
|
TSFG pro forma equivalent (U.S. GAAP)
|
|
|
0.15
|
|
|
|
0.14
|
|
|
|
|
(1) |
|
The TSFG historical book value per share for December 31,
2009 has been adjusted for the mandatorily convertible preferred
shares totaling $4.65 million which were converted into
715,383 shares of TSFG common stock in May 2010. Also
excludes outstanding balances for the $347 million of
Series 2008-T
Preferred Stock issued to the U.S. Treasury. |
15
COMPARATIVE
PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
TDs common shares are listed on the Toronto Stock Exchange
and the New York Stock Exchange under the trading symbol
TD. Effective June 7, 2010, the listing of
TSFGs common stock has been transferred from the Nasdaq
Global Select Market to the Nasdaq Capital Market. TSFGs
common stock continues to trade under the trading symbol
TSFG. The following table sets forth, for the
respective calendar years and quarters indicated, the high and
low closing prices per share of TSFG common stock as reported on
the Nasdaq Global Select Market (prior to June 7,
2010) or the Nasdaq Capital Market (from and after
June 7, 2010, as applicable), and the high and low closing
prices per TD common share as reported on the New York Stock
Exchange Composite Tape and the Toronto Stock Exchange. The
Toronto Stock Exchange closing prices of TD common shares are
presented in Canadian dollars, and the New York Stock Exchange
closing prices of TSFG common stock and TD common shares are
presented in U.S. dollars. For comparison purposes, the
following table uses calendar quarters, but it should be noted
that TDs fiscal year end is October 31 and TSFGs
fiscal year end is December 31.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Nasdaq Global
|
|
The New York Stock
|
|
The Toronto Stock
|
|
|
Select Market
|
|
Exchange
|
|
Exchange
|
|
|
(U.S.$)
|
|
(U.S.$)
|
|
(C$)
|
|
|
TSFG Common Stock
|
|
TD Common Shares
|
|
TD Common Shares
|
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
U.S.$
|
32.20
|
|
|
U.S.$
|
25.86
|
|
|
U.S.$
|
52.85
|
|
|
U.S.$
|
38.92
|
|
|
C$
|
61.60
|
|
|
C$
|
48.15
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
28.33
|
|
|
|
25.14
|
|
|
|
60.57
|
|
|
|
49.85
|
|
|
|
70.04
|
|
|
|
56.00
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
27.38
|
|
|
|
15.57
|
|
|
|
76.94
|
|
|
|
57.55
|
|
|
|
76.33
|
|
|
|
64.48
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
17.93
|
|
|
|
2.85
|
|
|
|
72.24
|
|
|
|
32.51
|
|
|
|
71.89
|
|
|
|
40.00
|
|
First Quarter
|
|
|
17.93
|
|
|
|
12.61
|
|
|
|
69.95
|
|
|
|
59.29
|
|
|
|
69.50
|
|
|
|
60.27
|
|
Second Quarter
|
|
|
14.62
|
|
|
|
3.89
|
|
|
|
72.24
|
|
|
|
61.31
|
|
|
|
71.89
|
|
|
|
62.40
|
|
Third Quarter
|
|
|
10.44
|
|
|
|
3.02
|
|
|
|
63.02
|
|
|
|
53.24
|
|
|
|
64.94
|
|
|
|
53.51
|
|
Fourth Quarter
|
|
|
9.11
|
|
|
|
2.85
|
|
|
|
60.99
|
|
|
|
32.51
|
|
|
|
64.08
|
|
|
|
40.00
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
4.47
|
|
|
|
0.54
|
|
|
|
64.74
|
|
|
|
26.20
|
|
|
|
69.49
|
|
|
|
32.80
|
|
First Quarter
|
|
|
4.47
|
|
|
|
0.69
|
|
|
|
39.45
|
|
|
|
26.20
|
|
|
|
46.56
|
|
|
|
32.80
|
|
Second Quarter
|
|
|
2.89
|
|
|
|
1.10
|
|
|
|
53.40
|
|
|
|
34.58
|
|
|
|
61.31
|
|
|
|
43.46
|
|
Third Quarter
|
|
|
2.05
|
|
|
|
1.05
|
|
|
|
64.45
|
|
|
|
48.30
|
|
|
|
69.49
|
|
|
|
56.31
|
|
Fourth Quarter
|
|
|
1.56
|
|
|
|
0.54
|
|
|
|
64.74
|
|
|
|
57.24
|
|
|
|
69.25
|
|
|
|
61.68
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
0.89
|
|
|
|
0.35
|
|
|
|
74.92
|
|
|
|
58.38
|
|
|
|
76.50
|
|
|
|
61.75
|
|
Second Quarter(1)
|
|
|
0.93
|
|
|
|
0.26
|
|
|
|
76.84
|
|
|
|
64.91
|
|
|
|
76.97
|
|
|
|
68.59
|
|
Third Quarter
(through August 23, 2010)
|
|
|
0.28
|
|
|
|
0.27
|
|
|
|
72.85
|
|
|
|
64.10
|
|
|
|
74.46
|
|
|
|
68.25
|
|
|
|
|
(1) |
|
Effective June 7, 2010, TSFGs common stock is listed
on the Nasdaq Capital Market. |
16
The table below sets forth the high and low closing prices for
each of the six most recent full calendar months for TSFG common
stock as reported on the applicable Nasdaq market and TD common
shares as reported on the New York Stock Exchange Composite Tape
and the Toronto Stock Exchange. The New York Stock Exchange and
Nasdaq closing prices of TSFG common stock and TD common shares
are presented in U.S. dollars and the Toronto Stock
Exchange closing prices of TD common shares are presented in
Canadian dollars.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Nasdaq Global
|
|
The New York Stock
|
|
The Toronto Stock
|
|
|
Select Market
|
|
Exchange
|
|
Exchange
|
|
|
(U.S.$)
|
|
(U.S.$)
|
|
(C$)
|
|
|
TSFG Common
|
|
TD Common
|
|
TD Common
|
|
|
Stock
|
|
Shares
|
|
Shares
|
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
February 2010
|
|
|
0.57
|
|
|
|
0.35
|
|
|
|
63.89
|
|
|
|
58.45
|
|
|
|
67.24
|
|
|
|
62.69
|
|
March 2010
|
|
|
0.89
|
|
|
|
0.56
|
|
|
|
74.92
|
|
|
|
64.76
|
|
|
|
76.50
|
|
|
|
67.55
|
|
April 2010
|
|
|
0.93
|
|
|
|
0.66
|
|
|
|
76.84
|
|
|
|
73.01
|
|
|
|
76.97
|
|
|
|
73.41
|
|
May 2010
|
|
|
0.77
|
|
|
|
0.27
|
|
|
|
74.91
|
|
|
|
65.81
|
|
|
|
75.70
|
|
|
|
70.32
|
|
June 2010
|
|
|
0.29
|
|
|
|
0.26
|
|
|
|
71.98
|
|
|
|
64.91
|
|
|
|
73.63
|
|
|
|
68.59
|
|
July 2010
|
|
|
0.28
|
|
|
|
0.27
|
|
|
|
71.61
|
|
|
|
64.10
|
|
|
|
74.46
|
|
|
|
68.25
|
|
The table below sets forth the closing sale prices of TD common
shares as reported on the New York Stock Exchange Composite Tape
and TSFG common stock as reported on the Nasdaq Global Select
Market and Nasdaq Capital Market, respectively, on May 14,
2010, the last trading day before the public announcement of the
merger, and August 23, 2010, the last practicable trading
day before the distribution of this proxy statement/prospectus.
The table also sets forth the equivalent pro forma sale price of
TSFG common stock on each of these dates, as determined by
multiplying the applicable closing sale price of TD common
shares on the New York Stock Exchange by the exchange ratio of
0.004 and assuming no cash election is made. We urge you to
obtain current market quotations for both TD common shares and
TSFG common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSFG Common Stock Pro
|
|
|
|
|
|
|
Forma Equivalent
|
|
|
|
|
TSFG
|
|
(Assuming No
|
|
|
TD Common
|
|
Common
|
|
Cash Election)
|
|
|
Shares (U.S.$)
|
|
Stock (U.S.$)
|
|
(U.S.$)
|
|
May 14, 2010
|
|
$
|
70.89
|
|
|
$
|
0.67
|
|
|
$
|
0.28
|
|
August 23, 2010
|
|
$
|
67.05
|
|
|
$
|
0.2760
|
|
|
$
|
0.2682
|
|
The table below sets forth the dividends declared per TD common
share and per share of TSFG common stock for the fiscal years
ended 2005, 2006, 2007, 2008 and 2009. TDs fiscal year end
is October 31 and TSFGs fiscal year end is
December 31.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared Dividends
|
|
|
TD
|
|
TD
|
|
TSFG
|
|
|
(C$)(1)
|
|
(U.S.$)(1)(2)
|
|
(U.S.$)
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
C$
|
1.58
|
|
|
U.S.$
|
1.17
|
|
|
U.S.$
|
0.65
|
|
2006
|
|
|
1.78
|
|
|
|
1.46
|
|
|
|
0.69
|
|
2007
|
|
|
2.11
|
|
|
|
1.98
|
|
|
|
0.73
|
|
2008
|
|
|
2.36
|
|
|
|
2.23
|
|
|
|
0.22
|
|
2009
|
|
|
2.44
|
|
|
|
2.09
|
|
|
|
0.02
|
|
|
|
|
(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 Bank of Canada on each dividend
payment date. |
17
CURRENCY
EXCHANGE RATE DATA
The following tables show, for the date or periods indicated,
certain information regarding the U.S. dollar/Canadian
dollar exchange rate and the Canadian dollar/U.S. dollar
exchange rate. The information is based on the noon buying rate
as reported by the Bank of Canada.
|
|
|
|
|
|
|
|
|
|
|
C$ per
|
|
U.S.$ per
|
|
|
U.S.$1.00
|
|
C$1.00
|
|
May 14, 2010 (the last trading day before public
announcement of the merger)
|
|
C$
|
1.0344
|
|
|
U.S.$
|
0.9667
|
|
August 23, 2010
|
|
C$
|
1.0523
|
|
|
U.S.$
|
0.9503
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Rate(1)
|
|
|
C$ per
|
|
U.S.$
|
|
|
U.S.$1.00
|
|
per C$1.00
|
|
Year Ended October 31,
|
|
|
|
|
|
|
|
|
2005
|
|
C$
|
1.2175
|
|
|
U.S.$
|
0.8213
|
|
2006
|
|
|
1.1386
|
|
|
|
0.8783
|
|
2007
|
|
|
1.1003
|
|
|
|
0.9089
|
|
2008
|
|
|
1.0275
|
|
|
|
0.9732
|
|
2009
|
|
|
1.1693
|
|
|
|
0.8552
|
|
Six Months Ended April 30,
|
|
|
|
|
|
|
|
|
2009
|
|
|
1.2359
|
|
|
|
0.8091
|
|
2010
|
|
|
1.0397
|
|
|
|
0.9618
|
|
|
|
|
(1) |
|
The average rate is calculated as the average of the noon buying
rate as reported by the Bank of Canada on the last day of each
month during the period. |
The following table shows the high and low
U.S. dollar/Canadian dollar exchange rates for each of the
months indicated. The information is based on the noon buying
rate as reported by the Bank of Canada.
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
|
(C$ per U.S.$1.00)
|
|
February 2010
|
|
C$
|
1.0734
|
|
|
C$
|
1.0420
|
|
March 2010
|
|
|
1.0421
|
|
|
|
1.0113
|
|
April 2010
|
|
|
1.0201
|
|
|
|
0.9961
|
|
May 2010
|
|
|
1.0778
|
|
|
|
1.0116
|
|
June 2010
|
|
|
1.0648
|
|
|
|
1.0138
|
|
July 2010
|
|
|
1.0678
|
|
|
|
1.0256
|
|
18
SELECTED
HISTORICAL CONSOLIDATED FINANCIAL DATA OF TD
The following table sets forth certain selected consolidated
financial information of TD prepared in accordance with
generally accepted accounting principles in Canada (which we
refer to in this document as Canadian GAAP), except as otherwise
indicated. The information as at and for each of the years in
the five-year period ended October 31, 2009 has been
derived from the consolidated financial statements of TD as
filed with the SEC. The information as at and for the six-month
periods ended April 30, 2010 and April 30, 2009 has
been derived from the unaudited interim consolidated financial
statements of TD and the notes thereto filed by TD with the SEC,
which reflect, in the opinion of TDs management, all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such information. Results
for interim periods are not necessarily indicative of results
which may be expected for any other interim period or for the
fiscal year as a whole. The information presented below is only
a summary and should be read in conjunction with the respective
audited financial statements of TD, including the notes thereto,
incorporated by reference in this proxy statement/prospectus.
See Where You Can Find More Information beginning on
page 96.
Amounts determined under generally accepted accounting
principles in the U.S. (which we refer to in this document
as U.S. GAAP) are different from those determined under
Canadian GAAP. For a reconciliation to U.S. GAAP of
TDs consolidated financial statements for the six months
ended April 30, 2010, see TDs
Form 6-K
for the six months ended April 30, 2010, filed with the SEC
on May 27, 2010, and for a discussion of the principal
differences between Canadian GAAP and U.S. GAAP and a
reconciliation to U.S. GAAP of TDs consolidated
financial statements for the year ended October 31, 2009,
see Exhibit 99.4 to TDs
Form 40-F
for the year ended October 31, 2009, filed with the SEC on
December 3, 2009, which Exhibit 99.4 is incorporated
by reference in this proxy statement/prospectus. A
reconciliation to U.S. GAAP for other periods presented is
included in the notes to the applicable historical consolidated
financial statements of TD filed by TD with the SEC. See
Where You Can Find More Information beginning on
page 96.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the Six
|
|
|
|
|
|
|
Months Ended April 30,
|
|
|
Fiscal Year Ended October 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(C$ in millions, except per share data and ratios)
|
|
|
Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
8,518
|
|
|
|
10,103
|
|
|
|
18,887
|
|
|
|
19,584
|
|
|
|
17,852
|
|
|
|
15,569
|
|
|
|
12,776
|
|
Interest expense
|
|
|
2,879
|
|
|
|
4,435
|
|
|
|
7,561
|
|
|
|
11,052
|
|
|
|
10,928
|
|
|
|
9,198
|
|
|
|
6,768
|
|
Net interest income
|
|
|
5,639
|
|
|
|
5,668
|
|
|
|
11,326
|
|
|
|
8,532
|
|
|
|
6,924
|
|
|
|
6,371
|
|
|
|
6,008
|
|
Provision for (recovery of) credit losses
|
|
|
882
|
|
|
|
1,402
|
|
|
|
2,480
|
|
|
|
1,063
|
|
|
|
645
|
|
|
|
409
|
|
|
|
55
|
|
Net interest income after credit loss provision
|
|
|
4,757
|
|
|
|
4,266
|
|
|
|
8,846
|
|
|
|
7,469
|
|
|
|
6,279
|
|
|
|
5,962
|
|
|
|
5,953
|
|
Other income
|
|
|
4,165
|
|
|
|
2,807
|
|
|
|
6,534
|
|
|
|
6,137
|
|
|
|
7,357
|
|
|
|
6,821
|
|
|
|
5,951
|
|
Non-interest expenses
|
|
|
5,934
|
|
|
|
6,071
|
|
|
|
12,211
|
|
|
|
9,502
|
|
|
|
8,975
|
|
|
|
8,815
|
|
|
|
8,844
|
|
Dilution gain (net)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,559
|
|
|
|
0
|
|
Net income (loss)
|
|
|
2,473
|
|
|
|
1,198
|
|
|
|
3,120
|
|
|
|
3,833
|
|
|
|
3,997
|
|
|
|
4,603
|
|
|
|
2,229
|
|
Net income (loss) (U.S. GAAP basis)
|
|
|
2,115
|
|
|
|
2,297
|
|
|
|
3,792
|
|
|
|
3,922
|
|
|
|
4,108
|
|
|
|
4,618
|
|
|
|
2,144
|
|
Preferred dividends
|
|
|
97
|
|
|
|
70
|
|
|
|
167
|
|
|
|
59
|
|
|
|
20
|
|
|
|
22
|
|
|
|
0
|
|
Net income (loss) applicable to common shares
|
|
|
2,376
|
|
|
|
1,128
|
|
|
|
2,953
|
|
|
|
3,774
|
|
|
|
3,977
|
|
|
|
4,581
|
|
|
|
2,229
|
|
Net income (loss) applicable to common shares (U.S. GAAP basis)
|
|
|
2,005
|
|
|
|
2,214
|
|
|
|
3,599
|
|
|
|
3,828
|
|
|
|
4,053
|
|
|
|
4,559
|
|
|
|
2,089
|
|
Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (basic)
|
|
|
2.76
|
|
|
|
1.34
|
|
|
|
3.49
|
|
|
|
4.90
|
|
|
|
5.53
|
|
|
|
6.39
|
|
|
|
3.22
|
|
Net income (basic) (U.S. GAAP basis)
|
|
|
2.33
|
|
|
|
2.63
|
|
|
|
4.25
|
|
|
|
4.97
|
|
|
|
5.64
|
|
|
|
6.36
|
|
|
|
3.02
|
|
Net income (fully diluted)
|
|
|
2.74
|
|
|
|
1.34
|
|
|
|
3.47
|
|
|
|
4.87
|
|
|
|
5.48
|
|
|
|
6.34
|
|
|
|
3.20
|
|
Net income (fully diluted) (U.S. GAAP basis)
|
|
|
2.31
|
|
|
|
2.63
|
|
|
|
4.23
|
|
|
|
4.93
|
|
|
|
5.59
|
|
|
|
6.31
|
|
|
|
3.00
|
|
Cash dividends declared
|
|
|
1.22
|
|
|
|
1.22
|
|
|
|
2.44
|
|
|
|
2.36
|
|
|
|
2.11
|
|
|
|
1.78
|
|
|
|
1.58
|
|
Book value (period end)
|
|
|
40.35
|
|
|
|
43.47
|
|
|
|
41.13
|
|
|
|
36.78
|
|
|
|
29.23
|
|
|
|
26.77
|
|
|
|
22.29
|
|
Consolidated Balance Sheet (period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
573,905
|
|
|
|
575,628
|
|
|
|
557,219
|
|
|
|
563,214
|
|
|
|
422,124
|
|
|
|
392,914
|
|
|
|
365,210
|
|
Total assets (U.S. GAAP basis)
|
|
|
542,157
|
|
|
|
515,389
|
|
|
|
518,176
|
|
|
|
497,612
|
|
|
|
428,602
|
|
|
|
400,616
|
|
|
|
371,746
|
|
Loans (net)
|
|
|
254,001
|
|
|
|
242,813
|
|
|
|
253,128
|
|
|
|
219,624
|
|
|
|
175,915
|
|
|
|
160,608
|
|
|
|
152,243
|
|
Deposits
|
|
|
404,492
|
|
|
|
401,955
|
|
|
|
391,034
|
|
|
|
375,694
|
|
|
|
276,393
|
|
|
|
260,907
|
|
|
|
246,981
|
|
Subordinated notes
|
|
|
12,328
|
|
|
|
12,469
|
|
|
|
12,383
|
|
|
|
12,436
|
|
|
|
9,449
|
|
|
|
6,900
|
|
|
|
5,138
|
|
Total shareholders equity
|
|
|
38,424
|
|
|
|
40,372
|
|
|
|
38,720
|
|
|
|
31,674
|
|
|
|
21,404
|
|
|
|
19,632
|
|
|
|
15,866
|
|
Common shares outstanding (in millions)
|
|
|
868.2
|
|
|
|
850.6
|
|
|
|
858.8
|
|
|
|
810.1
|
|
|
|
717.8
|
|
|
|
717.4
|
|
|
|
711.8
|
|
Selected Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on total common equity
|
|
|
13.5
|
|
|
|
6.4
|
|
|
|
8.4
|
|
|
|
14.4
|
|
|
|
19.3
|
|
|
|
25.5
|
|
|
|
15.3
|
|
Net impaired loans net of specific allowance as a % of net loans
0.2
|
|
|
0.9
|
|
|
|
0.5
|
|
|
|
0.7
|
|
|
|
0.4
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.1
|
|
Efficiency ratio(1)
|
|
|
60.5
|
|
|
|
71.6
|
|
|
|
68.4
|
|
|
|
64.8
|
|
|
|
62.8
|
|
|
|
59.8
|
|
|
|
74.0
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and for the Six
|
|
|
|
|
|
|
Months Ended April 30,
|
|
|
Fiscal Year Ended October 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(C$ in millions, except per share data and ratios)
|
|
|
Provision for credit losses as a % of net average loans
|
|
|
0.68
|
|
|
|
1.12
|
|
|
|
0.97
|
|
|
|
0.50
|
|
|
|
0.37
|
|
|
|
0.25
|
|
|
|
0.04
|
|
Tier 1 capital to risk weighted assets(2)
|
|
|
12.0
|
|
|
|
10.8
|
|
|
|
11.3
|
|
|
|
9.8
|
|
|
|
10.3
|
|
|
|
12.0
|
|
|
|
10.1
|
|
Total capital to risk-weighted assets(2)
|
|
|
15.5
|
|
|
|
14.2
|
|
|
|
14.9
|
|
|
|
12.0
|
|
|
|
13.0
|
|
|
|
13.1
|
|
|
|
13.2
|
|
Common dividend payout ratio
|
|
|
44.3
|
|
|
|
91.7
|
|
|
|
70.3
|
|
|
|
49.0
|
|
|
|
38.1
|
|
|
|
27.9
|
|
|
|
49.3
|
|
|
|
|
* |
|
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
periods presentation. |
|
|
|
(1) |
|
Non-interest expenses, as a percentage of total revenue. |
|
(2) |
|
Risk-weighted assets are determined in accordance with
applicable Canadian bank regulations. |
20
SELECTED
HISTORICAL CONSOLIDATED FINANCIAL DATA OF TSFG
The following table sets forth certain selected consolidated
financial information of TSFG prepared in accordance with
U.S. GAAP. This information as at and for each of the years
in the five year period ended December 31, 2009 has been
derived from the consolidated financial statements of TSFG and
notes to the consolidated financial statements as filed with the
SEC. The information as at and for the six-month periods ended
June 30, 2010 and June 30, 2009 has been derived from
the unaudited consolidated financial statements of TSFG and the
notes thereto filed by TSFG with the SEC, which reflect, in the
opinion of TSFGs management, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair
presentation of such information. Results for interim periods
are not necessarily indicative of results which may be expected
for any other interim period or for the fiscal year as a whole.
The information presented below is only a summary and should be
read in conjunction with the respective audited and unaudited
financial statements of TSFG, including the notes thereto,
incorporated by reference in this proxy statement/prospectus.
See Where You Can Find More Information beginning on
page 96.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Six
|
|
|
|
|
|
|
Months Ended June 30
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(US$ and shares in thousands, except per share data, ratios,
branch offices and employees)
|
|
|
Earnings Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
142,993
|
|
|
$
|
170,948
|
|
|
$
|
331,532
|
|
|
$
|
380,163
|
|
|
$
|
382,781
|
|
|
$
|
401,371
|
|
|
$
|
409,056
|
|
Noninterest income
|
|
|
58,097
|
|
|
|
56,013
|
|
|
|
118,033
|
|
|
|
121,967
|
|
|
|
113,712
|
|
|
|
118,210
|
|
|
|
43,893
|
|
Total revenue
|
|
|
201,090
|
|
|
|
226,961
|
|
|
|
449,565
|
|
|
|
502,130
|
|
|
|
496,493
|
|
|
|
519,581
|
|
|
|
452,949
|
|
Provision for loan losses
|
|
|
209,007
|
|
|
|
273,964
|
|
|
|
668,904
|
|
|
|
344,589
|
|
|
|
68,568
|
|
|
|
32,789
|
|
|
|
40,592
|
|
Noninterest expenses
|
|
|
389,106
|
|
|
|
226,429
|
|
|
|
419,121
|
|
|
|
792,233
|
|
|
|
321,249
|
|
|
|
326,244
|
|
|
|
316,736
|
|
(Loss) income from continuing ops
|
|
|
(390,139
|
)
|
|
|
(164,079
|
)
|
|
|
(676,254
|
)
|
|
|
(547,118
|
)
|
|
|
73,276
|
|
|
|
112,866
|
|
|
|
70,217
|
|
Net (loss) income
|
|
|
(390,139
|
)
|
|
|
(164,079
|
)
|
|
|
(676,254
|
)
|
|
|
(547,118
|
)
|
|
|
73,276
|
|
|
|
112,866
|
|
|
|
69,821
|
|
Net (loss) income available to common shareholders
|
|
|
(400,732
|
)
|
|
|
(202,296
|
)
|
|
|
(736,943
|
)
|
|
|
(568,776
|
)
|
|
|
72,611
|
|
|
|
112,348
|
|
|
|
69,653
|
|
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing ops
|
|
$
|
(1.86
|
)
|
|
$
|
(2.34
|
)
|
|
$
|
(5.22
|
)
|
|
$
|
(7.78
|
)
|
|
$
|
0.99
|
|
|
$
|
1.50
|
|
|
$
|
0.96
|
|
Net (loss) income
|
|
|
(1.86
|
)
|
|
|
(2.34
|
)
|
|
|
(5.22
|
)
|
|
|
(7.78
|
)
|
|
|
0.99
|
|
|
|
1.50
|
|
|
|
0.95
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing ops
|
|
|
(1.86
|
)
|
|
|
(2.34
|
)
|
|
|
(5.22
|
)
|
|
|
(7.78
|
)
|
|
|
0.98
|
|
|
|
1.49
|
|
|
|
0.94
|
|
Net (loss) income
|
|
|
(1.86
|
)
|
|
|
(2.34
|
)
|
|
|
(5.22
|
)
|
|
|
(7.78
|
)
|
|
|
0.98
|
|
|
|
1.49
|
|
|
|
0.93
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
215,756
|
|
|
|
86,629
|
|
|
|
141,208
|
|
|
|
73,137
|
|
|
|
73,618
|
|
|
|
74,940
|
|
|
|
73,307
|
|
Diluted
|
|
|
215,756
|
|
|
|
86,629
|
|
|
|
141,208
|
|
|
|
73,137
|
|
|
|
74,085
|
|
|
|
75,543
|
|
|
|
74,595
|
|
Cash dividends declared
|
|
$
|
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.22
|
|
|
$
|
0.73
|
|
|
$
|
0.69
|
|
|
$
|
0.65
|
|
Common book value (period end)
|
|
|
1.31
|
|
|
|
6.18
|
|
|
|
3.05
|
|
|
|
14.12
|
|
|
|
21.40
|
|
|
|
20.73
|
|
|
|
19.90
|
|
Market price (period end)
|
|
|
0.27
|
|
|
|
1.19
|
|
|
|
0.64
|
|
|
|
4.32
|
|
|
|
15.63
|
|
|
|
26.59
|
|
|
|
27.54
|
|
Balance Sheet Data (period end)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for investment
|
|
$
|
7,658,395
|
|
|
$
|
9,306,009
|
|
|
$
|
8,386,127
|
|
|
$
|
10,192,072
|
|
|
$
|
10,213,420
|
|
|
$
|
9,701,867
|
|
|
$
|
9,439,395
|
|
Allowance for credit losses
|
|
|
400,678
|
|
|
|
289,680
|
|
|
|
373,126
|
|
|
|
249,874
|
|
|
|
128,695
|
|
|
|
112,688
|
|
|
|
109,350
|
|
Securities
|
|
|
2,145,352
|
|
|
|
1,891,102
|
|
|
|
2,222,917
|
|
|
|
2,094,367
|
|
|
|
1,990,570
|
|
|
|
2,743,518
|
|
|
|
3,092,064
|
|
Intangible assets
|
|
|
13,690
|
|
|
|
240,932
|
|
|
|
229,825
|
|
|
|
246,020
|
|
|
|
678,182
|
|
|
|
685,568
|
|
|
|
691,758
|
|
Total assets
|
|
|
11,595,369
|
|
|
|
12,588,231
|
|
|
|
11,894,982
|
|
|
|
13,602,326
|
|
|
|
13,877,584
|
|
|
|
14,210,516
|
|
|
|
14,319,285
|
|
Customer funding(1)
|
|
|
7,936,832
|
|
|
|
7,663,645
|
|
|
|
7,666,801
|
|
|
|
7,989,962
|
|
|
|
8,178,471
|
|
|
|
8,392,597
|
|
|
|
8,201,571
|
|
Deposits
|
|
|
9,429,153
|
|
|
|
9,388,652
|
|
|
|
9,296,212
|
|
|
|
9,405,717
|
|
|
|
9,788,568
|
|
|
|
9,516,740
|
|
|
|
9,234,437
|
|
Long-term debt
|
|
|
1,116,206
|
|
|
|
1,126,435
|
|
|
|
1,116,869
|
|
|
|
707,769
|
|
|
|
698,340
|
|
|
|
1,130,475
|
|
|
|
1,922,151
|
|
Shareholders equity
|
|
|
616,821
|
|
|
|
1,509,253
|
|
|
|
993,174
|
|
|
|
1,620,531
|
|
|
|
1,550,308
|
|
|
|
1,562,032
|
|
|
|
1,486,907
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Six
|
|
|
|
|
|
|
Months Ended June 30
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(US$ and shares in thousands, except per share data, ratios,
branch offices and employees)
|
|
|
Balance Sheet Data (Averages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
8,064,542
|
|
|
$
|
10,030,953
|
|
|
$
|
9,478,536
|
|
|
$
|
10,374,423
|
|
|
$
|
10,013,387
|
|
|
$
|
9,621,846
|
|
|
$
|
8,883,837
|
|
Securities (excludes unrealized gains, losses on available for
sale securities)
|
|
|
2,206,168
|
|
|
|
2,023,286
|
|
|
|
2,018,845
|
|
|
|
2,087,745
|
|
|
|
2,525,317
|
|
|
|
3,043,385
|
|
|
|
4,388,351
|
|
Total earning assets(2)
|
|
|
10,888,059
|
|
|
|
12,152,879
|
|
|
|
11,673,702
|
|
|
|
12,478,993
|
|
|
|
12,545,223
|
|
|
|
12,692,872
|
|
|
|
13,307,956
|
|
Total assets
|
|
|
11,962,444
|
|
|
|
13,319,542
|
|
|
|
12,819,697
|
|
|
|
13,833,355
|
|
|
|
14,044,565
|
|
|
|
14,202,649
|
|
|
|
14,752,973
|
|
Customer funding(1)
|
|
|
7,869,569
|
|
|
|
7,795,697
|
|
|
|
7,723,889
|
|
|
|
8,065,982
|
|
|
|
8,216,762
|
|
|
|
8,077,605
|
|
|
|
7,606,071
|
|
Shareholders equity
|
|
|
936,412
|
|
|
|
1,570,266
|
|
|
|
1,450,273
|
|
|
|
1,558,081
|
|
|
|
1,543,552
|
|
|
|
1,506,195
|
|
|
|
1,463,125
|
|
Performance Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
(6.58
|
)%
|
|
|
(2.48
|
)%
|
|
|
(5.28
|
)%
|
|
|
(3.96
|
)%
|
|
|
0.52
|
%
|
|
|
0.79
|
%
|
|
|
0.47
|
%
|
Return on average equity
|
|
|
(84.02
|
)
|
|
|
(21.07
|
)
|
|
|
(46.63
|
)
|
|
|
(35.11
|
)
|
|
|
4.75
|
|
|
|
7.49
|
|
|
|
4.77
|
|
Net interest margin (tax-equivalent)(2)
|
|
|
2.65
|
|
|
|
2.87
|
|
|
|
2.88
|
|
|
|
3.09
|
|
|
|
3.10
|
|
|
|
3.22
|
|
|
|
3.12
|
|
Tangible equity to tangible assets
|
|
|
5.21
|
|
|
|
10.27
|
|
|
|
6.54
|
|
|
|
10.29
|
|
|
|
6.61
|
|
|
|
6.48
|
|
|
|
5.83
|
|
Dividend payout ratio
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
n/m
|
|
|
|
73.74
|
|
|
|
46.31
|
|
|
|
69.15
|
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans
|
|
$
|
460,617
|
|
|
$
|
464,941
|
|
|
$
|
399,046
|
|
|
$
|
365,664
|
|
|
$
|
80,191
|
|
|
$
|
37,168
|
|
|
$
|
33,255
|
|
Nonperforming assets
|
|
|
608,451
|
|
|
|
560,693
|
|
|
|
522,360
|
|
|
|
414,657
|
|
|
|
88,467
|
|
|
|
41,509
|
|
|
|
43,977
|
|
Nonperforming assets as a % of loans and foreclosed property
|
|
|
7.76
|
%
|
|
|
5.94
|
%
|
|
|
6.13
|
%
|
|
|
4.04
|
%
|
|
|
0.86
|
%
|
|
|
0.43
|
%
|
|
|
0.46
|
%
|
Nonperforming assets as a % of total assets
|
|
|
5.25
|
|
|
|
4.45
|
|
|
|
4.39
|
|
|
|
3.05
|
|
|
|
0.64
|
|
|
|
0.29
|
|
|
|
0.31
|
|
Net charge-offs to average loans HFI (annualized)
|
|
|
4.55
|
|
|
|
4.63
|
|
|
|
5.72
|
|
|
|
2.16
|
|
|
|
0.53
|
|
|
|
0.28
|
|
|
|
0.36
|
|
Allowance for credit losses as a % of loans HFI
|
|
|
5.23
|
|
|
|
3.11
|
|
|
|
4.45
|
|
|
|
2.45
|
|
|
|
1.26
|
|
|
|
1.16
|
|
|
|
1.16
|
|
Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branch offices
|
|
|
176
|
|
|
|
177
|
|
|
|
177
|
|
|
|
180
|
|
|
|
172
|
|
|
|
167
|
|
|
|
172
|
|
Employees (full-time equivalent)
|
|
|
2,066
|
|
|
|
2,345
|
|
|
|
2,214
|
|
|
|
2,505
|
|
|
|
2,474
|
|
|
|
2,618
|
|
|
|
2,607
|
|
|
|
|
(1) |
|
Customer funding is total deposits less brokered deposits plus
customer sweeps. |
|
(2) |
|
Prior to first quarter 2010, interest-bearing balances held at
the Federal Reserve were included in non-earning assets, and the
related interest income was utilized to offset certain Federal
Reserve account charges. Beginning first quarter 2010, these
cash balances were included in interest-bearing bank balances,
with amounts from prior periods reclassified to conform to the
current presentation. The related amounts of interest income are
prospectively included in net interest income beginning in first
quarter 2010. |
22
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 TSFG 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
TSFG incorporated by reference into this proxy
statement/prospectus and listed in the section entitled
Where You Can Find More Information beginning on
page 96.
Because
the exchange ratio for the stock consideration is fixed and the
market price of TD common shares may fluctuate, if you do not
make a cash election, you cannot be certain of the dollar value
of the stock consideration that you will receive upon completion
of the merger.
Upon completion of the merger, each TSFG shareholder of record
will be entitled to receive, in exchange for each share of TSFG
common stock owned by such shareholder either (1) $0.28 in
cash, if a cash election is effectively made with respect to
such share or (2) 0.004 TD common shares, plus cash in lieu
of any fractional share interests. Because the exchange ratio
for the stock consideration of 0.004 TD common shares is fixed,
the value of the TD common shares that may be issued to you as
stock consideration 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 that may be issued to you as stock consideration based
upon changes in the market price of TD common shares or
TSFG 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 TSFG, including the following:
|
|
|
|
|
changes in the business, operations or prospects of TD or TSFG;
|
|
|
|
governmental or regulatory developments, including any
limitations on or conditions to consummation of the merger;
|
|
|
|
changes in the interest rate environment;
|
|
|
|
changes in general economic conditions and the outlook for
economic conditions;
|
|
|
|
changes in securities markets, including changes due to
terrorist activities, other world events or other factors;
|
|
|
|
changes in currency exchange rates including changes in
U.S. dollar/Canadian dollar exchange rates which may affect
the trading prices of TDs common shares as reported in
U.S. dollars; and
|
|
|
|
the timing of the completion of the merger.
|
In addition to the approval of TSFGs 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 stock consideration you may 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 TSFG common stock not
making a cash election 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
TSFG.
Upon completion of the merger, holders of TSFG common stock not
making a cash election will become holders of TD common shares.
TDs businesses differ from those of TSFG, and accordingly
the results of operations
23
of TD will be affected by some factors different from those
currently affecting the results of operations of TSFG. For a
discussion of the businesses of TSFG 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 96.
If you
deliver your shares of TSFG common stock to the exchange agent
to make a cash election, you will not be able to sell those
shares, unless you revoke your cash election prior to the
election deadline or unless the merger agreement is
terminated.
If you want to make a cash election, you must deliver a properly
completed and signed form of cash election covering the shares
of TSFG common stock for which you wish to make a cash election
to the exchange agent together with stock certificates
representing those shares of TSFG common stock, a book-entry
delivery of shares or a guarantee of delivery as described in
the form of cash election. The deadline for doing this is
5:00 p.m., New York City time, on September 28, 2010,
the day of the special meeting of TSFG shareholders, unless the
completion of the merger will occur more than four business days
following the date of this special meeting, in which case the
election deadline will be extended until two business days
before the completion of the merger. After you submit a form of
cash election, under the terms of the cash election, you will
not be able to sell any shares of TSFG common stock covered by
your form of cash election, regardless of whether those shares
are held in certificated or book entry form, unless you revoke
your cash election before the deadline by providing written
notice to the exchange agent. If you do not revoke your
election, you will not be able to sell your shares of TSFG
common stock covered by a form of cash election prior to
completion of the merger. In the time between your submission of
a form of cash election and the completion of the merger, the
trading price of TSFG common stock may change, and you might
otherwise want to sell your shares of TSFG common stock covered
by a form of cash election to gain access to cash, make other
investments, or reduce the potential for an adverse change in
the value of your investment.
Some
directors and executive officers of TSFG 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.
In considering the recommendation of TSFGs board of
directors, you should be aware that some executive officers and
directors of TSFG may have interests in the merger that are
different from, or in addition to, your interests.
These interests are described in more detail in the section
entitled The Merger Interests of TSFGs
Executive Officers and Directors in the Merger beginning
on page 43.
The
merger agreement contains provisions that may discourage other
companies from trying to acquire TSFG for greater merger
consideration.
The merger agreement contains provisions that may discourage a
third party from submitting a business combination proposal to
TSFG that might result in greater value to TSFGs
shareholders than the proposed merger. These provisions include
a general prohibition on TSFG from soliciting, or, subject to
certain exceptions, entering into discussions with any third
party regarding any acquisition proposal or offers for competing
transactions and the requirement that TSFG pay a termination fee
of up to $7.62 million if the merger agreement is
terminated in specified circumstances. The termination fee may
result in a potential competing acquiror proposing to pay a
lower per share price to acquire TSFG than it might otherwise
have proposed to pay. For further information, please see the
section entitled Proposal No. 1: The Merger
Agreement Termination Fees and Expenses
beginning on page 71.
In addition, pursuant to the share purchase agreement, as of the
record date for the special meeting, TD held 100 shares of
Series M Preferred Stock that vote as a single class with
TSFGs common stock and have voting power equal to 39.9% of
the total voting power of holders of TSFG capital stock entitled
to vote. In addition, TD also owns 10,000,000 shares of
TSFGs common stock, which it purchased in the open market,
representing (together with the Series M Preferred Stock)
42.7% of the total voting power of holders of TSFG capital stock
entitled to vote at the special meeting, which could make it
more difficult for a third party to acquire TSFG prior to
completion of the merger or termination of the merger agreement.
24
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, or, if not obtained, could prevent
completion of the merger.
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, the State Board of Financial Institutions of the State
of South Carolina and other bank regulatory, antitrust and other
authorities in the U.S. On July 22, 2010, the Federal
Reserve Board of Governors announced its approval of the
application of TD and its subsidiary bank holding companies to
acquire TSFG and its subsidiary bank. The approval required TSFG
to enter into an agreement to divest certain branches in the
Palatka banking market prior to consummation of the Merger and
TSFG did so on August 8, 2010. TD filed an application
with, and has obtained the conditional approval of, the State
Board of Financial Institutions of the State of South Carolina.
Authorities who have not yet approved the transactions may
impose conditions on the completion of the merger or require
changes to the terms of the merger. While TD and TSFG 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 52 and Proposal No. 1: The Merger
Agreement Conditions to the Merger beginning
on page 69. 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 TSFG or TD (assuming, for this purpose, that
TD is an entity the size of TSFG in terms of financial metrics),
TD may elect not to consummate the merger.
Certain
rights of TSFG shareholders who do not make a cash election will
change as a result of the merger.
Following the completion of the merger, TSFG shareholders who do
not make a cash election will no longer be shareholders of TSFG,
a South Carolina corporation, but will instead be shareholders
of TD, a Canadian chartered bank. There will be certain
differences between your current rights as a shareholder of
TSFG, 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 TSFG and TD, see Comparison of Shareholder
Rights beginning on page 84.
TDs
consolidated results of operations may be negatively impacted by
foreign currency fluctuations.
A substantial portion of TDs 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 TDs revenues earned in
non-Canadian currencies and have a material adverse impact on
its business.
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, TDs
officers, directors and principal shareholders are exempt from
the reporting and short-swing profit recovery
provisions of Section 16 of the Exchange Act. In addition,
TD is permitted, under a multi-jurisdictional disclosure system
adopted by the United States and Canada, to prepare its
disclosure documents filed under the Exchange Act in accordance
with Canadian disclosure requirements, including preparing its
financial statements in accordance with Canadian GAAP, which
differ in some respects from U.S. GAAP.
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 TDs assets are located outside the United States,
and many of TDs 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
25
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.
Nasdaq
may delist the shares of TSFG common stock as a result of the
issuance of the Series M Preferred Stock to TD without
shareholder approval which may adversely affect the market price
and liquidity of the shares of TSFGs common stock. If the
merger is not consummated and TSFG is unable to relist its
common stock on the Nasdaq Capital Market, the market price and
liquidity of the shares of TSFG common stock may be further
adversely affected.
As discussed under The Merger Background
of the Merger and Nasdaq Matters,
TSFGs audit committee determined that the issuance of the
Series M Preferred Stock to TD without shareholder approval
was necessary to avoid seriously jeopardizing the financial
viability of TSFG, as contemplated by Nasdaq Rule 5635(f).
Following announcement of the merger, however, the staff of
Nasdaq informed TSFG that it has interpreted Rule 5635(f)
to not apply in the specific context of the merger. Because
there is no process for appealing this conclusion other than as
part of the delisting appeal process, because the TD preferred
share issuance remains an important requirement under the terms
of the proposed transaction, and because the TSFG board
determined that the issuance is in the best interests of TSFG,
its shareholders and other constituents, TSFG completed the
issuance of the Series M Preferred Stock to TD on
August 23, 2010. On August 23, 2010, TSFG received a letter
from Nasdaq stating that TSFG had failed to comply with Nasdaq
Listing Rules 5635(b), 5635(d) and 5640 and had taken action
that raises public interest concerns under Listing Rule 5100.
The letter stated that TSFGs common stock would be
delisted from Nasdaq on September 1, 2010 unless TSFG requested
a hearing before the Nasdaq Listing Qualifications Hearing Panel
prior to August 30, 2010. In response to the letter, TSFG
intends to request an oral hearing before the Nasdaq Listing
Qualifications Hearing Panel to appeal the Nasdaq staffs
delisting determination. Meanwhile, TSFGs common stock
will continue to trade on the Nasdaq Capital Market until a
written decision is rendered by the Nasdaq Listing
Qualifications Hearing Panel. TSFG cannot predict the timing or
outcome of this process, but if shares of TSFG common stock were
to be delisted prior to completion of the merger, the trading
price and liquidity levels would likely be negatively impacted.
If the shares of TSFG common stock are ultimately delisted from
the Nasdaq Capital Market, there is no guarantee that they will
begin trading on the
Over-the-Counter
Bulletin Board, the Pink Sheets or any other
established market. The delisting of TSFGs common stock
would likely negatively impact the trading price of TSFG common
stock and result in a reduction of the liquidity of the common
stock. Delisting could reduce the ability of holders of
TSFGs common stock to purchase or sell shares as quickly
and as inexpensively as they could have done in the past. In
addition, following any delisting, certain investors may become
obligated by law or contractual mandate to sell their shares of
TSFG common stock, TSFG common stock would not be eligible for
margin loans and TSFG common stock would be subject to
Rule 15g-9
of the Exchange Act.
If the merger is not consummated, TSFG may not be able to meet
the criteria for relisting its shares of common stock on the
Nasdaq Capital Market due to certain listing requirements. The
listing requirements include a minimum bid price of $4.00 per
share and a market value of publicly held shares of at least
$15 million. The inability to relist the shares of TSFG
common stock following any termination of the merger agreement
may have further negative effects on the market price and
liquidity of TSFGs common stock.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Some of the statements contained or incorporated by reference in
this proxy statement/prospectus, including those relating to
TDs and TSFGs 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 Securities Act of 1933,
as amended, which we refer to in this document as the Securities
Act. Without limiting the generality of the preceding sentence,
statements contained in the sections The
Merger TSFGs Reasons for the Merger,
Opinion of TSFGs Financial Advisor, and
TDs Reasons for the Merger include
forward-looking statements. These statements are not historical
facts but instead represent only TDs
and/or
TSFGs expectations, estimates and projections regarding
future events.
26
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 TSFG 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 23, 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 TSFG 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 companys filings with the SEC,
including the factors detailed in TDs
Form 40-F
for its fiscal year ended October 31, 2009, TDs
reports on
Form 6-K
and TSFGs annual report on
Form 10-K
for the year ended December 31, 2009 and TSFGs
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 TSFG
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 TSFG shareholders about
the special meeting that TSFG has called to allow its
shareholders to consider and approve the plan of merger
contained in the merger agreement. TSFG is mailing this proxy
statement/prospectus to its shareholders on or about
August 26, 2010. Together with this proxy
statement/prospectus, TSFG is sending a notice of the special
meeting and a form of proxy that TSFGs 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 September 28, 2010, at
10:30 a.m. local time at Poinsett Plaza,
2nd
Floor, 104 South Main Street, Greenville, SC 29601.
Matters
to be Considered
At the special meeting, TSFG shareholders will be asked to:
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approve the plan of merger contained in the merger
agreement; and
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approve the adjournment or postponement of the special meeting,
if necessary or appropriate, including to solicit additional
proxies.
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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 TSFG proxies should be addressed to:
The South Financial Group, Inc.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, SC 29601
Attn: William P. Crawford, Jr.
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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 TSFG 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. TSFGs 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, TSFG 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
TSFG will bear the entire cost of soliciting proxies from its
shareholders, except that TD and TSFG will share equally the
costs of filing, printing and mailing this proxy
statement/prospectus. In addition to solicitation of proxies by
mail, TSFG will request that banks, brokers and other record
holders send proxies and proxy material to the beneficial owners
of TSFG common stock and secure their voting instructions, if
necessary. TSFG will reimburse the record holders for their
reasonable expenses in taking those actions.
TSFG has also made arrangements with Innisfree M&A
Incorporated 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 up to $100,000 plus
disbursements for these services. Proxies may also be solicited
by directors, officers and employees of TSFG in person or by
telephone or other means, for which such persons will receive no
special compensation.
Record
Date and Quorum
TSFGs board of directors has fixed the close of business
on August 23, 2010 as the record date for determining the
holders of TSFG common stock and Series M Preferred Stock
entitled to receive notice of and to vote at the special meeting.
At the record date, there were 216,401,091 shares of TSFG
common stock outstanding and entitled to vote at the special
meeting held by 7,493 holders of record. Each share of TSFG
common stock entitles the holder to one vote at the special
meeting on all matters properly presented at the meeting. At the
record date, TD held 100 shares of the Series M
Preferred Stock of TSFG that vote as a single class with
TSFGs common stock, representing 39.9% of the total voting
power of holders of TSFG capital stock entitled to vote at the
special meeting. In addition, as of the record date for the
special meeting, TD also held 10,000,000 shares of TSFG
common stock, representing (together with the Series M
Preferred Stock) 42.7% of the total voting power of holders of
TSFG capital stock entitled to vote at the special meeting. TD
is required to vote its shares of Series M Preferred Stock,
and has informed TSFG that intends to vote its shares of TSFG
common stock, in favor of the proposal to approve the plan of
merger contained in the merger agreement.
A majority of the votes entitled to be cast on the plan of
merger, consisting of all outstanding shares of TSFG common
stock and the Series M Preferred Stock, voting together as
a single class, constitutes a quorum for transacting business at
the special meeting. 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 requires the affirmative vote of
a majority of the votes entitled to be cast at the special
meeting by the holders of TSFG common stock and the
Series M Preferred Stock, voting together as a single
class. Only holders of TSFG common stock and Series M
Preferred Stock are entitled to vote at the special meeting. You
are entitled to one vote for each full share of TSFG common
stock you held as of the record date. Approval of the proposal
relating to the adjournment or postponement of the special
meeting, if necessary or appropriate, including to solicit
additional proxies requires the affirmative vote of a majority
of the votes cast on such proposal at the special meeting by the
holders of TSFG common stock and the Series M Preferred
Stock, voting together as a single class, even if less than a
quorum.
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At the record date, there were 216,401,091 shares of TSFG
common stock outstanding and entitled to vote at the special
meeting. Directors and executive officers of TSFG and their
affiliates had the right to vote 4,018,003 shares of
TSFG common stock at the special meeting, or approximately 1.12%
of the voting power of the outstanding TSFG capital stock
entitled to vote at the special meeting (after giving effect to
the issuance of the Series M Preferred Stock). All of the
members of the TSFG board of directors have indicated their
intention as of August 23, 2010 to vote the shares of TSFG
common stock they own (or have the power to vote or direct the
vote), if any, as of the record date in favor of the approval of
the plan of merger contained in the merger agreement. In
addition, as of the record date for the special meeting, TD held
100 shares of Series M Preferred Stock of TSFG that
votes as a single class with TSFGs common stock and has
voting power equal to 39.9% of the total voting power of holders
of TSFG capital stock entitled to vote, and also held
10,000,000 shares of TSFG common stock, which it purchased
in the open market, representing (together with the
Series M Preferred Stock) 42.7% of the total voting power
of holders of TSFG capital stock entitled to vote at the special
meeting. TD is required to vote its shares of Series M
Preferred Stock, and has informed TSFG that it intends to vote
its shares of TSFG common stock in favor of, the proposal to
approve the plan of merger contained in the merger agreement.
TSFGs board of directors urges TSFG 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.
If you do not vote, or you abstain from voting, your shares with
respect to the proposal to approve the plan of merger, it will
have the same effect as a vote against the approval of the plan
of merger contained in the merger agreement. If the proposal to
approve the plan of merger contained in the merger agreement
receives the required approval of TSFGs shareholders and
the merger is completed, your shares of TSFG common stock will
be converted into the right to receive the merger consideration
even though you did not vote.
The affirmative vote of a majority of the votes cast by the
holders of the TSFG common stock and Series M Preferred
Stock, voting together as a single class, at the special meeting
is required to approve the proposal to adjourn or postpone the
special meeting, if necessary or appropriate, including to
solicit additional proxies. If you do not vote, or you abstain
from voting, your shares with respect to the proposal to approve
such adjournment or postponement, it will have no effect on such
proposal.
Additionally, if you do not vote your shares with respect to the
proposal to approve the plan of merger contained in the merger
agreement, or the proposal to adjourn or postpone the special
meeting, if necessary or appropriate, including to solicit
additional proxies, then your vote will not be counted toward
the quorum requirement at the TSFG special meeting called for
such purpose.
Brokers cannot vote the shares that they hold beneficially
either for or against the proposal to approve the plan of merger
contained in the merger agreement without specific instructions
from the person who beneficially owns the shares, so-called
broker non-votes. Therefore, if your shares are held
by a broker and you do not give your broker instructions on how
to vote your shares, this will have the same effect as voting
against the proposal to approve the plan of merger contained in
the merger agreement. Abstentions also will have the same effect
as a vote against the proposal to approve the plan of merger
contained in the merger agreement.
Participants
in TSFG Employee Plans
If you own shares of TSFG common stock in The South Financial
Group, Inc. 401(k) 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 TSFG.
If you own shares of TSFG common stock in such plan, you will be
receiving a separate letter, shortly after the mailing of this
proxy, 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.
If you own shares of TSFG common stock in the Deferred
Compensation Plan, such shares will be voted solely by the
trustee of such plan pursuant to the terms of such plan. You
will not be entitled to vote any shares of the TSFG common stock
held for your benefit under the Deferred Compensation Plan.
Voting by
Telephone or Through the Internet
Many shareholders of TSFG 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
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there are separate arrangements for using the telephone and the
Internet depending on whether your shares are registered in
TSFGs 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.
TSFG
shareholders of record may submit proxies:
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By telephone: Use any touch-tone telephone to
vote your proxy 24 hours a day, 7 days a week. Have
your proxy card handy when you call. You will be prompted to
enter your control number(s), which is located on your proxy
card, and then follow the directions given.
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Through the Internet: Use the Internet to vote
your proxy 24 hours a day, 7 days a week. Have your
proxy card handy when you access the website. You will be
prompted to enter your control number(s), which is located on
your proxy card, to create and submit an electronic ballot.
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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. TSFG
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
SCBCA.
Delivery
of Proxy Materials
To reduce the expenses of delivering duplicate proxy materials
to TSFG shareholders, TSFG 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
(888) 592-3001
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:
The South Financial Group, Inc.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, SC 29601
Attn: William P. Crawford, Jr.
Recommendations
of TSFGs Board of Directors
TSFGs 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 TSFG and its shareholders, and unanimously recommends that
TSFG 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
Toronto-Dominion Centre
P.O. Box 1
Toronto, Ontario, Canada M5K 1A2
(416) 982-8222
TD and its subsidiaries are collectively known as TD Bank
Financial Group, or TDBFG. TDBFG is the sixth largest bank in
North America by branches and serves more than 18 million
customers in four key businesses operating in a number of
locations in key financial centres around the globe: Canadian
Personal and Commercial Banking, including TD Canada Trust and
TD Insurance; Wealth Management, including TD Waterhouse and an
investment in TD Ameritrade; U.S. Personal and Commercial
Banking, including TD Bank, Americas Most Convenient Bank;
and Wholesale Banking, including TD Securities. TDBFG also ranks
among the worlds leading online financial services firms,
with more than 6 million online customers. TDBFG had
C$574 billion in assets on April 30, 2010. The
Toronto-Dominion Bank trades under the symbol TD on
the Toronto and New York Stock Exchanges.
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Additional information about TD can be found on its website at
http://www.td.com.
The information provided on TDs 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 96.
Additional
Information Relating to Certain Prior Disclosures of
TD
The discussion set forth under Capital
Structure Ratings in the Annual Information
Form filed as Exhibit 99.1 to TDs Annual Report on
Form 40-F
for the year ended October 31, 2009 , Liquidity
Risk Funding in the Managements
Discussion and Analysis attached as Exhibit 99.2 to
TDs Annual Report on
Form 40-F
for the year ended October 31, 2009,
Managements Discussion and Analysis
Liquidity Risk in the
1st
Quarter 2010 Report to Shareholders attached as
Exhibit 99.1 to TDs Report of Foreign Issuer on
Form 6-K
filed with the SEC on March 4, 2010 that attached as an
exhibit TDs
1st
Quarter 2010 Report to Shareholders, and Managements
Discussion and Analysis Liquidity Risk in the
2nd
Quarter 2010 Report to Shareholders attached as
Exhibit 99.1 to TDs Report of Foreign Issuer on
Form 6-K
filed with the SEC on May 27, 2010 that attached as an
exhibit TDs
2nd
Quarter 2010 Report to Shareholders, which reports are
incorporated by reference into this proxy statement/prospectus,
is amended by supplementing such discussion with the following
additional information:
Credit ratings are important to TDs borrowing costs and
ability to raise funds. A ratings downgrade could potentially
result in higher financing costs and reduce access to capital
markets. A lowering of credit ratings may also affect TDs
ability to enter into normal course derivative or hedging
transactions and impact the costs associated with such
transactions. TD regularly reviews the level of increased
collateral its trading counterparties would require in the event
of a downgrade of TDs credit rating. TD believes that the
impact of a one notch downgrade would be minimal and could be
readily managed in the normal course of business, but more
severe downgrades could have a more significant impact by
increasing TDs cost of borrowing and/or requiring TD to
post additional collateral for the benefit of its trading
counterparties. Credit ratings and outlooks provided by the
ratings agencies reflect their views and are subject to change
from time to time, based on a number of factors, including
TDs financial strength, competitive position and liquidity
as well as factors not entirely within TDs control,
including the methodologies used by the rating agencies and
conditions affecting the financial services industry generally.
The information contained under Capital
Structure Ratings in the Annual Information
Form with respect to the description of ratings categories of
various ratings agencies is issuer-related disclosure required
by Canadian law and was based solely on public statements by the
respective ratings agencies available on their respective public
websites.
c/o The
Toronto-Dominion Bank
New York Branch
31 West 52nd Street
New York, NY
10019-6101
(212) 827-7000
Hunt Merger Sub, Inc. is a South Carolina corporation and a
wholly-owned subsidiary of TD. Hunt Merger Sub, Inc. was
organized solely for the purpose of effecting the merger with
TSFG described in this proxy statement/prospectus. It has not
carried on any activities other than in connection with the
merger agreement.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, SC 29601
(888) 592-3001
TSFG is a bank holding company focused on serving small
businesses, middle market companies, and retail customers in the
Carolinas and Florida. At June 30, 2010, it had
approximately $11.6 billion in total assets and
176 branch offices. TSFG operates Carolina First Bank,
which conducts banking operations in North Carolina and South
Carolina (as Carolina First Bank), and in Florida (as Mercantile
Bank). At June 30, 2010, approximately 44% of TSFGs
total customer deposits were in South Carolina, 45% were in
Florida, and 11% were in North Carolina.
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Additional information about TSFG and its subsidiaries can be
found on its website at
http://www.thesouthgroup.com
and in documents incorporated by reference into this document.
The information provided on TSFGs website is not part of
this proxy statement/prospectus and is not incorporated herein
by reference.
For more information, see the section entitled Where You
Can Find More Information on page 96.
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.
TDs and TSFGs boards of directors have approved the
merger agreement. The merger agreement provides for the
acquisition of TSFG by TD through the merger of Hunt Merger Sub,
Inc., a wholly-owned subsidiary of TD, with and into TSFG, with
TSFG as the surviving corporation. Following the merger, TSFG
will operate as a wholly-owned subsidiary of TD.
In the merger, each share of TSFG common stock will be converted
into the right to receive either $0.28 in cash, if a cash
election is effectively made with respect to such share, or
0.004 TD common shares, plus cash in lieu of any fractional
share interests. TD common shares issued and outstanding at
merger completion will remain outstanding and those stock
certificates will be unaffected by the merger. TDs common
shares will continue to trade on the New York Stock Exchange and
the Toronto Stock Exchange under 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
TSFG has been severely affected by economic deterioration and
real estate downturn resulting in declining asset quality.
During 2008, TSFG experienced a $568.8 million net loss
available to common shareholders, which was followed by a net
loss available to common shareholders of $736.9 million in
2009 and an additional $85.8 million net loss available to
common shareholders in the first quarter of 2010. As of May
2010, TSFG projected that these substantial losses would
continue for the foreseeable future, and in particular projected
net losses of approximately $365 million in 2010 and
further losses in 2011. These losses have severely depleted its
capital and future losses will further erode capital levels. At
March 31 of this year, TSFGs tangible common equity ratio
had declined precipitously to 2.9% (compared to 6% a year
earlier) and both TSFGs and the Carolina First Banks
credit ratings have been reduced to junk status. As
a result of TSFGs severe financial challenges, on
April 30, 2010, the FDIC and the South Carolina Board of
Financial Institutions required Carolina First Bank to enter
into a consent order, and TSFG entered into a formal written
agreement with the Federal Reserve effective May 4, 2010.
As discussed in TSFGs public filings, these regulatory
agreements, among other things, require that Carolina First Bank
meet and maintain a minimum Tier 1 leverage ratio of 8% and
a minimum total risk-based capital ratio of 12% by
August 28, 2010, prohibit Carolina First Bank from
originating or renewing brokered deposits without prior FDIC
approval, limit the interest rates Carolina First Bank is
permitted to pay on customer deposits and require TSFG to
develop a capital plan addressing TSFGs and Carolina First
Banks current and future capital requirements. Carolina
First Banks capital ratios are substantially lower than
the minimums required by these regulatory agreements, and TSFG
expects that if it does not meet those requirements in
accordance with the terms of the regulatory agreements, Carolina
First Bank will ultimately be subject to FDIC receivership,
which will result in the insolvency of TSFG and a complete loss
by its shareholders of their investment in the company.
In light of the circumstances TSFG has faced over the past
several years, TSFG has undertaken numerous and exhaustive
efforts to preserve and raise capital, reduce problem asset
levels and stabilize earnings. These efforts began in early
2008, when TSFG raised $250 million of capital through a
mandatorily convertible preferred stock
32
issuance. TSFG raised an additional $347 million in
December 2008 by selling preferred stock to the
U.S. Department of the Treasury under the Treasurys
Capital Purchase Program. Due to continuing losses, these
efforts were insufficient, and TSFG announced and began
executing a capital plan in June 2009 to bolster its common
equity. This plan enabled TSFG to raise $85 million of
common equity in an underwritten public offering,
$200 million from public and private exchanges of the
mandatorily convertible preferred stock for common stock, and
$16 million from the sale of three ancillary businesses.
TSFG also took various other steps, including first reducing and
then suspending all common stock, preferred stock and trust
preferred securities dividends, and reducing its total loans by
approximately $2.2 billion from December 31, 2008 to
March 31, 2010.
Although TSFG completed over $942 million of capital
actions in 2008 and 2009, those actions proved insufficient in
the face of mounting losses. In the fall of 2009, TSFG began to
explore the potential for a transaction or series of
transactions that would enable the company to obtain a
substantial capital infusion from private capital sources that
would effectively recapitalize TSFG, and formed a special
committee to assist in leading those efforts with management,
comprised of directors M. Dexter Hagy, Jon W. Pritchett, C.B.
Smith and William R. Timmons III and former director Edward
J. Sebastian. Members of management, including Chief Executive
Officer H. Lynn Harton and Chief Financial Officer James R.
Gordon, were invited to, attended, and actively participated in
the meetings of the special committee. As a result, TSFG,
working with its advisors, began discussions with a number of
potential capital sources. The potential investors engaged in
discussions with management, led by Mr. Harton, and
conducted due diligence regarding a potential recapitalization
transaction. In December 2009, following discussions with its
bank regulators, and in recognition of its large and growing
need for a substantial amount of capital, TSFG committed to
expand its efforts by proceeding on simultaneous paths in which
it would seek either to obtain a substantial capital infusion
from public or private investors or to sell itself to a
strategic partner. Accordingly, TSFG began to approach and
undertake discussions and due diligence with potential strategic
partners in addition to the discussions in process with private
capital sources. Working with and through its advisors, TSFG
undertook a comprehensive effort to identify potential
transaction partners, including parties both within and beyond
its geographic footprint. Among other efforts, TSFG or its
advisors contacted the principals of these potential transaction
partners and distributed materials relating to the company and
its business. In total, TSFG or its advisors formally contacted
nineteen potential strategic acquirers and investors, and
fourteen of those potential partners entered into
confidentiality agreements with TSFG. Upon execution of a
confidentiality agreement, parties were provided with access to
an electronic data room containing extensive due diligence
materials relating to TSFG, and a number of parties participated
in discussions with management. In addition, six parties
attended formal presentations by TSFGs management, which
were arranged by TSFGs financial advisor, Morgan Stanley,
and led by Mr. Harton, relating to a potential transaction
with the Company.
Following several months of due diligence and management
meetings, none of the capital sources remained interested in
pursuing discussions with TSFG, with a number of such investors
indicating they were not interested in pursuing an investment in
TSFG because of the extent of the perceived credit losses in
TSFGs loan portfolio, as well as the risk of bank failure
and seizure by the FDIC. Similarly, while TSFG sought to engage
in discussions and due diligence with a number of potential
strategic partners, only three potential partners engaged in
comprehensive due diligence. After this diligence, two
determined not to proceed with a potential transaction in view
of significant anticipated credit losses in TSFGs loan
portfolio and only TD expressed a willingness to continue to
explore a potential transaction.
Throughout this period and through the announcement of the
merger on May 17, 2010, the TSFG board of directors met
periodically to receive updates and engage in discussions
regarding the status of TSFGs financial condition, the
results of its efforts to seek a transaction and the status of
the discussions with the bank regulatory authorities. Also
during this period, the TSFG special committee met regularly
between meetings of the full board to consider and discuss these
matters and related matters and give direction to management and
TSFGs advisors. During this period representatives of
TSFG, including Mr. Harton, also engaged in weekly update
discussions with the FDIC, the Federal Reserve and the South
Carolina State Board of Financial Institutions, and
Mr. Harton generally served as TSFGs primary contact
with its regulators throughout TSFGs strategic process.
While TD continued to conduct due diligence and explore the
potential for a transaction, TSFG also continued to seek out
other potential capital sources and strategic merger partners.
These efforts became particularly important following the
issuance of the FDIC consent order and written agreement with
the Federal Reserve Board because of
33
TSFGs inability to meet the requirements contained
therein absent a strategic transaction or substantial capital
raise. These various efforts resulted in further discussions and
due diligence efforts with additional potential investors and
acquirers, as well as with some of the potential partners
previously contacted by TSFG which had previously determined not
to pursue a transaction. These efforts took place both before
and after the period following the release by TSFG and other
U.S. bank holding companies of first quarter 2010 earnings
reflecting some degree of credit improvement at TSFG and across
the industry, which resulted in renewed investor interest in
regional banking franchises. In late April, one potential
strategic partner expressed interest in a potential transaction
at an indicative price that, while still below the market value
of TSFGs common stock, exceeded the consideration offered
under the merger agreement by TD. However, following additional
due diligence on TSFG, the potential partner withdrew its
indication and informed TSFG that it had determined that it was
unable to arrive at a positive equity value for the company.
Thus, TSFGs efforts were not successful in obtaining a
firm proposal from any of these potential investors or
acquirers. In addition, analyses performed by TSFG and its
financial advisor indicated that a public or private stock
offering to raise capital would require a minimum of
$500 million and would likely need to equal or even exceed
$800 million in order to successfully address TSFGs
capital needs and provide investors with an adequate capital
cushion against potential future credit losses. TSFG, following
discussions with its financial advisor, concluded that such a
capital raise (which would appear to be the largest in
U.S. public capital markets history relative to the
issuers pre-issuance market capitalization and shareholder
base), was not likely achievable under the circumstances, and
even if achievable would likely result in such massive dilution
to existing TSFG shareholders that it would almost certainly
provide less value to TSFG shareholders than the merger with TD.
During the period of TDs due diligence and consideration
of a potential transaction, the parties also engaged in
discussions regarding the treatment of the $347 million of
TSFG
Series 2008-T
Preferred Stock and related warrant held by the Treasury
Department pursuant to the Treasurys Capital Purchase
Program. In light of preliminary discussions with the Treasury
Department and the occurrence of a number of publicly announced
transactions involving similarly situated banks in which the
Treasury Department had exchanged TARP preferred stock at a
discount, TSFG engaged in general discussions with TD and other
potential investors and strategic partners regarding the
possibility of negotiating with the Treasury Department to
redeem or exchange the
Series 2008-T
Preferred Stock at a discount, but in each case (other than TD)
these parties ceased discussions with TSFG before arriving at a
specific transaction that could be proposed to the Treasury
Department. As the discussions with TD regarding a potential
transaction progressed, TSFG, working with Morgan Stanley, and
the Treasury Department held discussions relating to the
consideration to be paid to the Treasury, and TSFG obtained a
commitment from Treasury to accept approximately
$130.6 million as consideration for the exchange of the
Series 2008-T
Preferred Stock and related warrant and the discharge of all
accrued but unpaid dividends on the preferred stock.
Following agreement in principle on the terms of the preferred
stock repurchase, the parties continued to work to finalize the
terms of the proposed merger, and counsel to TSFG and TD worked
to finalize the definitive transaction documentation, including
the merger agreement. The parties also worked on the
Series M Preferred Stock purchase arrangements, under which
TSFG agreed to issue and sell to TD, 100 shares of
Series M Preferred Stock, which shares represent in the
aggregate 39.9% of the voting power of TSFGs outstanding
voting securities after giving effect to the issuance and will
vote with the common stock on the merger agreement. The issuance
was an essential component of, and a condition of TDs
willingness to enter into, the merger. The share issuance was
essential in order to provide TD, as well as TSFGs
depositors and other customers and its regulators, with a
reasonable level of confidence that TSFG would not be
destabilized prior to the completion of the merger and that the
merger transaction, once announced, would be completed.
On May 16, the audit committee of the TSFG board of
directors met to discuss and consider the proposed Series M
Preferred Stock purchase agreement. Ordinarily, the rules of the
Nasdaq would require shareholder approval on an issuance of
securities having voting rights of 20% or more of the
companys outstanding voting securities. However, following
discussion and consideration of the factors described above and
further discussed with the full board of directors as described
below and under Reasons for the Merger, including
the lack of alternatives available to meet TSFGs capital
and other regulatory obligations under the FDIC and Federal
Reserve Board agreements and prevent the ultimate seizure of
Carolina First Bank and resulting failure of TSFG, the audit
34
committee unanimously determined that, upon full board approval
of the transactions, it was appropriate to issue the
Series M Preferred Stock without shareholder approval
pursuant to Nasdaq Rule 5635(f). This Rule, commonly known
as the financial viability exception, permits a Nasdaq-listed
issuer, with the approval of Nasdaq, to issue securities without
shareholder approval where the audit committee determines that
the delay in securing shareholder approval prior to the
consummation of the share issuance would seriously jeopardize
the financial viability of the issuer. The TSFG audit committee
so determined in connection with the proposed TD merger and
related share issuance. As discussed below under Nasdaq
Matters, subsequent to the announcement of the merger TSFG
was advised by Nasdaq staff that they did not believe that the
issuance of the Series M Preferred Stock without a
shareholder vote would qualify under the financial viability
exception. TSFG has determined that it is in the best interests
of TSFG and its shareholders and other constituents to proceed
with the issuance of the Series M Preferred Stock in
accordance with the terms of the applicable purchase agreement,
and intends to reassert its position that such issuance does
qualify under the financial viability exception in any
proceedings that Nasdaq may bring to delist TSFGs common
stock, including if necessary in an appeal from any such
delisting determination.
Also on May 16, the TSFG board of directors met to consider
the proposed transactions with TD. The special committee and
management reviewed for the TSFG board of directors the most
recent discussions with TD and the Treasury Department and the
result of the audit committee meeting. Representatives of
TSFGs financial advisor, Morgan Stanley, reviewed with the
TSFG board of directors the proposed financial terms of the
transaction with TD. The Morgan Stanley representatives also
reviewed with the TSFG board of directors additional
information, including information regarding TSFGs
financial condition, information regarding TSFGs capital
needs and its efforts to seek alternative transactions to meet
those needs, information regarding the commitment from Treasury
regarding the
Series 2008-T
Preferred Stock and financial information regarding TD. In
connection with the deliberation by the TSFG board of directors,
Morgan Stanley rendered to the TSFG board of directors its oral
opinion (subsequently confirmed in writing), as described under
Opinion of TSFGs Financial
Advisor, that, as of such date and based upon and subject
to the assumptions, considerations, qualifications and
limitations set forth in the written opinion, the consideration
to be received by the holders of shares of TSFGs common
stock pursuant to the merger agreement was fair, from a
financial point of view, to such holders. Representatives of
Wachtell, Lipton, Rosen & Katz, legal advisors to
TSFG, discussed with the TSFG board of directors the legal
standards applicable to its decisions and actions with respect
to its evaluation of merger proposals, and reviewed the proposed
transaction agreements, the terms of the Series M Preferred
Stock and related information.
Following these discussions with their advisors, the members of
the TSFG board of directors reviewed and discussed the proposed
merger and related matters among the board members and with
their advisors, including consideration of the factors described
under TSFGs Reasons for the
Merger. The TSFG board noted in particular that, other
than the TD merger, it did not have any other viable alternative
that would enable it to meet the obligations under the FDIC
consent order or the written agreement with the Federal Reserve.
The TSFG board also noted that if TSFG failed to meet those
obligations, Carolina First Bank would ultimately be subject to
FDIC receivership, which would in turn result in the insolvency
of TSFG, and that any insolvency would likely result in a
complete loss to its shareholders due to the minimal assets of
TSFG outside of its investment in Carolina First Bank. Following
these board deliberations, the TSFG board of directors
determined that the merger, the merger agreement and the
transactions contemplated by the merger agreement are advisable
and in the best interests of TSFG and its shareholders, and the
directors voted unanimously to approve the merger and other
transactions and to approve and adopt the merger agreement and
the other agreements and related matters.
The definitive transaction documentation was entered into as of
May 16, 2010, and on the following day, the transaction was
announced before the opening of the market in press releases
issued by TD and TSFG.
TSFGs
Reasons for the Merger
After careful consideration, the TSFG board of directors
determined that the merger agreement and the transactions
contemplated by the merger agreement were advisable and in the
best interests of TSFG and its shareholders and approved the
merger agreement and the transactions contemplated by the merger
agreement, including the merger and the Series M Preferred
Stock issuance. Accordingly, TSFGs board recommends that
TSFG shareholders vote FOR adoption of the merger
agreement at the TSFG special meeting.
35
In reaching its decision, the board of directors, with advice
from its financial and legal advisors, considered a number of
factors, including the following:
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The lack of strategic alternatives available to TSFG,
notwithstanding the exhaustive search and evaluation of
alternatives conducted by TSFG with the assistance of its
financial and legal advisors.
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The likelihood that TSFG would not be able to access the capital
markets at levels sufficient to meet its obligations under the
FDIC consent order, and the risk that pursuing such a path
despite its low likelihood would jeopardize the potential
transaction with TD.
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The fact that any material failure to comply with the provisions
of the FDIC consent order or the written agreement with the
Federal Reserve Board would result in additional enforcement
actions, including, in the absence of a transaction that
satisfies the capital requirements under the FDIC and Federal
Reserve Board agreements, eventual FDIC receivership of Carolina
First and the resulting insolvency of TSFG.
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The risks that TSFG faces in terms of loss of liquidity in the
future, including the regulatory prohibition on accepting or
renewing brokered deposits without FDIC approval in light of its
approximately $1 billion of maturing brokered deposits
prior to June 2011 ($1.9 billion outstanding) (as of May
2010). In addition, the board noted that TSFGs
deteriorating financial position or external events could
trigger deposit outflows or volatility, further weakening its
liquidity position and impacting TSFGs franchise value.
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The belief that FDIC receivership and the resulting failure of
TSFG would result in a complete loss of value to TSFGs
shareholders, and would also have significant adverse impacts on
depositors, other customers, the Treasury Department, the
resources of the FDIC and employees.
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TSFGs and TDs respective sizes, businesses,
operations, financial conditions, asset quality, earnings and
prospects, including the stronger balance sheet and relative
prospects of TD.
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The Carolina First Bank loan portfolio and the current and
prospective environment in which it operates, which reflects
challenging conditions and risks that are likely to persist,
including future credit losses, the potential for volatile
market actions and generally uncertain economic conditions. The
board also considered the effect these factors could have on
TSFGs liquidity and capital position and funding
capabilities, and noted the effects which these factors had had
on its business, including difficulties in retaining necessary
vendor contracts, limitations on its ability to confirm letters
of credit for customers, the elimination of all trading and
other credit lines with financial institutions (which severely
restricts its ability to serve commercial and international
customers), and significant and continuing deterioration in
TSFGs ability to hire and retain employees.
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The inability of financial institutions such as TSFG to
withstand a loss of confidence, which presents the risk of a
run on the bank that could have a material and
adverse impact on Carolina First Bank and the speed with which
such a loss of confidence and resulting impact can cause bank
regulators to proceed with bank seizure.
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The fact that TD was willing to permit, and the merger agreement
allows, all holders to elect between the cash consideration and
the stock consideration, and that the stock consideration had a
fixed exchange ratio and, therefore, would allow TSFG
shareholders to participate in a portion of the future
performance of the combined TSFG and TD businesses and synergies
resulting from the merger, and the value to TSFG shareholders
represented by that consideration. The TSFG board of directors
also considered that the consideration reflected a substantial
discount to TSFGs then-current and historical trading
prices.
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Closing certainty and time to closing, along with
managements belief that TSFGs regulators would view
the transaction favorably.
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The terms of the merger agreement and share purchase agreement.
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The oral opinion of Morgan Stanley (which subsequently was
confirmed in writing) that, as of May 16, 2010 and based
upon and subject to the assumptions, considerations,
qualifications and limitations set forth in the written opinion,
the consideration to be received by the holders of shares of
TSFGs common stock pursuant
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36
to the merger agreement was fair, from a financial point of
view, to such holders. For more information, see
Opinion of TSFGs Financial Advisor
beginning on page 37.
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The requirement that TSFG issue shares of preferred stock to TD
that would give TD voting rights reflecting 39.9% of TSFGs
post-issuance voting securities, which would provide greater
certainty and stability at TSFG, but which would lessen the
ability of TSFG shareholders to accept a competing transaction
proposal or otherwise vote down the proposed merger.
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The reasons set forth above are not intended to be exhaustive,
but include material factors considered by the board of
directors in approving the merger agreement. Although each
member of TSFGs board individually considered these and
other factors, the board did not collectively assign any
specific or relative weights to the factors considered and did
not make any determination with respect to any individual
factor. The board collectively made its determination with
respect to the merger based on the conclusion reached by its
members, in light of the factors that each of them considered
appropriate, that the merger is in the best interests of TSFG
and its shareholders. TSFGs board of directors realized
there can be no assurance about future results, including
results expected or considered in the factors listed above.
However, the board concluded the potential positive factors
outweighed the potential risks of entering into the transaction
agreements.
Opinion
of TSFGs Financial Advisor
TSFG retained Morgan Stanley to act as its financial advisor in
connection with the merger because of Morgan Stanleys
qualifications, expertise and reputation, as well as its
knowledge of the business and affairs of TSFG and its investment
banking professionals substantial experience in comparable
transactions. On May 16, 2010, Morgan Stanley rendered its
oral opinion, subsequently confirmed in writing, to TSFGs
board of directors that, as of such date and based upon and
subject to the assumptions, considerations, qualifications and
limitations set forth in the written opinion, the consideration
to be received by the holders of shares of TSFGs common
stock pursuant to the merger agreement was fair, from a
financial point of view, to such holders.
The full text of Morgan Stanleys written fairness
opinion, dated May 17, 2010, is attached as Appendix B
to this proxy statement/prospectus. You should read the Morgan
Stanley opinion for a discussion of the assumptions made,
procedures followed, factors considered and limitations upon the
review undertaken by Morgan Stanley in rendering its opinion.
Morgan Stanleys opinion is directed to TSFGs board
of directors and addresses only the fairness, from a financial
point of view, of the consideration to be received by the
holders of shares of TSFGs common stock pursuant to the
merger agreement, and it does not address any other aspect of
the merger nor does it constitute a recommendation to any
shareholder as to how to vote at any shareholders meeting.
The summary of the opinion of Morgan Stanley set forth in this
document is qualified in its entirety by reference to the full
text of such opinion.
In arriving at its opinion, Morgan Stanley, among other things:
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reviewed certain publicly available financial statements and
other business and financial information of TSFG and TD,
respectively;
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reviewed certain internal financial statements and other
financial and operating data concerning TSFG;
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reviewed certain financial projections prepared by management of
TSFG;
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reviewed (i) the consent order with the FDIC and the South
Carolina State Board of Financial Institutions, effective
April 30, 2010, which consent order was entered into by the
board of directors of TSFGs bank subsidiary, Carolina
First Bank, and (ii) TSFGs written agreement with the
Federal Reserve Board, effective May 4, 2010;
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discussed the past and current operations and financial
condition and the prospects of TSFG with senior executives of
TSFG;
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reviewed the reported prices and trading activity for
TSFGs common stock and TDs common stock;
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37
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compared the financial performance of TSFG and TD and the prices
and trading activity of TSFGs common stock and TDs
common stock with that of certain other publicly-traded
companies comparable with TSFG and TD, respectively, and their
securities;
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reviewed the financial terms, to the extent publicly available,
of certain recent recapitalization transactions involving
certain companies comparable with TSFG;
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participated in discussions and negotiations among
representatives of TSFG and TD and their financial and legal
advisors;
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reviewed the merger agreement and certain related
documents; and
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performed such other analyses, reviewed such other information
and considered such other factors as Morgan Stanley deemed
appropriate.
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The TSFG board of directors advised Morgan Stanley that TSFG had
considerable exposure to risks related to the deteriorating
credit performance and declining values of a significant portion
of the loan portfolio and related assets of TSFG and its
subsidiaries, and that the business and prospects of TSFG were
severely and negatively affected as a result thereof, as well as
due to the prevailing economic, financial and regulatory
environment and the deteriorating financial condition of TSFG.
In particular, the TSFG board of directors informed Morgan
Stanley that:
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The board of directors of TSFGs bank subsidiary, Carolina
First Bank, had entered into the consent order, that, among
other things, included the following:
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A requirement that Carolina First Bank have a tier 1
leverage ratio of not less than 8% and a total risk-based
capital ratio of not less than 12% within 120 days of the
date of the consent order;
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Prohibitions on Carolina First Banks ability to accept or
renew brokered deposits without prior approval from the FDIC,
which may put severe pressure on Carolina First Banks
short and long term liquidity needs; and
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Limitations on Carolina First Bank with respect to the rates it
can pay on certain customer deposits.
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TSFG had also entered into the written agreement, that, among
other things, required TSFG to submit to the Federal Reserve
Board, within 60 days of such agreement, an acceptable
written plan to maintain sufficient capital at TSFG on a
consolidated basis; and
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TSFG expected that, absent a transaction such as the merger or a
significant infusion of new capital, TSFGs capital
position would become severely strained and, as a result, TSFG
and Carolina First Bank would face additional regulatory
actions, including intervention by the United States federal
banking regulators,
and/or TSFG
would be required to seek protection under applicable bankruptcy
laws.
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As part of Morgan Stanleys engagement, Morgan Stanley
assisted the management of TSFG in connection with its
evaluation of a range of strategic alternatives, including, but
not limited to, a sale of TSFG and capital raising and
recapitalization alternatives. As part of this process, TSFG had
discussions with a significant number of potential strategic
acquirors and investors. In arriving at its opinion, Morgan
Stanley took into account the foregoing.
The TSFG board of directors advised Morgan Stanley that, as a
result of the foregoing, TSFG and its board of directors were
faced with a narrow set of alternatives, which, at the time of
Morgan Stanleys opinion, were limited to a significant
strategic transaction such as the merger or intervention by
United States banking regulators and eventual liquidation of
TSFG, and, at that point, there were no executable transactions
other than the merger. Morgan Stanley considered recent
instances where concerns regarding the liquidity of a bank or
financial institution triggered a rapid deterioration of the
institutions financial condition, necessitating government
intervention or bankruptcy protection and, as a result of which,
the common equity holders of the institution received
substantially diminished value, if any at all, for their equity.
In light of the facts and circumstances, Morgan Stanley assumed
that, if Carolina First Bank were taken over by the United
States federal banking regulators and TSFGs non-banking
38
assets were liquidated under applicable bankruptcy laws, the
holders of TSFGs common stock would likely receive no
value for their shares.
In arriving at its opinion, Morgan Stanley assumed and relied
upon, without independent verification, the accuracy and
completeness of the information that was publicly available or
supplied or otherwise made available to it by TSFG, and formed a
substantial basis for its opinion. With respect to the financial
projections, Morgan Stanley assumed that they had been
reasonably prepared on bases reflecting the best currently
available estimates and judgments of TSFGs management of
the future financial performance of TSFG. In addition, Morgan
Stanley assumed that the merger will be consummated in
accordance with the terms set forth in the merger agreement
without any waiver, amendment or delay of any terms or
conditions. Morgan Stanley assumed that, in connection with the
receipt of all the necessary governmental, regulatory or other
approvals and consents required for the merger, no delays,
limitations, conditions or restrictions will be imposed that
would have a material adverse effect on the contemplated
benefits expected to be derived in the merger. Morgan Stanley is
not a legal, tax, accounting or regulatory advisor. Morgan
Stanley is a financial advisor only and relied upon, without
independent verification, the assessment of TSFG and its legal,
tax, accounting, or regulatory advisors with respect to legal,
tax, accounting, or regulatory matters. Morgan Stanleys
opinion is not a solvency opinion and did not in any way address
the solvency or financial condition of TSFG or whether other
strategic alternatives exist for TSFG or are available. Morgan
Stanley expressed no opinion with respect to the fairness of the
amount or nature of the compensation to any of TSFGs
officers, directors or employees, or any class of such persons,
relative to the consideration to be received by the holders of
TSFGs common stock in the merger. Morgan Stanley did not
make any independent valuation or appraisal of the assets or
liabilities of TSFG, nor was it furnished with any such
appraisals. Morgan Stanley does not have expertise in the
evaluation of allowances for loan losses, and it neither made an
independent evaluation of the adequacy of the allowance for loan
losses at TSFG nor examined any individual loan credit files of
TSFG, nor was Morgan Stanley requested to conduct such a review.
Accordingly, Morgan Stanley relied upon, without independent
verification, the assessment by TSFGs management that the
aggregate allowance for the estimated loan losses of TSFG was
adequate. In particular, Morgan Stanley did not express any
opinion as to the value of any asset of TSFG, whether at the
current market prices or in the future. Morgan Stanley noted,
however, that, under the ownership of a company with adequate
liquidity and capital, such as TD, the value of TSFG could
substantially improve, resulting in significant returns to TD if
the proposed merger is consummated. Morgan Stanleys
opinion was necessarily based on financial, economic, market and
other conditions as in effect on, and the information made
available to Morgan Stanley as of, the date of the opinion.
Events occurring after such date may affect its opinion and the
assumptions used in preparing it, and Morgan Stanley did not
assume any obligation to update, revise or reaffirm its opinion.
Morgan Stanleys opinion was approved by a committee of
Morgan Stanley investment banking professionals in accordance
with its customary practices.
The following is a summary of the material financial analyses
used by Morgan Stanley in connection with providing its opinion
to TSFGs board of directors. The financial analyses
summarized below include information presented in tabular
format. In order to fully understand the financial analyses used
by Morgan Stanley, the tables must be read together with the
text of each summary. The tables alone do not constitute a
complete description of the financial analyses. Rather, the
analyses listed in the tables and described below must be
considered as a whole; considering any portion of such analyses
and of the factors considered, without considering all analyses
and factors, could create a misleading or incomplete view of the
process underlying Morgan Stanleys fairness opinion.
Morgan Stanley did not perform certain analyses that it would
customarily prepare in connection with a financial opinion
letter because such analyses were not meaningful as a result of
the extraordinary circumstances of TSFG described in the opinion.
Review
of Alternatives
Based on information provided by TSFGs board of directors,
Morgan Stanley reviewed the condition of TSFG and the
alternatives available to TSFG. The TSFG board of directors
informed Morgan Stanley that TSFGs principal operating
subsidiary, Carolina First Bank, had received the consent order
following, among other things, approximately $1.4 billion
in losses (after preferred dividends) since 2008, significant
continuing expected losses and rapidly depleting capital. The
consent order, among other things, required Carolina First Bank
to raise substantial capital within 120 days. The TSFG
board of directors also informed Morgan Stanley that TSFG had
39
entered into the written agreement with the Federal Reserve
Board. Based upon the foregoing, absent third party action
(i.e., a sale of the company or substantial capital raise),
Carolina First Bank would exhaust its regulatory capital, fail
to achieve the obligations under the consent order and be
expected to be seized by the FDIC. Because TSFG had only minimal
assets beyond its investment in Carolina First Bank, its common
shareholders would likely receive no value in the event of a
seizure of the bank.
TSFG had conducted an extensive review of capital options and
potential investors and no definitive offers were received. Even
if a recapitalization of TSFG could be completed, the terms of
recent publicly announced recapitalization transactions
involving companies that Morgan Stanley, based on its
experience, deemed comparable to TSFG would imply a value to
TSFGs common stock that is less than the value attributed
to such shares in the merger with TD.
Using publicly available information, Morgan Stanley reviewed
the following transactions:
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Sterling Financial Corporations proposed capital plan,
consisting of a $170 million investment by Thomas H. Lee
Partners; conversion of $303 million of preferred stock
held by the U.S. Treasury into common stock at a 75%
discount; and a $555 million capital raise (announced
April 27, 2010); and
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Ford Financial Fund, L.P.s proposed investment of
$500 million in Pacific Capital Bancorp, conditioned upon
Pacific Capital Bancorps exchange of $181 million of
preferred stock held by the U.S. Treasury for common stock
at an 80% discount; successful tender for at least 70% of
$67 million of trust preferred securities at an 80%
discount and $121 million of subordinated debt at a 70%
discount; and receipt of approval from NASDAQ for an exemption
to its shareholder voting requirements pursuant to NASDAQs
financial viability exception (announced April 29, 2010).
|
No company or transaction utilized in this analysis is identical
to TSFG or the merger.
The following table sets forth certain financial metrics of
these transactions and the implied price per share of TSFG
common stock, based on TSFGs closing price on the Nasdaq
Global Select Market on May 14, 2010 of $0.67 per share:
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Financial
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Implied Price
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Sterling Financial
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Metrics
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per Share for TSFG
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Discount to Current Market Price
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87%
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$0.08
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Price/Tangible Book
Value*
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Not Meaningful
|
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Not Meaningful
|
Pro Forma Ownership of Existing Shareholders
|
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1%
|
|
$0.05**
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|
|
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Financial
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|
Implied Price
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Pacific Capital
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Metrics
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per Share for TSFG
|
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Discount to Current Market Price
|
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95
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%
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$
|
0.03
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Price/Tangible Book Value
|
|
|
0.1
|
x
|
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$
|
0.16
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Pro Forma Ownership of Existing Shareholders
|
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2
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%
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$
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0.07
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**
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* |
|
Sterling Financial reported negative tangible book value at
March 31, 2010. |
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** |
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Assumes $800 million common equity raise by TSFG. |
Morgan Stanley was also advised that TSFG conducted an extensive
solicitation of strategic partners and received no definitive
offers other than from TD with respect to the merger.
The TSFG board of directors advised Morgan Stanley that, as a
result of the foregoing, TSFG and its board of directors were
faced with a narrow set of alternatives, which at the time of
Morgan Stanleys opinion were limited to a significant
strategic transaction such as the merger with TD or intervention
by United States banking regulators and eventual liquidation of
TSFG, and that at that point, there were no executable
transactions other than the merger with TD.
40
TD
Valuation Summary
The number of shares of TD common stock issuable in the merger
for each share of TSFG common stock for which an election to
receive TD shares is made was calculated based on TDs
closing stock price on the Toronto Stock Exchange on
May 14, 2010 of C$73.39 per share, converted to
U.S. dollars, as compared to the cash price per share of
TSFG common stock for which an election to receive cash in the
merger is made ($0.28).
Discounted
Cash Flow Analysis
Morgan Stanley conducted an illustrative discounted cash flow
analysis on TD (on a stand-alone basis), using Institutional
Brokers Estimate System, which we refer to as IBES, mean
earnings per share estimates for the remainder of fiscal year
2010, and fiscal years 2011 and 2012, grown at 7.0% thereafter,
a 5% tangible common equity ratio, discount rates ranging from
10% 12% and terminal forward earnings multiples
ranging from 10.0x 12.0x applied to estimated
earnings for fiscal year 2015. IBES is a data service that
compiles forward-looking financial estimates made by equity
research analysts for U.S. publicly traded companies. This
analysis resulted in an implied present value per share of TD
common stock in the range of C$67 to C$85, as compared to
TDs closing stock price on the Toronto Stock Exchange on
May 14, 2010 of C$73.39.
Comparative
Analysis of TD Trading Multiples
Morgan Stanley also reviewed certain historical trading
multiples of TD common stock in relation to the corresponding
mean trading multiples for selected companies that share similar
business characteristics with TD.
The selected companies were divided into two segments:
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Canadian peers: Royal Bank of Canada, Bank of
Nova Scotia, BMO Financial Group and Canadian Imperial Bank of
Commerce; and
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U.S. peers: Wells Fargo & Co.,
Bank of America Corp., JPMorgan Chase & Co., Citigroup
Inc., U.S. Bancorp and PNC Financial Services Group, Inc.
|
The following table lists the results of the analysis:
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|
|
Closing Price as a Multiple of Next 12 Months Earnings
Estimates
|
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|
Over Period Ending on May 14, 2010
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1-Month
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6-Month
|
|
1-Year
|
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3-Year
|
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5-Year
|
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Current
|
|
Avg.
|
|
Avg.
|
|
Avg.
|
|
Avg.
|
|
Avg.
|
|
The Toronto-Dominion Bank
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11.5
|
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12.0
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11.8
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11.9
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|
10.8
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|
11.5
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Canadian peers mean
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11.8
|
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|
12.3
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12.2
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12.2
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10.7
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11.5
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U.S. peers mean
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12.2
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14.3
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15.1
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15.8
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12.8
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12.4
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|
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|
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|
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|
Closing Price as a Multiple of Tangible Book Value per
Share
|
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|
Over Period Ending on May 14, 2010
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1-Month
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|
6-Month
|
|
1-Year
|
|
3-Year
|
|
5-Year
|
|
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Current
|
|
Avg.
|
|
Avg.
|
|
Avg.
|
|
Avg.
|
|
Avg.
|
|
The Toronto-Dominion Bank
|
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|
3.4
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3.5
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3.3
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3.2
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3.8
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4.4
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Canadian peers mean
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3.0
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3.0
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2.9
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2.9
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2.8
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3.0
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U.S. peers mean
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2.0
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2.1
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2.0
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2.0
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2.6
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3.0
|
|
Sources: FactSet and SNL Financial
No company utilized in the comparative analysis of TD trading
multiples is identical to TD. In evaluating the comparable
companies, Morgan Stanley made judgments and assumptions with
regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which
are beyond the control of TD, such as the impact of competition
on the businesses of TD and the industry generally, industry
growth and the absence of any adverse material change in the
financial condition and prospects of TD or the industry or in
the financial markets in general. Mathematical analysis (such as
determining the average or median) is not in itself a meaningful
method of using peer data.
41
Miscellaneous
The preparation of a financial opinion is a complex process and
is not necessarily susceptible to a partial analysis or summary
description. In arriving at its opinion, Morgan Stanley
considered the circumstances described above and the results of
all of its analyses as a whole and did not attribute any
particular weight to any analysis or factor it considered.
Morgan Stanley believes that selecting any portion of its
analyses, without considering all analyses as a whole, would
create an incomplete view of the process underlying its analyses
and opinion. In addition, Morgan Stanley may have given various
analyses and factors more or less weight than other analyses and
factors, and may have deemed various assumptions more or less
probable than other assumptions. In performing its analyses,
Morgan Stanley made numerous assumptions with respect to
industry performance, general business and economic conditions
and other matters. Many of these assumptions are beyond the
control of TSFG and TD. Any estimates contained in Morgan
Stanleys analyses are not necessarily indicative of future
results or actual values, which may be significantly more or
less favorable than those suggested by such estimates.
Morgan Stanley conducted the analyses described above solely as
part of its analysis of the fairness of the consideration to be
received by the holders of TSFGs common stock pursuant to
the merger agreement from a financial point of view to such
holders and in connection with the delivery of its opinion to
TSFGs board of directors. These analyses do not purport to
be appraisals or to reflect the prices at which shares of
TSFGs common stock might actually trade.
The consideration to be paid pursuant to the merger agreement
was determined through arms-length negotiations between
TSFG and TD and was approved by TSFGs board of directors.
Morgan Stanley provided advice to TSFG during these
negotiations. Morgan Stanley did not, however, recommend any
specific merger consideration to TSFG or that any specific
merger consideration constituted the only appropriate merger
consideration for the merger. Morgan Stanleys opinion did
not in any manner address the prices at which TDs common
stock will trade following consummation of the merger. Morgan
Stanleys opinion did not address the underlying business
decision of TSFG to engage in the merger, or the relative merits
of the merger as compared to any other alternative business
transaction, or other alternatives, or whether or not such
alternatives could be achieved or were available. Morgan
Stanleys opinion addressed only the fairness, from a
financial point of view, to the holders of TSFGs common
stock, as of the date of the opinion, of the consideration to be
received by such holders pursuant to the merger agreement.
Morgan Stanley expressed no view on, nor did its opinion
address, any other term or aspect of the fairness of the merger
to, or any consideration received in connection therewith by,
the holders of any class of securities, creditors, or other
constituencies of TSFG other than holders of TSFG common stock.
Morgan Stanley expressed no view or opinion as to any terms or
other aspects of the merger, including, without limitation,
(i) TDs acquisition of shares of the Series M
Preferred Stock and (ii) TDs purchase from the United
States Department of the Treasury of all of the outstanding
shares of TSFG
Series 2008-T
Preferred Stock, and the associated warrant, acquired under the
Treasurys Capital Purchase Program, each to be effected by
TD in connection with the merger.
Morgan Stanleys opinion and its presentation to
TSFGs board of directors was one of many factors taken
into consideration by TSFGs board of directors in deciding
to approve, adopt and authorize the merger agreement.
Consequently, the analyses as described above should not be
viewed as determinative of the opinion of TSFGs board of
directors with respect to the merger consideration or of whether
TSFGs board of directors would have been willing to agree
to a different merger consideration.
Morgan Stanley is a global financial services firm engaged in
the securities, investment management and individual wealth
management businesses. Morgan Stanleys securities business
is engaged in securities underwriting, trading and brokerage
activities, foreign exchange, commodities and derivatives
trading, prime brokerage, as well as providing investment
banking, financing and financial advisory services. Morgan
Stanley, its affiliates, directors and officers may at any time
invest on a principal basis or manage funds that invest, hold
long or short positions, finance positions, and may trade or
otherwise structure and effect transactions, for their own
account or the accounts of its customers, in debt or equity
securities or loans of TSFG, TD or any other company, or any
currency or commodity, that may be involved in the proposed
merger, or any related derivative instrument.
In the two years prior to the date of its opinion, Morgan
Stanley and its affiliates have provided financial advisory and
financing services for each of TSFG and TD and have received
fees in connection for such services.
42
Morgan Stanley may also seek to provide such services to TD in
the future and expects to receive fees for the rendering of
these services. Morgan Stanley acted as financial advisor to the
board of directors of TSFG in connection with the merger. As
compensation for its services in connection with the merger,
TSFG has agreed to pay Morgan Stanley aggregate fees of
approximately $12,875,000, a substantial portion of which is
payable upon the completion of the merger. TSFG has also agreed
to reimburse Morgan Stanley for certain expenses incurred by
Morgan Stanley, including fees of outside legal counsel, and to
indemnify Morgan Stanley and its affiliates, their respective
directors, officers, agents and employees and each person, if
any, controlling Morgan Stanley or any of its affiliates against
certain liabilities and expenses, including certain liabilities
under the federal securities laws, related to or arising out of
Morgan Stanleys engagement.
TDs
Reasons for the Merger
One of TDs strategic priorities is the continued expansion
of its U.S. operations in businesses in which TD is strong
in Canada and sees opportunities for growth in the United
States. In that regard, TD believes that the acquisition of TSFG
will complement TDs U.S. growth strategy, footprint
and retail banking model. In particular, TD believes it will
expand its presence in the Florida market and provide a strong
entry for TD into South Carolina and North Carolina. TD also
considered the experience and quality of TSFGs current
management team as a significant benefit of the transaction and
believes there is a growth opportunity in providing a broader
suite of retail and commercial banking products to TSFGs
customers. The board of directors of TD approved the merger
agreement after TDs senior management discussed with the
board of directors a number of factors, including those
described above and the business, assets, liabilities, results
of operations, financial performance, strategic direction and
prospects of TSFG. The TD board of directors did not consider it
practicable to, and did not attempt to, quantify or otherwise
assign relative weights to the specific factors it considered in
reaching its determination. The TD board of directors viewed its
position as being based on all the information and the factors
presented to and considered by it. In addition, individual
directors may have given different weights to different
information and factors.
Litigation
Relating to the Merger
TSFG, members of its board of directors and management, TD and
Hunt Merger Sub, Inc. have been named as defendants in two
purported class action lawsuits in the South Carolina Court of
Common Pleas, consolidated under the caption In re The South
Financial Group, Inc., Civil Action
No. 2010-CP-23-5001.
The consolidated action alleges breach of fiduciary duty by the
TSFG directors in connection with the acquisition contemplated
by the merger agreement and the issuance of Series M
preferred stock to TD, and asserts aiding and abetting claims
against TSFG, TD and Hunt Merger Sub, Inc. On August 6,
2010, the parties entered into a stipulation of settlement to
settle the consolidated action. Under the stipulation of
settlement, the defendants agreed to include certain additional
disclosures relating to the merger in this proxy
statement/prospectus and TD agreed not to engage in any
additional purchases of outstanding shares of TSFG common stock
as of July 22, 2010 and prior to the record date. The
stipulation of settlement is subject to the approval of the
South Carolina Court of Common Pleas.
Interests
of TSFGs Executive Officers and Directors in the
Merger
In considering the recommendation of the TSFG board of directors
that you vote to adopt the merger agreement, you should be aware
that some of TSFGs executive officers and directors may
have financial interests in the merger that are different from,
or in addition to, those of TSFGs shareholders generally.
The independent members of TSFGs board of directors were
aware of and considered these interests, among other matters, in
evaluating and negotiating the merger agreement and the merger,
and in recommending to the shareholders that the merger
agreement be adopted.
Equity
Compensation Awards
Under the merger agreement, upon completion of the merger,
outstanding TSFG equity awards (except for TSFG restricted stock
units, which we refer to as RSUs) will be converted into
corresponding TD equity awards, based on the exchange ratio in
the merger. Outstanding TSFG restricted stock units will be
converted into the right to receive $0.28 per share subject to
such restricted stock unit, upon completion of the merger. Under
the terms of the merger agreement, stock options to purchase
shares of TSFG common stock that were granted under the Florida
43
Banks, Inc. 1998 Stock Option Plan and the TSFG Stock Option
Plan will vest and terminate, in accordance with their terms,
upon completion of the merger or, to the extent required by
their terms, during a period of up to 31 days thereafter.
The treatment of outstanding TSFG equity awards in the merger
are discussed in greater detail under
Treatment of TSFG Options and Other Equity
Based Awards beginning on page 55.
The table below sets forth the number of stock options, service-
and performance-based restricted shares and RSUs that will vest
upon consummation of the merger for each TSFG executive officer,
as well as for the non-employee directors as a group, based on
TSFG equity compensation awards outstanding as of
August 18, 2010, and assuming a merger completion date of
September 30, 2010.
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
|
|
|
Outstanding
|
|
Performance
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
Service Based
|
|
Based
|
|
Outstanding
|
|
Performance
|
|
|
Stock
|
|
Restricted
|
|
Restricted
|
|
Service Based
|
|
Based RSUs
|
|
|
Options That
|
|
Shares That
|
|
Shares That
|
|
RSUs That
|
|
That Would
|
|
|
Would Vest
|
|
Would Vest
|
|
Would Vest
|
|
Would Vest
|
|
Vest
|
|
H. Lynn Harton
|
|
|
110,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
0
|
|
Tanya A. Butts
|
|
|
21,250
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,875
|
|
|
|
0
|
|
William P. Crawford, Jr.
|
|
|
56,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
J. Ernesto Diaz
|
|
|
10,834
|
|
|
|
3,334
|
|
|
|
0
|
|
|
|
1,500
|
|
|
|
0
|
|
Robert A. Edwards
|
|
|
23,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,000
|
|
|
|
0
|
|
Christopher S. Gompper
|
|
|
22,750
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,875
|
|
|
|
0
|
|
James R. Gordon
|
|
|
106,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
0
|
|
Christopher G. Speaks
|
|
|
9,950
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,500
|
|
|
|
0
|
|
Non-employee directors, as a group
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Employment
Agreements
Current Employment Agreements. TSFG is
party to Noncompetition, Severance and Employment Agreements,
which we refer to as employment agreements, with each of its
executive officers (Messrs. Gordon, Crawford, Gompper,
Diaz, Harton, Speaks and Edwards and Ms. Butts), which
will, upon the consummation of the merger, be superseded by
their offer letters with TD, as described in more detail below.
Under the terms of the employment agreements, if an executive
officers employment is terminated without cause or due to
a constructive termination, in each case, following a change in
control (each as defined under the employment agreement), the
executive would have been eligible to receive severance
benefits, which included a lump sum cash severance benefit equal
to a multiple of one to three times the sum of the
executives annual base salary and average annual cash
bonus earned in the three years preceding the executives
termination, vesting of certain equity compensation awards and
continued coverage under TSFGs health and life insurance
plans.
In addition, in the event that any payments or benefits made to
the executive would be subjected to the excise tax imposed by
Section 4999 of the Internal Revenue Code, under the terms
of the employment agreements, Messrs. Harton, Crawford and
Gordon would have received an additional payment such that they
would be placed in the same after-tax position as if no excise
tax had been imposed. However, to the extent such payments or
benefits do not exceed 110% of the specified statutory threshold
amount giving rise to the excise tax, Messrs. Harton,
Crawford and Gordon would not have been entitled to any
additional payment and any payments or benefits would have been
reduced to the maximum amount that he could receive without
being subject to the excise tax. In the case of all the other
executive officers, any severance payments or benefits that
would be subject to the excise tax under Section 4999 of
the Code would have been reduced to the maximum amount that he
or she could receive without being subject to the excise tax.
Because each of the executive officers existing employment
agreements will be superseded by their respective new offer
letter agreements with TD at the completion of the merger, none
of the executive officers will receive severance benefits under
their existing employment agreement.
44
New Offer Letter Agreement with Messrs. Gordon and
Crawford. Messrs. Gordon and Crawford
have each entered into a new offer letter agreement with TD that
will become effective upon the completion of the merger and will
have an employment term guaranteed up to 90 days after the
completion of the merger (except in the event of a termination
for cause). Under the terms of these new offer letter
agreements, Mr. Gordon and Mr. Crawfords base
salary will be $345,000 and $275,625, respectively. Upon the
applicable executives termination of employment (excluding
termination for cause) at a date no earlier than the end of the
employment term, executive will be entitled to a severance
payment of $650,000, in lieu of any severance benefits under
TDs severance arrangements. In the event that any payments
or benefits made to the executive would be subjected to the
excise tax imposed by Section 4999 of the Internal Revenue
Code, such payments will be reduced to the maximum amount that
the executive could receive without being subject to the excise
tax.
New Offer Letter Agreements with Messrs. Speaks,
Gompper, Diaz, Edwards, Harton and
Ms. Butts. Messrs Speaks, Gompper,
Diaz, Edwards and Harton and Ms. Butts have each entered
into a new offer letter agreement with TD that will become
effective upon the completion of the merger. Under the terms of
the offer letter agreement, Messrs Gompper, Diaz, Edwards and
Harton and Ms. Butts will each be eligible to receive
(1) an annual base salary equal to $300,000, $300,000,
$200,000, $450,000 and $200,000, respectively, (2) annual
incentive target awards equal to $50,000, $50,000, $25,000,
$175,000 and $25,000, respectively and (3) equity incentive
target awards equal to $150,000, $150,000, $100,000, $625,000
and $100,000, respectively, (4) a one-time TD RSU
and/or cash
award, subject to the executives continued employment for
specified periods of time, in an amount equal to $600,000,
$1,025,000, $595,000, $2,000,000 and $595,000, respectively
(with the number of shares to be granted under the TD RSU awards
determined by dividing the dollar amount of the award by the
closing TD share price on the trading day preceding the grant
date) and (5) certain benefits such as a car allowance,
paid time off and credits for years of service currently
recognized by TSFG. Mr. Speaks will receive an annual base
salary of $176,000, an annual incentive target award in an
amount equal to what is granted to similarly situated executives
of TD and certain benefits such as paid time off and credits for
years of service. Mr. Speaks will also, upon consummation
of the merger, receive a payment of $16,000, which represents
the earned deferred portion of a prior years bonus payable
under the applicable bonus plan terms.
The offer letter further specifies that, in the event of a
termination without cause during the period prior to the third
anniversary of the executives start date (or second
anniversary in the case of Mr. Speaks), Messrs Speaks,
Gompper, Diaz, Edwards and Harton and Ms. Butts will be
eligible to receive severance benefits in an amount equal to
$200,000, $600,000, $925,000, $525,000, $1,800,000 and $525,000,
respectively.
In the event that any payments or benefits made to the executive
would be subjected to the excise tax imposed by
Section 4999 of the Internal Revenue Code, such payments
will be reduced to the maximum amount that the executive could
receive without being subject to the excise tax.
Supplemental
Executive Retirement Agreements.
Messrs. Harton, Butts, Crawford, Diaz, Edwards, Gompper,
and Gordon each entered into amendments to their offer letter
agreements with TD to provide that, upon the consummation of the
merger, each of their Supplemental Executive Retirement
Agreements, which we refer to as SERPs, with TSFG will terminate
and, without giving effect to the fact that a change in control
(as defined under the SERP) has occurred and the attendant
additional benefits that the SERP provides in that situation,
each of their vested and accrued SERP amounts will be
distributed in an amount equal to $211,852, $13,487, $719,637,
$14,580, $10,558, $14,154 and $137,135, respectively, assuming a
merger completion date of September 30, 2010.
Non
Qualified Deferred Compensation Plan
TSFG maintains the 2005 Executive and Director Deferred
Compensation Plan, a non-qualified deferred compensation plan,
for the benefit of eligible executive officers and all the
directors of TSFG. Under the terms of the Deferred Compensation
Plan, if a change in control occurs prior to the
participants termination of employment, then the
participants vested account balance may become, at the
participants election, distributable, in a lump sum, no
later than 60 days following a change in control. If the
participant has not made such an election, then his or her
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account balance will remain within the Deferred Compensation
Plan and continue to be subject to its terms and conditions.
Indemnification
and Directors and Officers Insurance
Following completion of the merger, TD will cause TSFG to
indemnify and hold harmless the current or former directors,
officers or employees of TSFG or its subsidiaries against all
costs and liabilities arising out of matters existing or
occurring at or before the completion of the merger based in
whole or in part on the fact of such persons status as
such a director, officer or employee or the merger and related
transactions, to the same extent that they are indemnified under
the articles of incorporation, bylaws or other organizational
documents of TSFG, or under certain indemnification agreements.
In addition, for a period of six years after completion of the
merger, TD will provide directors and officers
liability insurance that serves to reimburse current and former
officers and directors of TSFG or any of its subsidiaries with
respect to claims against such persons arising from facts or
events that existed or occurred at or prior to the completion of
the merger. Such insurance will contain at least the same
coverage and amounts and contain terms and conditions as are not
less advantageous, in the aggregate, to such indemnified persons
as that coverage currently provided by the TSFG, and be
purchased from insurers with ratings equivalent to or better
than the insurers providing coverage as of the date of the
merger agreement. TD will not, however, be required to make
annual premium payments for such insurance to the extent such
premiums exceed 200% of TSFGs current annual premium
payments for such insurance.
Material
United States Federal Income Tax Consequences
The following is a summary of the material United States federal
income tax consequences of the merger to holders of TSFG common
stock and the ownership of TD common shares received in the
merger by U.S. holders (as defined below) (i) who are
residents of the United States for purposes of the current
Canada-United States Income Tax Convention (1980) as
amended, which we refer to as the Treaty,
(ii) whose TD common shares are not, for purposes of the
Treaty, effectively connected with a permanent establishment in
Canada and (iii) who otherwise qualify for the full
benefits of the Treaty. This discussion is based upon the Code,
the regulations of the United States Treasury Department and
court and administrative rulings and decisions in effect on the
date of this document. These laws may change, possibly
retroactively, and any change could affect the continuing
validity of this discussion. We have not and will not seek any
rulings from the Internal Revenue Service, which we refer to as
the IRS, regarding the matters discussed below. There can be no
assurance that the IRS will not take positions concerning the
tax consequences of the merger that are different from those
discussed below.
For purposes of this discussion, we use the term
U.S. holder to mean:
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an individual citizen or resident of the United States for
United States federal income tax purposes;
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a corporation (or other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any U.S. state
or the District of Columbia;
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an estate the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust which either (1) is subject to the primary
supervision of a court within the United States and one or more
United States persons have the authority to control all
substantial decisions of the trust or (2) has a valid
election in effect under applicable United States Treasury
regulations to be treated as a United States person.
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A
non-U.S. holder
is a person (other than a partnership) that is not a
U.S. holder.
If a partnership holds TD common shares or TSFG common stock,
the tax treatment of a partner will generally depend on the
status of the partners and the activities of the partnership. If
you are a partner of a partnership holding TD common shares or
TSFG common stock, you should consult your tax advisors.
This discussion assumes that you hold your TD common shares or
TSFG common stock as capital assets within the meaning of
Section 1221 of the Code. This discussion does not address
any tax consequences arising under the laws of any state, local
or foreign jurisdiction or under any U.S. federal laws
other than those pertaining to the income tax, nor does it
address the tax consequences arising under the unearned income
Medicare contribution tax pursuant to the Health Care and
Education Reconciliation Act of 2010. Further, this discussion
does not address
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all aspects of United States federal income taxation that may be
relevant to you in light of your particular circumstances or
that may be applicable to you if you are subject to special
treatment under the United States federal income tax laws,
including if you are:
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a financial institution;
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a tax-exempt organization;
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an S corporation, partnership or other pass-through entity;
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an insurance company;
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a regulated investment company;
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a real estate investment trust;
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a dealer in securities or foreign currencies;
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a trader in securities who elects the
mark-to-market
method of accounting for your securities;
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a person liable for alternative minimum tax;
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a TSFG shareholder who received TSFG common stock through the
exercise of employee stock options or through a tax-qualified
retirement plan;
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a person that has a functional currency other than the United
States dollar;
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a holder of options granted under any TSFG benefit plan;
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a TSFG or TD shareholder who holds TSFG common stock or TD
common shares, respectively, as part of a hedge, straddle,
constructive sale or integrated or conversion
transaction; or
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a person that owns or is deemed to own 10% or more of TDs
voting stock.
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Merger
U.S.
Holders
We believe that the merger will be treated for United States
federal income tax purposes as a taxable sale by a
U.S. holder of TSFG common stock of the shares of TSFG
common stock that such holder surrenders in the merger.
Accordingly, the material United States federal income tax
consequences of the merger are as follows:
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A U.S. holder will generally recognize gain or loss equal
to the difference between (1) the sum of any cash
consideration (including any cash received in lieu of fractional
shares) and the fair market value of any TD common shares
received in the merger and (2) such holders adjusted
tax basis in the shares of TSFG common stock surrendered in
the merger for TD common shares
and/or cash;
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A U.S. holders aggregate tax basis in the TD common
shares, if any, that such holder receives in the merger will
equal the fair market value of such common shares at the time of
the merger; and
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A U.S. holders holding period for the TD common
shares, if any, that such holder receives in the merger should
generally begin on the day after the completion of the merger.
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If U.S. holders receive stock consideration, such holders
of TSFG common stock may need to sell TD common shares received
in the merger, or raise cash from other sources, to pay any tax
obligations resulting from the merger.
If a U.S. holder acquired different blocks of TSFG common
stock at different times and at different prices, any gain or
loss will be determined separately with respect to each such
block of TSFG common stock surrendered.
Any gain or loss that a U.S. holder recognizes in
connection with the merger will generally be capital gain or
loss and will be long-term capital gain or loss if, as of the
date of the merger, such holders holding period in its
TSFG common stock is greater than one year as of the date of the
merger. For non-corporate shareholders, long-term capital gain
generally is subject to tax at preferential rates. There are
limitations on the deductibility of capital losses.
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U.S. holders of TSFG common stock may be subject to
information reporting and backup withholding on any cash
payments such holders receive in the merger. A U.S. holder
will not be subject to backup withholding, however, if such
holder:
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timely furnishes a correct taxpayer identification number and
certifies that such holder is not subject to backup withholding
on the substitute
Form W-9
or successor form included in the letter of transmittal such
holder will receive; or
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is otherwise exempt from backup withholding.
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Any amounts withheld under the backup withholding rules will
generally be allowed as a refund or credit against a
U.S. holders United States federal income tax
liability, provided such holder timely furnishes the required
information to the IRS.
Non-U.S.
Holders
Any gain realized on the receipt of TD common shares
and/or cash
in the merger by a
non-U.S. holder
generally will not be subject to United States federal income
tax unless:
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the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States (and, if required by an applicable income
tax treaty, is attributable to a United States permanent
establishment of the
non-U.S. holder);
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the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met; or
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TSFG is or has been a United States real property holding
corporation for United States federal income tax purposes
and the
non-U.S. holder
owned more than 5% of TSFGs common stock at any time
during the five years preceding the merger.
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An individual
non-U.S. holder
described in the first bullet point immediately above will be
subject to tax on the net gain derived from the merger under
regular graduated United States federal income tax rates. An
individual
non-U.S. holder
described in the second bullet point immediately above will be
subject to a flat 30% tax on the gain derived from the merger,
which may be offset by U.S. source capital losses, even
though the individual is not considered a resident of the United
States. If a
non-U.S. holder
that is a foreign corporation falls under the first bullet point
immediately above, it will be subject to tax on its net gain in
the same manner as if it were a United States person as defined
under the Code and may be subject to an additional branch
profits tax equal to 30% of its effectively connected earnings
and profits or at such lower rate as may be specified by an
applicable income tax treaty.
TSFG believes it is not and has not been a United States
real property holding corporation for United States
federal income tax purposes.
Information reporting and, depending on the circumstances,
backup withholding will apply to the TD common shares
and/or cash
received in the merger, unless the beneficial owner certifies
under penalty of perjury that it is a
non-U.S. holder
(and the payor does not have actual knowledge or reason to know
that the beneficial owner is a United States person as defined
under the Code) or such owner otherwise establishes an
exemption. Backup withholding is not an additional tax and any
amounts withheld under the backup withholding rules may be
refunded or credited against a
non-U.S. holders
United States federal income tax liability, if any, provided
that such
non-U.S. holder
furnishes the required information to the IRS in a timely manner.
Ownership
and Disposition of TD Common Shares by U.S.
Holders
Passive
Foreign Investment Company
TD does not believe that it is, for United States federal income
tax purposes, a passive foreign investment company, or
PFIC, and expects to operate in such a manner so as
not to become a PFIC. If, however, TD is or becomes a PFIC, you
could be subject to additional United States federal income
taxes on gains recognized with respect to TD common shares and
on certain distributions, plus an interest charge on certain
taxes treated as having
48
been deferred under the PFIC rules. The remainder of this
discussion assumes that TD will not be treated as a PFIC for
United States federal income tax purposes.
Dividends
Distributions on a U.S. holders TD common shares
(including amounts withheld to reflect Canadian withholding
taxes) will be taxable as dividends to the extent paid out of
TDs current or accumulated earnings and profits, as
determined under United States federal income tax principles.
Such income (including withheld taxes) will be includable in a
U.S. holders gross income as ordinary income on the
day actually or constructively received by such
U.S. holder. Because TD is not a U.S. corporation,
such dividends will not be eligible for the dividends received
deduction allowed to corporations. With respect to non-corporate
U.S. holders, certain dividends received in taxable years
beginning before January 1, 2011 from a qualified foreign
corporation may be subject to reduced rates of taxation
(currently 15%). A qualified foreign corporation includes a
foreign corporation that is eligible for the benefits of a
comprehensive income tax treaty with the United States which the
United States Treasury Department determines to be satisfactory
for these purposes and which includes an exchange of information
provision. The United States Treasury Department has determined
that the Treaty meets these requirements, and TD believes it is
eligible for the benefits of the Treaty. Non-corporate holders
that do not meet a minimum holding period requirement during
which they are not protected from the risk of loss or that elect
to treat the dividend income as investment income
under Section 163(d)(4) of the Code will not be eligible
for the reduced rates of taxation regardless of TDs status
as a qualified foreign corporation. In addition, the rate
reduction will not apply to dividends if the recipient of a
dividend is obligated to make related payments with respect to
positions in substantially similar or related property. This
disallowance applies even if the minimum holding period has been
met. U.S. holders should consult their own tax advisors
regarding the application of these rules given their particular
circumstances.
The amount of any dividend paid on the TD common shares in
Canadian currency will equal the United States dollar value of
the Canadian currency calculated by reference to the exchange
rate in effect on the date the dividend is properly included in
income by a U.S. holder, regardless of whether the Canadian
currency is converted into United States dollars. A
U.S. holder will have a basis in the Canadian currency
equal to its United States dollar value on the date the dividend
is properly included in income. Any gain or loss realized on a
subsequent conversion or other disposition of the Canadian
currency will be treated as United States source ordinary income
or loss.
Subject to certain conditions and limitations, Canadian
withholding taxes on dividends, as described under
Material Canadian Federal Income Tax
Considerations Material Canadian Federal Income Tax
Consequences of Owning TD Common Shares beginning on
page 51, may be treated as foreign taxes eligible for
credit against a U.S. holders United States federal
income tax liability. For purposes of calculating the foreign
tax credit, dividends paid on the TD common shares will be
treated as income from sources outside the United States and
will generally constitute passive category income.
Special rules apply to certain U.S. holders that are
individuals whose foreign source income during the taxable year
consists entirely of qualified passive income and
whose creditable foreign taxes paid or accrued during the
taxable year do not exceed $300 ($600 in the case of a joint
return). Further, in certain circumstances, if a
U.S. holder:
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has held TD common shares for less than a specified minimum
period during which such holder is not protected from risk of
loss,
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is obligated to make payments related to the dividends with
respect to positions in substantially similar or related
property, or
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holds the TD common shares in arrangements in which such
holders expected economic profit, after
non-U.S. taxes,
is insubstantial,
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such holder will not be allowed a foreign tax credit for foreign
taxes imposed on dividends paid on the TD common shares. The
rules governing the foreign tax credit are complex.
U.S. holders are urged to consult their tax advisors
regarding the availability of the foreign tax credit under their
particular circumstances.
To the extent that the amount of any distribution exceeds TD
current and accumulated earnings and profits, the distribution
will first be treated as a tax-free return of capital, causing a
reduction in the adjusted basis of the TD
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common shares (which increases the amount of gain, or decreases
the amount of loss, to be recognized by the U.S. holder on
a subsequent disposition of the common shares), and the balance
in excess of adjusted basis will be taxed as capital gain.
Consequently, these distributions in excess of TDs current
and accumulated earnings and profits would not give rise to
foreign source income and a U.S. holder would not be able
to use the foreign tax credit arising from any Canadian
withholding tax imposed on that distribution unless that credit
can be applied (subject to applicable limitations) against
U.S. tax due on other foreign source income in the
appropriate category for foreign tax credit purposes.
Taxation
of Capital Gains
A U.S. holder will recognize taxable gain or loss on any
sale or exchange of TD common shares in an amount equal to the
difference between the amount realized for the TD common shares
and such holders tax basis in the TD common shares. Such
gain or loss will generally be capital gain or loss. Capital
gains of non-corporate taxpayers derived with respect to capital
assets held for more than one year are eligible for reduced
rates of taxation. The deductibility of capital losses is
subject to limitations. Any gain or loss recognized by a
U.S. holder will generally be treated as United States
source gain or loss.
Information
Reporting and Backup Withholding
In general, information reporting will apply to dividends in
respect of TD common shares and the proceeds from the sale,
exchange or redemption of TD common shares that are paid to a
U.S. holder within the United States (and in certain cases,
outside the United States), unless such holder is an exempt
recipient. Backup withholding may apply to such payments if a
U.S. holder fails to provide a taxpayer identification
number or certification of other exempt status or fails to
report in full dividend and interest income.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a
U.S. holders United States federal income tax
liability provided the required information is furnished to the
IRS.
This discussion does not address tax consequences that may
vary with, or are contingent on, individual circumstances.
Moreover, it only addresses United States federal income tax and
does not address any non-income tax or any foreign, state or
local tax consequences. You should consult your own tax advisors
concerning the United States federal income tax consequences of
the merger and the ownership of TD common shares in light of
your particular situation, as well as any consequences arising
under the laws of any other taxing jurisdiction.
Material
Canadian Federal Income Tax Considerations
The following summary describes the material Canadian federal
income tax considerations generally applicable to a person who
acquires cash (including cash in lieu of fractional share
interests)
and/or TD
common shares in exchange for TSFG common stock as part of the
merger and who, at all relevant times, for purposes of the
application of the Income Tax Act (Canada) and the Income Tax
Regulations, or collectively, the Tax Act, and the Canada-United
States Income Tax Convention (1980), or the Treaty,
(1) deals at arms length with TD; (2) is not
affiliated with TD; (3) holds TD common shares as capital
property; (4) is not, and is not deemed to be, resident in
Canada; (5) is a resident of the U.S. that is eligible
for benefits under the Treaty; and (6) does not use or
hold, and is not deemed to use or hold, TD common shares or TSFG
common stock in a business carried on in Canada (a
U.S. Resident Holder). Special rules, which are
not discussed in this summary, may apply to certain holders that
are insurers carrying on an insurance business in Canada and
elsewhere.
Generally, TD common shares will be capital property to a
U.S. Resident Holder provided the U.S. Resident Holder
does not hold those shares in the course of carrying on a
business or as part of an adventure or concern in the nature of
trade.
This summary is based on the current provisions of the Tax Act,
and on our understanding of the current administrative and
assessing practices and policies of the Canada Revenue Agency
published in writing prior to the date hereof. This summary
takes into account all specific proposals to amend the Tax Act
publicly announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof, which we refer to as the
proposed
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amendments, and assumes that all proposed amendments will be
enacted in the form proposed. However, no assurances can be
given that the proposed amendments will be enacted as proposed,
or at all. This summary does not otherwise take into account or
anticipate any changes in law or administrative or assessing
practice whether by legislative, regulatory, administrative or
judicial action nor does it take into account tax legislation or
considerations of any province, territory or foreign
jurisdiction, which may be different from those discussed herein.
This summary is of a general nature only and is not, nor is it
intended to be, legal or tax advice to any particular
U.S. Resident Holder. This summary is not exhaustive of all
Canadian federal income tax considerations. Accordingly,
U.S. Resident Holders should consult their own tax advisors
with regard to their own particular circumstances.
For the purposes of the Tax Act, all amounts relating to the
acquisition, holding or disposition of TD common shares must be
converted into Canadian dollars based on the exchange rates as
determined in accordance with the Tax Act. The amount of any
dividends required to be included in the income of a
U.S. Resident Holder may be affected by fluctuations in the
Canadian/U.S. dollar exchange rate.
Material
Canadian Federal Income Tax Consequences of the
Merger
A U.S. Resident Holder will not be subject to tax under the
Tax Act on the exchange of TSFG common stock for cash (including
cash in lieu of fractional share interests)
and/or TD
common shares in the merger.
Material
Canadian Federal Income Tax Consequences of Owning TD Common
Shares
Dividends paid or credited or deemed to be paid or credited to a
U.S. Resident Holder on TD common shares will be subject to
Canadian withholding tax at a rate of 25%, subject to a
reduction in the rate of withholding to which the
U.S. Resident Holder is entitled under the Treaty. If the
U.S. Resident Holder is the beneficial owner of the
dividends, the applicable rate of Canadian withholding tax is
generally reduced under the Treaty to 15%.
Material
Canadian Federal Income Tax Consequences of Disposing of TD
Common Shares
A U.S. Resident Holder will not be subject to tax under the
Tax Act on any capital gain realized on a disposition of TD
common shares, unless the TD common shares are taxable
Canadian property to the U.S. Resident Holder for
purposes of the Tax Act and the U.S. Resident Holder is not
entitled to relief under the Treaty.
Generally, the TD common shares will not constitute taxable
Canadian property to a U.S. Resident Holder at a particular
time provided that (1) the TD common shares are listed on a
designated stock exchange (which includes the Toronto Stock
Exchange and the New York Stock Exchange) at that time, and
(2) the U.S. Resident Holder, persons with whom the
U.S. Resident Holder does not deal at arms length, or
the U.S. Resident Holder together with all such persons,
have not owned or had an interest in or an option in respect of
25% or more of the issued shares of any class or series of the
capital stock of TD at any time during the
60-month
period that ends at that time. In any event, gains realized by a
U.S. Resident Holder on the disposition of TD common shares
will not generally be subject to Canadian tax as long as the
value of the TD common shares is not derived principally from
real property situated in Canada at the time of the disposition,
as contemplated in the Treaty.
In the Canadian federal budget released on March 4, 2010,
the Minister of Finance (Canada) proposed to amend the
definition of taxable Canadian property in the Tax Act such
that, after March 4, 2010, shares that are listed on a
designated stock exchange (which includes the Toronto Stock
Exchange and New York Stock Exchange) will generally not
constitute taxable Canadian property to a U.S. Resident
Holder at a particular time unless at any time during the
60-month
period that ends at that time (a) 25% or more of the issued
shares of any class or series of the capital stock of the
company were owned by or belonged to any combination of the
U.S. Resident Holder and persons with whom the
U.S. Resident Holder did not deal at arms length, and
(b) more than 50% of the fair market value of the shares
was derived directly or indirectly from one or any combination
of real or immovable property situated in Canada, Canadian
resource properties (as defined in the Tax Act), timber resource
properties (as defined in the Tax Act), and options in respect
of, or interests in, or for civil law rights in, any such
properties whether or not such properties exist. A bill to enact
such amendment is currently being considered by the Canadian
Parliament, although there can be no assurance that such
amendment will be enacted as proposed.
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Anticipated
Accounting Treatment
TD intends to account for the merger under the purchase method
for both Canadian and United States financial accounting
purposes. Accordingly, the aggregate fair value of the
consideration paid by TD in connection with the merger will be
allocated to TSFGs net assets based on their fair values
as of the completion of the merger. The excess of the total
purchase consideration over the fair value of the identifiable
net assets acquired will be allocated to goodwill. The purchase
price allocation is subject to refinement as TD completes the
valuation of the assets acquired and liabilities assumed. The
results of operations of TSFG will be included in TDs
consolidated results of operations only for periods subsequent
to the completion of the merger.
Regulatory
Matters Related to the Merger and Stock Exchange
Listings
To complete the merger, we need to obtain approvals or consents
from, or make filings with, a number of U.S. federal and
state bank and other regulatory authorities as well as
regulatory authorities in Canada. These approvals and filings
are described below.
Federal
Reserve Board Approval
On July 22, 2010, the Federal Reserve Board of Governors
announced its approval of the application of TD and its
subsidiary bank holding companies to acquire control of TSFG and
its subsidiary bank. The approval required TSFG to enter into an
agreement to divest certain branches in the Palatka banking
market prior to consummation of the Merger and TSFG did so on
August 8, 2010.
Canadian
Approvals
Under the Bank Act of Canada, the consent of the Superintendent
of Financial Institutions of Canada is required in order for TD
to hold a substantial investment in TSFG as a result of the
purchase of the Series M Preferred Stock and to acquire
control of TSFG, as a result of the merger. Approval is also
required for TD to issue its common shares for non-cash
consideration as part of the consideration to be distributed to
TSFG shareholders in connection with the merger. TD has filed
the necessary applications with the Superintendent of Financial
Institutions of Canada for the aforementioned approvals.
Approval was also required for TD to issue its common shares for
non-cash consideration in order to purchase the TSFG shares of
Series M Preferred Stock, which approval was received on
July 7, 2010.
Stock
Exchange Listings
TD is obligated under the merger agreement to use its reasonable
best efforts to cause the TD common shares issuable in the
merger to be approved for listing on the Toronto Stock Exchange
and the New York Stock Exchange, subject to official notice of
issuance, prior to the completion of the merger. In addition, it
is a condition to the completion of the merger that these shares
be approved for listing on the Toronto Stock Exchange and the
New York Stock Exchange. As discussed in greater detail under
Nasdaq Matters, on August 23, 2010, TSFG
received notice from Nasdaq of the commencement of delisting
proceedings. TSFG common stock will be delisted from the Nasdaq
Capital Market promptly following consummation of the merger.
Other
Regulatory Approvals
TD has filed an application with, and has obtained the
conditional approval of, the State Board of Financial
Institutions of the State of South Carolina. Applications and
notifications may be filed with various other state regulatory
authorities. While we believe that the requisite regulatory
approvals for the merger will be received, there can be no
assurances of this or regarding the timing of receipt of the
approvals, our ability to obtain the approvals on satisfactory
terms or the absence of litigation challenging such approvals.
There can likewise be no assurance that U.S., Canadian or state
regulatory authorities will not attempt to challenge the merger
on antitrust grounds or for other reasons, or, if such a
challenge is made, as to the result of such challenge. The
obligations of TD and TSFG to complete the merger are
conditioned upon the receipt of all required regulatory
approvals (and, in the case of TDs obligation to complete
the merger, the receipt of these approvals without the
imposition of any condition or restriction that would reasonably
be expected to have a material adverse effect on TSFG or TD
(assuming, for this
52
purpose, that TD is an entity the size of TSFG in terms of
financial metrics). See Proposal No. 1: The
Merger Agreement Conditions to the Merger
beginning on page 69.
Private parties also may seek to take legal action under the
antitrust laws under some circumstances. Based upon an
examination of information available relating to the businesses
in which the companies are engaged, TSFG and TD believe that the
completion of the merger will not violate U.S. antitrust
laws. However, we can give no assurance that a challenge to the
merger on antitrust grounds will not be made, or, if such a
challenge is made, that we will prevail.
The approval of an application means only that the regulatory
criteria for approval have been satisfied or waived. It does not
mean that the approving authority has determined that the
consideration to be received by TSFG shareholders in the merger
is fair. Regulatory approval does not constitute an endorsement
or recommendation of the merger.
Merger
Fees, Costs and Expenses
All expenses incurred in connection with the merger agreement
and the transactions contemplated by the merger agreement will
be paid by the party incurring those expenses, except that TSFG
and TD will share equally the costs and expenses incurred in
connection with the filing, printing and mailing of this proxy
statement/prospectus and the registration statement of which
this proxy statement/prospectus forms a part and costs and
expenses incurred in connection with applications, notices and
other filings with regulatory authorities. See
Proposal No. 1: The Merger Agreement
Termination Fees and Expenses beginning on page 71.
Procedures
for Cash Election and Exchange of TSFG Stock
Certificates
TSFG shareholders are receiving a form of cash election with
this proxy statement-prospectus. This form of cash election
shall be used if a TSFG shareholder wishes to make a cash
election for any or all of such holders shares of TSFG
common stock. The form of cash election allows the holder to
make a cash election for some or all of such holders
shares of TSFG common stock. If a holder or the holders
affiliates are the registered holders of shares of TSFG common
stock represented by more than one certificate or held in more
than one account, the holder may also specify on the form of
cash election how to allocate cash consideration, if any, among
those shares of TSFG common stock.
You only need to complete and return a cash election form if you
wish to receive cash for some or all of your shares of TSFG
common stock. You do not need to complete the cash election form
if you wish to receive only TD common shares for your shares of
TSFG common stock. If the exchange agent does not receive from
you a properly completed cash election form, together with the
stock certificates representing the shares you wish to exchange
for cash, properly endorsed for transfer, a book-entry delivery
of shares or a guarantee of delivery by the election deadline,
all of your shares of TSFG common stock will be exchanged for TD
common shares (or cash in lieu of fractional shares of TD common
shares) in the merger.
Exchange
Agent
BNY Mellon Shareowner Services will serve as the exchange agent
for purposes of effecting the election.
Election
Deadline
The election deadline will be 5:00 p.m., New York City
time, on (i) September 28, 2010, the date of the TSFG
special meeting, or (ii) two business days prior to the
date of the completion of the merger if the completion of the
merger is more than four business days following the TSFG
special meeting. If it is determined that the election deadline
will not be the date of the special meeting of TSFG
shareholders, TD and TSFG will publicly announce the election
deadline at least five business days prior to the anticipated
completion date of the merger.
53
Form
of Cash Election
The applicable form of cash election must be properly completed
and signed and accompanied by:
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certificates representing all of the shares of TSFG common stock
covered by the form of cash election, duly endorsed in blank or
otherwise in a form acceptable for transfer on TSFGs books
(or appropriate evidence as to the loss, theft or destruction,
appropriate evidence as to the ownership of that certificate by
the claimant, and appropriate and customary indemnification, as
described in the form of cash election);
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a properly completed and signed notice of guaranteed delivery,
as described in the form of cash election, from a firm that is
an eligible guarantor institution (as described in
the form of cash election), provided that the actual stock
certificates are in fact delivered to the exchange agent by the
time set forth in the notice of guaranteed delivery; or
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if the shares of TSFG common stock are held in book-entry form,
the documents specified in the form of cash election.
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In order to make a cash election, the properly completed and
signed form of cash election, together with one of the items
described above, must be actually received by the exchange agent
at or prior to the election deadline in accordance with the
instructions in the form of cash election.
If shares of TSFG common stock are held in street name and the
holder wishes to make a cash election, the holder should contact
his or her bank, broker, dealer or financial institution and
follow the instructions provided.
Inability
to Sell Shares as to which an Election is Made
TSFG shareholders who make a cash election will be unable to
sell their shares of TSFG common stock after making the
election, unless the election is properly revoked before the
election deadline or the merger agreement is terminated.
Election
Revocation and Changes
Generally, an election may be revoked or changed with respect to
all or a portion of the shares of TSFG common stock covered by
the election by the holder who submitted the applicable form of
cash election, but only by written notice received by the
exchange agent prior to 5:00 p.m., New York City time on
the election deadline. If an election is revoked, or the merger
agreement is terminated, and any stock certificates have been
transmitted to the exchange agent, the exchange agent will
promptly return those certificates to the TSFG shareholder who
submitted those certificates. TSFG shareholders will not be
entitled to revoke or change their elections following the
election deadline. As a result, TSFG shareholders who have made
elections will be unable to revoke their elections or sell their
shares of TSFG common stock during the interval between the
election deadline and the date of completion of the merger.
Shares of TSFG common stock as to which the holder has not made
a valid cash election prior to the election deadline, including
as a result of revocation, will be deemed not to have made a
cash election and the holder thereof will receive the stock
consideration for such shares of TSFG common stock. If it is
determined that any purported cash election was not properly
made, the purported election will be deemed to be of no force or
effect and the holder making the purported election will be
deemed not to have made an election for these purposes, unless a
proper election is subsequently made on a timely basis.
Neither TD nor TSFG is making any recommendation as to
whether TSFG shareholders should make a cash election. You must
make your own decision with respect to such election.
Exchange
of TSFG Stock Certificates
At or prior to the completion of the merger, TD will cause to be
deposited with an exchange agent appointed by TD, subject to the
approval of TSFG, which shall not be unreasonably withheld, an
estimated amount of cash sufficient to pay the aggregate cash
consideration and the cash in lieu of any fractional shares that
would otherwise
54
be issued in the merger, and certificates, or evidence of shares
in book-entry form, representing the TD common shares to be
issued as part of the merger consideration.
As soon as reasonably practicable after the completion of the
merger, and in no event more than five business days thereafter,
the exchange agent will mail to each record holder of TSFG
common stock (other than any holders who properly made a cash
election) a form of letter of transmittal and instructions for
use in effecting the surrender of the TSFG stock certificates in
exchange for the stock consideration. Upon proper surrender of a
TSFG stock certificate for exchange and cancellation to the
exchange agent, together with a letter of transmittal and such
other documents as may be specified in the instructions, the
holder of the TSFG stock certificate will be entitled to receive
the stock consideration. With respect to the stock consideration
consisting of TD common shares, holders of TSFG stock
certificates will receive evidence of such shares in book-entry
form.
TSFG stock certificates may be exchanged for the merger
consideration with the exchange agent for up to six months after
the completion of the merger. At the end of that period, any
evidence of shares in book-entry form and cash may at TDs
option be returned to TD, and in such case, any holders of TSFG
stock certificates that have not exchanged their stock
certificates would then be entitled to look only to TD for the
portion of the merger consideration to be paid by TD.
Until you exchange your TSFG stock certificates for merger
consideration, you will not receive any dividends or other
distributions in respect of any TD common shares which you may
be entitled to receive in connection with that exchange. Once
you exchange your TSFG stock certificates for the merger
consideration, you will receive, without interest, any dividends
or distributions with a record date after the completion of the
merger and payable with respect to the TD common shares, if any,
that you are entitled to receive.
If your TSFG stock certificate has been lost, stolen or
destroyed, you may receive the merger consideration upon the
making of an affidavit of that fact. You may be required to post
a bond in a reasonable amount as an indemnity against any claim
that may be made with respect to the lost, stolen or destroyed
TSFG stock certificate.
Treatment
of TSFG Options and Other Equity Based Awards
Treatment
of TSFG Stock Options
Upon completion of the merger, each option to purchase shares of
TSFG common stock (a Company Option) outstanding
under any of TSFGs stock incentive plans, whether vested
or unvested, will become fully vested and will automatically
convert into an option to purchase a number of TD common shares
(a TD Option), on the same terms and conditions as
were applicable under such Company Option, equal to (i) the
number of shares of TSFG common stock subject to each Company
Option, multiplied by (ii) 0.004, rounded, if necessary,
down to the nearest whole TD common share, and such TD Option
shall have an exercise price per share equal to the per share
exercise price specified in such Company Option divided by
0.004, rounded up, if necessary, to the nearest cent. However,
in the case of any Company Option that qualifies as an incentive
stock option, if the foregoing calculation above does not
preserve such Company Options status as incentive stock
options, the manner of determination will be adjusted in a way
that (i) complies with Section 424(a) of the Code and
(ii) results in the smallest adverse modification in the
economic values that otherwise would be achieved by the holder
pursuant to the calculation set forth above. TD Options
granted in respect of Company Options originally granted under
the Florida Banks, Inc. 1998 Stock Option Plan will be
terminated, without payment, upon completion of the merger and
outstanding options granted under the TSFG Stock Option Plan
will be terminated, without payment, no less than 31 days
after the completion of the merger.
Treatment
of TSFG Restricted Stock
Upon completion of the merger, each outstanding share of TSFG
common stock, subject to vesting or other lapse restrictions,
granted under any of TSFGs stock incentive plans will
become fully vested and free from such restrictions and will be
treated in the same manner as other TSFG common stock, as
described above.
55
Treatment
of TSFG Restricted Stock Units
Upon completion of the merger, each outstanding right to receive
a share of TSFG common stock in the form of a restricted stock
unit, whether vested or unvested, granted under any of
TSFGs stock incentive plans, will be fully vested and will
automatically convert into the vested right to receive cash in
accordance with the applicable stock incentive plan in an amount
equal to the product of (x) $0.28 multiplied by
(y) the number of shares of TSFG common stock subject to
such right.
Treatment
of TSFG Stock Appreciation Rights
Upon completion of the merger, each outstanding stock
appreciation right granted under any of TSFGs stock
incentive plans, whether vested or unvested, will cease to
represent a right to receive cash upon exercise of such stock
appreciation right and will be converted into a stock
appreciation right in respect of TD common shares, on the same
terms and conditions as were applicable under the respective
stock incentive plan (including that the stock appreciation
right will be settled in cash upon exercise), in an amount equal
to the product of (x) 0.004, multiplied by (y) the
number of shares of TSFGs common stock subject to each
such stock appreciation right, rounded down, if necessary, to
the nearest whole TD common share, and such TD stock
appreciation right shall have an exercise price per share equal
to the per share exercise price specified in such Company stock
appreciation right divided by 0.004, rounded, if necessary, up
to the nearest cent.
Treatment
of Certain TSFG Equity-Based Plans
TSFGs Dividend Reinvestment Plan and the Amended and
Restated TSFG Employee Stock Purchase Plan (and any other plan
or program intending to qualify as a stock purchase plan under
Section 423 of the Code) will be terminated immediately
prior to the completion of the merger. All TSFG common stock
(and, if applicable, preferred stock) held in the TSFG
tax-qualified defined contribution plan and in respect of any
liabilities under TSFGs Executive Deferred Compensation
Plan will be converted into the merger consideration in the same
manner as all other shares of TSFG common stock.
No
Dissenters Rights of Appraisal
Chapter 13 of the South Carolina Business Corporation Act
provides that a shareholder of a corporation is entitled to
dissent from, and obtain payment of the fair value of his or her
shares in the event of, the consummation of a plan of merger to
which the corporation is a party if shareholder approval is
required for the merger by
Section 33-11-103
of the 1976 Code of Laws of South Carolina, as amended, or the
articles of incorporation and the shareholder is entitled to
vote on the merger. However,
Section 33-13-102(B)
of the 1976 Code of Laws of South Carolina, as amended, states
that no dissenters rights are available for shares of any
class or series of shares which, at the record date fixed to
determine shareholders entitled to receive notice of a vote at
the meeting of shareholders to act upon the agreement of merger
or exchange, were either listed on a national securities
exchange or designated as a national market system security on
an interdealer quotation system by the Financial Industry
Regulatory Authority. As a result of the foregoing, TSFG common
shareholders will not be entitled to exercise any
dissenters rights of appraisal in connection with the
transactions contemplated by the merger agreement.
Resale of
TD Common Shares
U.S.
Resale Requirements
The TD common shares issued under the terms of the merger
agreement will not be subject to any restrictions on transfer
arising under the Securities Act.
Canadian
Resale Restrictions
The TD common shares issued under the terms of the merger
agreement will not be subject to any restrictions on transfer
under applicable Canadian securities law. To the extent Canadian
securities laws apply, however, the first trade in the TD common
shares issued under the terms of the merger agreement must be
made in accordance with customary conditions, including that
such trade is not a control distribution, that no unusual effort
is made to prepare the market or to create a demand for such
shares and that no extraordinary commission or consideration is
paid in
56
respect of the trade. In addition, when selling the TD common
shares, holders who engage in the business of trading in
securities, or hold themselves out as engaging in the business
of trading in securities may also be subject to Canadian dealer
registration requirements. If a holder requires advice on the
application of Canadian securities laws to the trade of TD
common shares, the holder should consult its own legal advisor.
Nasdaq
Matters
As discussed under Background of the
Merger, Nasdaq Rule 5635 typically requires
shareholder approval for issuances of voting securities
representing 20% or more of the outstanding voting securities of
the issuer. However, Nasdaq Rule 5635(f), commonly known as
the financial viability exception, permits a Nasdaq-listed
issuer to issue securities without a shareholder vote where the
audit committee of the board of directors determines that the
delay in securing that shareholder approval prior to
consummation of the issuance would seriously jeopardize the
financial viability of the issuer. While the TSFG audit
committee reached that conclusion with respect to the issuance
of the Series M Preferred Stock to TD for the reasons
discussed under Background of the Merger
and Reasons for the Merger, reliance on
Nasdaq financial viability exception also requires the approval
of Nasdaq. The staff of Nasdaq has informed TSFG that it has
reviewed TSFGs request for approval to rely on the
financial viability exception and has determined not to approve
such request. The staff of Nasdaq informed TSFG that it has
interpreted Rule 5635(f) to not apply in the specific
context of the proposed merger. This interpretation, which TSFG
understands was an issue of first impression for Nasdaq, is
contrary to determinations by the New York Stock Exchange in
similar circumstances with respect to its comparable shareholder
approval rules.
TSFG advised the staff of Nasdaq that it respectfully believes
that the staff reached the wrong conclusion in this matter.
Because there is no process for appealing this conclusion other
than as part of the delisting appeal process, because the
issuance of the Series M Preferred Stock to TD is an
important requirement under the terms of the proposed
transaction, and because the TSFG board determined that the
issuance is in the best interests of TSFG, its shareholders and
other constituents, TSFG completed the issuance of the
Series M Preferred Stock to TD on August 23, 2010. On
August 23, 2010, TSFG received a letter from Nasdaq stating that
TSFG had failed to comply with Nasdaq Listing Rules 5635(b),
5635(d) and 5640 and had taken action that raises public
interest concerns under Listing Rule 5100. The letter stated
that TSFGs common stock would be delisted from Nasdaq on
September 1, 2010 unless TSFG requested a hearing before
the Nasdaq Listing Qualifications Hearing Panel prior to
August 30, 2010. In response to the letter, TSFG intends to
request an oral hearing before the Nasdaq Listing Qualifications
Hearing Panel to appeal the Nasdaq staffs delisting
determination. Meanwhile, TSFGs common stock will
continue to trade on the Nasdaq Capital Market until a written
decision is rendered by the Nasdaq Listing Qualifications
Hearing Panel. Under Nasdaqs rules, TSFG may also file a
notice of appeal of any staff delisting determination within
seven days after notification of such determination. The filing
of an appeal will generally stay the delisting process pending a
hearing on the appeal (which Nasdaqs rules specify will
take place, to the extent practicable, within 45 days of
the filing of the notice of appeal). TSFG understands that in
the normal course a determination of an appeal would be made
within three to four weeks following a hearing. In the event
that the Nasdaq Hearings Panel agrees with the Nasdaq
staffs interpretation, TSFGs common stock would then
be delisted from Nasdaq following a
10-day
notice period (although TSFG could pursue further appeals during
that period). There can be no assurances as to the timing of
delisting or such appeal process or the result of any such
appeals.
In the event that TSFG is delisted from Nasdaq prior to
completion of the merger, TSFG shareholders will not be able to
trade their shares of TSFG common stock on Nasdaq, and will only
be able to trade to the extent trading develops in the so-called
over-the-counter
market on the OTC Bulletin Board or in the Pink
Sheets. The completion of the merger is expected to occur
approximately one month following the issuance of the
Series M Preferred Stock (subject to the conditions to
closing set forth in the merger agreement). In any event, TSFG
would expect that the loss of the Nasdaq listing would likely
negatively impact the trading price of TSFG common stock and
levels of liquidity available to TSFG shareholders. In addition,
following any delisting, certain investors may become obligated
by law or contractual mandate to sell their holdings of TSFG
common stock, TSFG common stock would not be eligible for margin
loans and TSFG common stock would be subject to
Rule 15g-9
of the Exchange Act.
In addition, as previously disclosed, on December 4, 2009,
TSFG received a notice letter from Nasdaq regarding its
non-compliance with Rule 5450(a)(1) of The Nasdaq
Marketplace Rules with respect to the minimum bid price
requirement of $1.00 per share. In accordance with the Nasdaq
listing rules, TSFG had a 180 calendar day
57
grace period, or until June 2, 2010, to comply with the
minimum bid price requirement. TSFG was unable to satisfy this
requirement, and, effective June 7, 2010, the listing of
TSFG common stock was transferred to the Nasdaq Capital Market
from the Nasdaq Global Market. In connection with such transfer,
TSFG has been granted an additional 180 calendar days from
June 2, 2010, or until November 29, 2010, to
demonstrate compliance with the $1.00 bid price requirement. As
a result, TSFG could be delisted notwithstanding the above
discussion relating to the TD preferred share issuance.
PROPOSAL NO. 1:
THE MERGER AGREEMENT
The following is a summary of material terms of the merger
agreement, including the effects of those provisions. While TD
and TSFG believe this description covers the material terms of
the merger agreement, it may not contain all of the information
that is important to you and is qualified in its entirety by
reference to the merger agreement, which is included as
Appendix A to this document and is incorporated by
reference in this document. We urge you to read the entire
merger agreement carefully.
Structure
of the Merger
Subject to the terms and conditions of the merger agreement, and
in accordance with South Carolina law, Hunt Merger Sub, Inc., a
newly-formed subsidiary of TD, will merge with and into TSFG.
TSFG will be the surviving corporation in the merger, will
become a wholly-owned subsidiary of TD, and will continue its
corporate existence under the laws of the State of South
Carolina. Upon completion of the merger, the separate corporate
existence of Hunt Merger Sub, Inc. will terminate.
Merger
Consideration
Merger Consideration. Upon completion of the
merger, each TSFG shareholder of record will be entitled to
receive in exchange for each share of TSFG common stock owned by
such shareholder either:
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$0.28 in cash, which we refer to as the cash consideration, if a
cash election is made with respect to such share; or
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0.004 TD common shares, plus cash in lieu of any fractional
share interests, which we refer to as the stock consideration.
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Cash Election. TSFG common shareholders are
receiving a form of cash election with this proxy
statement/prospectus for making cash elections. The form of cash
election allows the record holder of shares of TSFG common stock
(or, in the case of nominee record holders, the beneficial owner
through proper instructions and documentation) to make cash
elections for some or all of their TSFG common stock in lieu of
receiving the stock consideration. TSFG shares of common stock
as to which the holder has not made a valid election prior to
the election deadline will be treated as though no cash election
had been made and will receive the stock consideration. See
The Merger Procedures for Cash Election and
Exchange of TSFG Stock Certificates beginning on
page 53.
TD intends to pay any cash consideration (including any amounts
paid in lieu of any fractional share interests) from funds on
hand by TD and its affiliates.
Cancellation of Stock. All shares of TSFG
common stock directly owned by TSFG (other than shares in trust
accounts, managed accounts and the like, or otherwise held in a
fiduciary or agency capacity, for the benefit of customers or
clients, and other than shares held in satisfaction of a debt
previously contracted) at the effective time of the merger will
be cancelled and retired and will cease to exist, and no merger
consideration will be delivered in exchange for these shares.
All shares of TSFG common stock owned by TD or by any
wholly-owned subsidiary of TD will remain outstanding, and no
consideration will be delivered in exchange for these shares.
Effect on Preferred Stock. Each share of the
TSFGs
Series 2008-T
Preferred Stock and each share of Series M Preferred Stock
outstanding immediately prior to the completion of the merger
will remain issued and outstanding and will have the rights,
preferences, privileges and voting powers, and limitations and
restrictions as set forth in TSFGs articles of
incorporation.
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Conversion of Hunt Merger Sub, Inc. Common
Stock. Upon completion of the merger, all of the
shares of Hunt Merger Sub, Inc. common stock outstanding
immediately prior to the effective time of the merger will be
converted into one share of common stock of TSFG.
Treatment of TSFG Stock Options and Other Equity Based
Awards. At the effective time of the merger,
outstanding TSFG equity awards (except for TSFG restricted stock
units) will be converted into the right to receive TD equity
awards, adjusted to reflect the exchange ratio and outstanding
TSFG restricted stock units will be converted into the right to
receive cash. TD Options granted in respect of Company Options
originally granted under the Florida Banks, Inc. 1998 Stock
Option Plan will be terminated, without payment, upon completion
of the merger and outstanding options granted under the TSFG
Stock Option Plan will be terminated, without payment, no less
than 31 days after the completion of the merger. See
The Merger Treatment of TSFG Options and Other
Equity Based Awards beginning on page 55.
Fractional Shares. TD will not issue any
fractional TD common shares in the merger. Instead, a TSFG
shareholder will receive an amount in cash that is equal to:
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the fractional part of a TD common share the shareholder would
otherwise be entitled to receive, multiplied by
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the average of the daily volume weighted average prices for the
TD common shares on the Toronto Stock Exchange for the five
trading days immediately prior to the date on which the merger
is completed, converted into U.S. dollars using the
exchange rate for each day as reported by the Bank of Canada.
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Certain Adjustments. If, between the date of
the merger agreement and the completion of the merger, TDs
outstanding common shares are increased, decreased, changed into
or exchanged for a different number or kind of shares or
securities through any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock
split, or other like changes in TDs capitalization or any
special or extraordinary dividend or distribution shall have
been declared, paid or made with respect to the TD common shares
(excluding regularly quarterly dividends and any increases of
regularly quarterly dividends by TD) unless the record date of
such special or extraordinary dividend or distribution is after
the completion of the merger, the exchange ratio for the TD
common shares to be issued as merger consideration and issuable
upon exercise of assumed TSFG options will be appropriately
adjusted to provide TSFGs shareholders and optionholders,
as the case may be, the same economic effect as contemplated by
the merger agreement prior to the relevant event.
Surviving
Corporation, Governing Documents and Directors
At the effective time of the merger, the articles of
incorporation of TSFG, as in effect immediately prior to the
effective time of the merger, will be the articles of
incorporation of TSFG as the surviving corporation in the
merger. At the effective time of the merger, the bylaws of TSFG,
as in effect immediately prior to the effective time of the
merger, will be amended and restated so as to read in their
entirety in the form of the bylaws of Hunt Merger Sub, Inc. and
will be the bylaws of TSFG as the surviving corporation in the
merger.
At the effective time of the merger, the board of directors of
Hunt Merger Sub, Inc. immediately prior to the effective time of
the merger will be the directors of TSFG as the surviving
corporation of the merger.
Closing
Unless the parties agree otherwise, the completion of the merger
will occur on the second business day after the satisfaction or
waiver of all closing conditions except for the conditions that,
by their terms, are to be satisfied at the closing. See
The Merger Conditions to the Merger
beginning on page 69. The parties currently expect to
complete the merger shortly after the special meeting, assuming
all regulatory approvals have been received.
Effective
Time of the Merger
The merger will become effective at the time the articles of
merger are filed with the Secretary of State of the State of
South Carolina, or at such later time as agreed to by the
parties and specified in the articles of merger. We will file
the articles of merger as soon as practicable after the
satisfaction or waiver of the closing conditions in the merger
agreement.
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Representations
and Warranties
The merger agreement contains representations and warranties
made by TSFG to TD and Hunt Merger Sub, Inc. relating to a
number of matters, including the following:
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corporate or other organization and similar matters of TSFG and
its subsidiaries;
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capital structure;
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corporate authorization and validity of the merger agreement and
the absence of conflicts with organizational documents, laws and
agreements;
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the unanimous approval by TSFGs board of directors of the
merger agreement, the share purchase agreement, the Certificate
of Designations of the new preferred stock and the other
transactions contemplated thereby, and the recommendation of the
merger agreement to the shareholders of TSFG;
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required consents, approvals and filings with governmental
entities;
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proper filing of documents with the SEC and the accuracy of
information contained in those documents and the implementation
of proper disclosure controls and procedures;
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the conformity with U.S. GAAP and SEC requirements of
TSFGs financial statements filed with the SEC and the
absence of undisclosed liabilities;
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brokers and finders fees related to the merger;
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the absence of a material adverse effect since December 31,
2009, the date of TSFGs last audited financial statements
and the absence of certain other material events since
March 31, 2010;
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the absence of litigation, investigations, injunctions and
similar proceedings affecting TSFG;
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tax matters;
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employees and employee benefit plans;
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TSFGs and its subsidiaries possession of all permits
and regulatory approvals (and payment of all corresponding fees
and assessments) required to conduct their business and
compliance by TSFG and its subsidiaries with law;
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the existence, validity and absence of defaults under material
contracts;
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the absence of agreements with, orders by, or directives from
regulatory agencies;
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the nature of, absence of defaults relating to, and financial
position with respect to, derivative instruments and
transactions; and
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information to be provided by TSFG or its representatives for
inclusion in this proxy statement/prospectus, the
Form F-4,
other filings with the SEC or any other filing with any other
governmental entity;
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title to real and personal property and the validity of and
absence of defaults relating to leases for leased property;
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insurance coverage;
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environmental matters;
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the receipt of an opinion of Morgan Stanley, TSFGs
financial advisor, as to the fairness, from a financial point of
view, of the merger consideration to TSFGs common
shareholders;
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ownership and validity of intellectual property rights;
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loan and extension of credit matters;
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allowances for loan losses;
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agreements or other transactions with related parties and
insiders, including executive officers, principal shareholders,
directors, affiliates or family members of the foregoing;
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compliance by Carolina First Bank with the CRA and the
regulations promulgated thereunder; and
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labor matters.
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The merger agreement also contains representations and
warranties by TD to TSFG relating to a number of matters,
including the following:
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corporate or other organizational and similar matters;
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capital structure;
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corporate authorization and validity of the merger agreement and
the absence of conflicts with organizational documents, laws and
agreements;
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required consents, approvals and filings with governmental
entities;
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proper filing of documents with the SEC and Canadian securities
regulatory authorities and the accuracy of information contained
in those documents and the implementation of proper disclosure
controls and procedures;
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the conformity with Canadian GAAP and SEC or Canadian securities
regulatory authority requirements of TDs financial
statements and the absence of undisclosed liabilities;
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brokers and finders fees related to the merger;
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the absence of certain material changes or events since the date
of TDs last audited financial statements;
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the absence of litigation, investigations, injunctions and
similar proceedings affecting TD;
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the approval by TDs board of directors of the merger
agreement and the transactions contemplated thereby;
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TDs and its subsidiaries possession of all permits
and regulatory approvals required to conduct their business and
compliance by TD and its subsidiaries with law;
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the absence of agreements with, orders by, or directives from
regulatory agencies; and
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information to be provided by TD for inclusion in this proxy
statement/prospectus, the
Form F-4,
other filings with the SEC or any other filing with any other
governmental entity.
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This summary, and the copy of the merger agreement attached to
this document as Appendix A, are included solely to provide
investors with information regarding the terms of the merger
agreement. They are not intended to provide any other factual
information about TSFG or TD or any of their respective
subsidiaries or affiliates. The representations, warranties and
covenants contained in the merger agreement were made only for
purposes of that agreement and as of specific dates, were solely
for the benefit of the parties to the merger agreement, may be
subject to limitations agreed upon by the contracting parties,
including being qualified by confidential disclosures made for
the purposes of allocating contractual risk between the parties
to the merger agreement instead of establishing these matters as
facts, and may be subject to standards of materiality applicable
to the contracting parties that differ from those applicable to
investors. Investors are not third-party beneficiaries under the
merger agreement and should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of
TSFG or TD, or any of their respective subsidiaries or
affiliates. Moreover, information concerning the subject matter
of the representations and warranties may change after the date
of the merger agreement, which subsequent information may or may
not be fully reflected in the periodic and current reports and
statements that TSFG and TD file with the SEC. For more
information regarding these documents incorporated by reference,
see the section entitled Where You Can Find More
Information on page 96.
Certain of these representations and warranties are qualified as
to materiality or material adverse
effect. For purposes of the merger agreement, a
material adverse effect with respect to TD or TSFG,
as the case may be, means (a) a material adverse effect on
the financial condition, results of operations or business of
that party and its subsidiaries taken as a whole or (b) a
material adverse effect that prevents or materially impairs that
partys ability to
61
consummate the transactions contemplated by the merger agreement
on a timely basis, other than, with respect to (a) above,
to the extent that effect results from:
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changes applicable to banks or their holding companies generally
in:
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in the case of TD, Canadian GAAP;
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laws, rules or regulations or the written interpretations of
those laws, rules or regulations by courts or governmental
authorities; or
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regulatory accounting requirements;
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except to the extent that the effects of such changes are
disproportionately adverse to the financial condition, results
of operations or business of such party and its subsidiaries,
taken as a whole as compared to other companies in the industry
in which such party and its subsidiaries operate
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actions or omissions expressly required by the merger agreement;
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changes in global, national or regional political conditions
(including acts of terrorism or war) or in general economic,
business or market conditions in the United States or any region
thereof (or, in the case of TD, the United States or Canada and
any region thereof) including changes generally in prevailing
interest rates, currency exchange rates, credit markets and
price levels or trading volumes in the United States or foreign
securities markets, in each case affecting banks or their
holding companies generally, except to the extent that the
effects of such change are disproportionately adverse to the
financial condition, results of operations or business of such
party and its subsidiaries, taken as a whole as compared to
other companies in the industry in which such party and its
subsidiaries operate;
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the execution of the merger agreement or the public disclosure
of the merger agreement or the transactions contemplated
thereby, including the impacts on relationships with customers
and employees; or
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failure, in and of itself, to meet earnings projections, but not
including any underlying causes thereof unless separately
excluded by one of the preceding, or changes in the trading
price of a partys common stock, in and of itself, but not
including any underlying causes, unless excluded by one of the
preceding clauses.
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The representations and warranties in the merger agreement do
not survive the effective time of the merger and, as described
below under Termination, if the merger
agreement is validly terminated, there will be no liability
under the representations and warranties of the parties, or
otherwise under the merger agreement, unless a party
intentionally breached the merger agreement.
Covenants
and Agreements
Conduct of Business of TSFG Pending the
Merger. TSFG has agreed that, prior to the
completion of the merger, it and its subsidiaries will conduct
their respective businesses in the ordinary course of business
consistent with past practice and use reasonable best efforts to
preserve intact their respective business organizations, rights,
authorizations, franchises and other authorizations from
governmental entities and advantageous business relationships
and to retain its officers and key employees. TSFG has also
agreed, on behalf of itself and its subsidiaries, to take no
action that would reasonably be expected to adversely affect or
delay the receipt of any required regulatory approvals needed to
complete the transactions contemplated by the merger agreement
or the share purchase agreement or otherwise delay the
consummation of the transactions contemplated by the merger
agreement or the share purchase agreement.
Additionally, TSFG has agreed that except as set forth in the
merger agreement or pursuant to certain exceptions, during the
period from the date of the merger agreement to the completion
of the merger, TSFG and its subsidiaries will not, and will not
permit any of its subsidiaries to, without the prior written
consent of TD:
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adjust, split, combine or reclassify any of its capital stock,
or redeem, purchase or otherwise acquire any of its capital
stock;
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set any record date or payment date, or declare or pay, any
dividends or other distributions on its capital stock, other
than regular cash dividends on the
Series 2008-T
Preferred Stock, regular cash dividends on the Series 2000A
Cumulative Fixed Rate Preferred Shares and Series 2002C
Cumulative Floating Rate Preferred Shares of Carolina First
Mortgage Loan Trust, regular quarterly dividends or dividends
paid by subsidiaries to TSFG or any of its wholly-owned
subsidiaries;
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issue or commit to issue additional shares of its capital stock
(except pursuant to the exercise of the warrant issued to the
United States Department of the Treasury in connection with the
issuance of the
Series 2008-T
Preferred Stock, the exercise of TSFG stock options, stock
appreciation rights or in connection with the settlement of any
TSFG restricted stock units, in each case, outstanding as of the
date of the merger agreement or the exercise of purchase rights
under any TSFG employee stock purchase plan outstanding as of
the date of the merger agreement and for issuances of capital
stock or other equity by subsidiaries to TSFG or any of its
wholly-owned subsidiaries) or securities convertible into its
capital stock or other equity interest (including TSFG options
to purchase TSFG common stock, TSFG stock appreciation rights,
TSFG restricted stock units or any other equity or
phantom equity grant under any TSFG stock incentive
plan or otherwise), except pursuant to the share purchase
agreement;
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incur or guarantee any material indebtedness for borrowed money
other than deposits, Federal Home Loan Bank borrowings,
repurchase agreements and similar liabilities in the ordinary
course of business consistent with past practice;
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amend its articles of incorporation or bylaws or similar
governing documents;
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sell, license, lease, transfer, mortgage, encumber or otherwise
dispose of, abandon or fail to maintain, any material rights,
assets, deposits or properties or cancel or release any material
indebtedness or claims, except:
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sales of loans and sales of investment securities in the
ordinary course of business consistent with past practice;
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as expressly required by the terms of any specified existing
agreement; or
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pledges of assets to secure public deposits accepted in the
ordinary course of business consistent with past practice.
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enter into new lines of business or change in any material
respect its lending, investment, risk and asset-liability
management and other material banking or operating policies
except as required by law or by rules or policies imposed by
governmental entities;
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make any acquisition of or investment in any person or
acquisition of assets of another person, in each case other than
a wholly owned subsidiary of TSFG, or enter into an agreement
relating to a business combination, liquidation or similar
transaction, or letter of intent or memorandum of understanding
or agreement in principle in respect thereto, except for:
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foreclosures and other similar transactions in connection with
securing or collecting debts previously contracted;
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purchases of U.S. government and U.S. government
agency securities which are investment grade rated and, in the
case of fixed rate instruments, that have a final maturity of
five years or less; and
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transactions in the ordinary course of business consistent with
past practice and that, together with all other such
transactions, are not material to TSFG.
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foreclose on or take a deed or title to any real estate other
than single-family residential without first conducting a
specified environmental assessment of the property, or if that
assessment indicates the presence of a hazardous, toxic,
radioactive or dangerous substance;
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enter into, renew, extend or terminate any material lease,
license, contract or other agreement, except in the ordinary
course of business consistent with past practice, or make any
material change in such leases,
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licenses, contracts or other agreements, other than renewals of
leases, licenses, contracts or other agreements for a term of
one year or less without material changes to the terms thereof;
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increase the compensation or benefits of any current or former
employee, officer, director, consultant or independent
contractor of TSFG or its subsidiaries (each, a TSFG
employee), subject to certain merit-based salary increases
and changes required by law or existing specified arrangements;
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grant or pay any
change-in-control,
retention bonus, severance or termination pay to any TSFG
employee including as required by law or existing specified
arrangements;
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loan or advance any money or other property, or sell, transfer
or lease any properties, rights or assets to any TSFG employee;
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except as required by law, establish, adopt, enter into, amend,
terminate or grant any waiver or consent under any employee
benefit plan, agreement, program, policy, trust, fund or other
arrangement;
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grant any equity or equity-based awards;
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hire, or terminate the employment of, any TSFG employee with an
annual base salary in excess of $150,000;
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effectuate any layoff of TSFG employees without compliance in
all material respects with the Worker Adjustment and Retraining
Notification Act of 1988, as amended, and any similar state or
local law or regulation;
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allow for the commencement of any new offering periods under any
TSFG Employee Stock Purchase Plan;
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take any action to accelerate the vesting or payment of any
compensation or benefit under any employee benefit plan or
awards made thereunder;
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make or commit to make any capital expenditures in excess of
$100,000 individually or $1 million in the aggregate;
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permit the construction of new structures or facilities upon, or
purchase, or lease any real property, or open, relocate or close
any branch or other facility or make an application to do so;
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without providing prior notice to and consulting with TD and
except as approved by TSFG prior to the date of the merger
agreement, make or acquire any loan or issue a commitment for
any loan or amend or modify in any material respect any existing
loan that would result in total credit exposure to the
applicable borrower and its affiliates in excess of
$10 million, amend or modify in any material respect any
existing loan rated special mention or below by TSFG
with total credit exposure in excess of $5 million or
modify or amend any loan in a manner that would result in any
additional extension of credit, principal forgiveness, or effect
any uncompensated release of collateral, in each case in excess
of $1 million;
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except as otherwise provided in the merger agreement, engage in
any material transaction or incur any material obligation
except, in each case, in the ordinary course of business
consistent with past practice;
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make payments or loans or advances to, or sell, transfer or
lease any properties, rights or assets to, or enter into any
agreement or arrangement with, any of its officers or directors
or any of their family members or any affiliates or associates,
except for loans originated in the ordinary course of business
consistent with past practice (and with respect to
compensation-related matters subject to the other restrictions
described in this section of the merger agreement);
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settle any claim, action or proceeding involving monetary
damages in excess of $100,000, or other than in the ordinary
course of business consistent with past practice, waive or
release any material rights or claims or agree or consent to the
issuance of any injunction or order affecting the business or
operations of TSFG;
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materially change its investment securities portfolio policy or
its policies with respect to the classification or reporting of
such portfolios, or invest in any mortgage-backed or
mortgage-related securities which would be considered
high-risk securities under applicable regulatory
pronouncements;
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except as required by law or applicable regulatory authorities,
make any material change in its policies and practices with
respect to underwriting, pricing, originating, acquiring,
selling, servicing, or buying or selling rights to service,
loans or its hedging practices and policies;
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fail to use commercially reasonable efforts to take any action
that is required by a
cease-and-desist
or other order, any written agreement, consent agreement or
memorandum of understanding, commitment letter or similar
undertaking from or with any governmental entity, any
extraordinary supervisory letter from or any order or directive
by or any board resolutions at the request of any governmental
entity or willfully take any action that violates any of the
foregoing;
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take any action that is intended to or would reasonably be
expected to result in any of TSFGs representations or
warranties being or becoming untrue in any material respect,
result in the conditions to the completion of the merger not
being satisfied or a required regulatory approval not being
obtained without imposition of a condition that would be
reasonably likely to have a material adverse effect on TSFG or
TD (assuming, for this purpose, that TD is an entity the size of
TSFG in terms of financial metrics) or result in a material
violation of the merger agreement;
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make any material changes in its methods, practices or policies
of financial or tax accounting, except as may be required under
applicable law, regulation or U.S. GAAP or regulatory
accounting policies, in each case as discussed with, and with
the concurrence of, TSFGs independent public accountants;
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enter into any securitizations of any loans or create any
special purpose funding or variable interest entity;
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other than in the ordinary course of business consistent with
past practice, introduce any material new products or services,
any material marketing campaigns or any material new sales
compensation or incentive programs or arrangements;
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except as required by law, make or change any material tax
election, file any amended material tax returns, agree to
extension or waiver of any statute of limitations with respect
to the assessment or determination of taxes, settle or
compromise any material tax liability of TSFG or any of its
subsidiaries, enter into any closing agreement with respect to
any material tax, or surrender any right to claim a material tax
refund; or
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agree to, or make any commitment to, take any of these
restricted actions.
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Conduct of Business of TD Pending the
Merger. TD has agreed to a more limited set of
restrictions on its business prior to the completion of the
merger. Specifically, TD agreed that, except as permitted by the
merger agreement or as required by applicable law, during the
period from the date of the merger agreement to the completion
of the merger, TD and its subsidiaries will not, without the
prior written consent of TSFG:
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amend, repeal or otherwise modify its by-laws in a manner that
would materially and adversely affect the economic benefits of
the merger to the holders of TSFG common stock or that would
materially impede TDs or Hunt Merger Sub, Inc.s
ability to consummate the transactions contemplated under the
merger agreement;
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take any action that is intended or would reasonably be expected
to cause TDs representations and warranties being or
becoming untrue in any material respect, or result in the
conditions to completion of the merger not being satisfied or
the required regulatory approvals not being obtained without the
imposition of a condition that would be reasonably likely to
have a material adverse effect on TSFG or TD (assuming, for this
purpose, that TD is an entity the size of TSFG in terms of
financial metrics); or
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agree to, or make any commitment to, take any of these
restricted actions.
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TSFG Tax Matters. The merger agreement
requires TSFG to consult with TD regarding TSFGs
recognition of any material loss (either individually or in the
aggregate) for United States federal income tax purposes and to
consider in good faith the implementation of TDs views on
such matters.
TSFG Shareholder Meeting and Duty to
Recommend. The merger agreement requires TSFG to
call, give notice of, convene and hold a meeting of its
shareholders to approve the plan of merger. The board of
directors of TSFG has agreed to recommend that TSFGs
shareholders vote in favor of approval of the plan of merger and
to not
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withdraw, modify or qualify such recommendation in any manner
adverse to TD such recommendation or take any other action or
make any other public statement in connection with the TSFG
shareholder meeting or in reference to the acquisition proposal
that is inconsistent with such recommendation to TSFGs
shareholders to approve the plan of merger (which we refer to in
this document as a change in TSFG recommendation),
except that TSFGs board of directors may effect a change
in TSFG recommendation if and only to the extent that:
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TSFG has complied in all material respects with its obligations
under the no solicitation covenant of the merger agreement,
which is described below under No
Solicitation;
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TSFGs board of directors, after consultation with and
based on the advice of its outside counsel, determines in good
faith that the failure to effect a change in TSFG recommendation
would reasonably be likely to result in a violation of the
boards fiduciary duties under applicable law; and
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If the change in TSFG recommendation is made after TSFG has
received an acquisition proposal (as described below) from a
third party, the acquisition proposal was unsolicited and
TSFGs board of directors has concluded in good faith that
it is or is reasonably likely to constitute a superior proposal
(as described below) after taking into account any amendment or
modifications to the merger agreement agreed to by
TD, after:
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giving at least three business days written notice to TD
of its intention to effect a change in TSFG recommendation,
specifying the material terms and conditions of the superior
proposal and furnishing TD a copy of the relevant proposed
transaction agreement and all other material documents, if
any, and
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negotiating with TD in good faith during this period of not less
than three business days to improve the terms of the merger
agreement so that the acquisition proposal ceases to be a
superior proposal after giving effect to any adjustments which
may be offered by TD in connection with these negotiations.
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In the event of any material revisions to the superior proposal,
TSFG will be required to deliver a new written notice to TD two
days in advance of its intention to effect a change in TSFG
recommendation and to comply with the other requirements
described above during that
two-day
period.
For purposes of the merger agreement,
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an acquisition proposal means any inquiry, proposal
or offer from any person (other than TD or any of its
subsidiaries), or multiple persons in a single transaction or
series of related transactions, relating to any direct or
indirect (i) acquisition, purchase or sale of a business,
deposits or assets that constitute more than 15% of the
consolidated business, revenues, net income, assets (including
stock of TSFGs subsidiaries) or deposits of TSFG and its
subsidiaries, (ii) merger, reorganization, share exchange,
consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving TSFG
or any of its subsidiaries, or (iii) purchase (whether of
outstanding or newly-issued shares) or sale of, or tender or
exchange offer (including a self-tender offer) for, securities
of TSFG or any of its subsidiaries that, if consummated, would
result in any person, or multiple persons in a single
transaction or series of related transactions (or the
shareholders of such person or persons), beneficially owning
securities representing (including upon conversion, exchange or
exercise thereof) more than 15% of the equity or total voting
power of TSFG, any of its subsidiaries or the surviving parent
entity in such transaction; and
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a superior proposal means a bona fide written
acquisition proposal by a person or group of persons to acquire,
directly or indirectly, a majority of the total voting power of
TSFG (or a majority of the total voting power of the resulting
or surviving entity of such transaction or the ultimate parent
of such resulting or surviving entity), which the board of
directors of TSFG concludes in good faith, after consultation
with its financial advisor and receiving the advice of its
outside counsel, taking into account timing and all legal,
financial, regulatory and other aspects of the proposal and the
person making the proposal, including any
break-up
fees, expense reimbursement provisions and conditions to
consummation:
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is more favorable to the shareholders of TSFG from a financial
point of view than the transactions contemplated by the merger
agreement; and
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is reasonably capable of being consummated on the terms proposed.
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No Solicitation. The merger agreement
precludes TSFG, its subsidiaries and their respective directors
and officers, employees, agents, affiliates and representatives
from, directly or indirectly:
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initiating, soliciting, encouraging or knowingly facilitating
(including by way of providing information) the submission of
any inquiries, proposals or offers or taking any other efforts
or attempts that constitute or may reasonably be expected to
lead to any acquisition proposal;
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having any discussions with, or providing any confidential or
non-public information or data to, any person relating to or in
connection with an acquisition proposal, or engaging in any
negotiations concerning an acquisition proposal;
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approving or recommending, or proposing to approve or recommend,
any acquisition proposal;
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approving or recommending, or proposing to approve or recommend,
or executing or entering into any letter of intent, agreement in
principle, memorandum of understanding, merger agreement, asset
purchase or share purchase or share exchange agreement, option
agreement or other similar agreement related to any acquisition
proposal;
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entering into any agreement or agreement in principle requiring,
directly or indirectly, TSFG to abandon, terminate or fail to
consummate the transactions contemplated by the merger agreement
or breach its obligations thereunder; or
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proposing or agreeing to do any of these restricted actions.
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However, if TSFG receives an unsolicited bona fide written
acquisition proposal, TSFG may, prior to obtaining the required
approval of the shareholders of TSFG of the plan of merger,
participate in discussions with, or provide confidential or
non-public information or data to, the person making that
acquisition proposal if:
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TSFGs board of directors concludes in good faith that the
acquisition proposal constitutes or is reasonably likely to
result in a superior proposal;
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TSFGs board of directors, based on the advice of its
outside counsel, concludes in good faith that the failure to
take those actions would reasonably be likely to result in a
violation of the boards fiduciary duties under applicable
law;
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prior to providing (or causing to be provided) any confidential
or non-public information or data to the person making the
inquiry or proposal, TSFG enters into a written confidentiality
agreement with the person making the inquiry or proposal having
terms that are no less favorable to TSFG than those in the
confidentiality agreement between TD and TSFG; and
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TSFG promptly provides TD with any confidential or non-public
information or data concerning TSFG or its subsidiaries provided
to such person making the inquiry or proposal that was not
previously provided to TD or its representatives.
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TSFG has agreed to immediately cease and cause to be terminated
any activities, discussions or negotiations conducted with any
third party prior to May 16, 2010 with respect to any
acquisition proposal and to use its reasonable best efforts to
enforce, and not waive or amend any provision of, any
confidentiality, standstill or similar agreement relating to an
acquisition proposal, including by requiring other parties to
promptly return or destroy any confidential or non-public
information or data previously furnished.
TSFG also agreed to promptly (within 24 hours) following
the receipt of any acquisition proposal, or any inquiry that
could reasonably be expected to lead to an acquisition proposal,
advise TD of the material terms thereof, including the identity
of the person making such acquisition proposal, and to keep TD
reasonably apprised of any related developments, discussions and
negotiations and the status and terms thereof (including
providing TD with a copy of all material documentation and
correspondence relating thereto) on a current basis. Without
limiting the foregoing, TSFG agreed to notify TD orally and in
writing within 24 hours after it enters into discussions or
negotiations with another person regarding an acquisition
proposal, executes and delivers a confidentiality agreement with
another person in connection with an acquisition proposal, or
provides confidential or non-public information or data to
another person in connection with an acquisition proposal.
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The merger agreement provides that the above-described no
solicitation restrictions do not prohibit TSFG and its board of
directors from complying with
Rules 14d-9
and
14e-2(a)(2)-(3)
promulgated under the Exchange Act with respect to an
acquisition proposal, provided that such rules will in no way
eliminate or modify the effect that any action pursuant to such
Rules would otherwise have under the merger agreement and
provided further that any such disclosure will be deemed to be a
change in TSFG recommendation unless the board of directors of
TSFG expressly and concurrently reaffirms the TSFG
recommendation.
Reasonable Best Efforts Covenant. TD and TSFG
have agreed to use their reasonable best efforts to take, or
cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements with respect to the
merger, to consummate the merger and the other transactions
contemplated by the merger agreement (including in the case of
TD, with respect to the completion of the purchase of the
Series 2008-T
Preferred Stock and the associated warrant issued to the United
States Department of the Treasury in connection with the
issuance of the
Series 2008-T
Preferred Stock and in the case of TSFG, by complying with its
obligations under the share purchase agreement) and to obtain
any governmental and third-party approvals required in
connection with the merger. However, neither TSFG nor TD is
required to take any action referred to above if the taking of
that action is reasonably likely to result in a condition or
restriction that would be reasonably likely to have a material
adverse effect on TSFG or TD (assuming, for this purpose, that
TD is an entity the size of TSFG in terms of financial metrics).
Employee Benefit Plans Covenant. The merger
agreement provides that as of the completion of the merger, TD
will honor all TSFG employee benefit plans, in accordance with
their terms, and for a period of at least one year (or, if
earlier, until the date that TSFG employees who are employed by
TSFG or one of its subsidiaries (referred to as
transferred employees) become eligible to
participate in TD employee benefit plans) TD will provide such
transferred employees with compensation and benefits (excluding
equity-based awards, retiree medical benefits, defined benefit
pension plan benefits, deferred compensation plan benefits,
supplemental executive retirement plan benefits and employee
stock purchase plan benefits) that are substantially comparable,
in the aggregate, to the compensation and benefits provided to
transferred employees immediately before the consummation of the
merger. When transferred employees become eligible to
participate in TD employee benefit plans, TD shall provide such
employees with compensation and benefits that are no less
favorable, in the aggregate, to the compensation and benefits
provided to similarly situated employees of TD under TDs
benefit plans.
In addition, TD has agreed, to the extent any TSFG employee
becomes eligible to participate in TD benefit plans following
the completion of the merger:
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for purposes of determining eligibility to participate, vesting,
entitlement to benefits, accrual of benefits and level of
benefits, that service with TSFG or any subsidiary will be
treated as service with TD, to the extent recognized by TSFG
prior to the date of the merger agreement under comparable TSFG
plans (however, this excludes (i) any benefit accrual under
any defined benefit pension plan, post-retirement medical plan
or core contributions under the TD 401(k) plan and
(ii) any benefit that would result in a duplication of
benefits);
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to waive pre-existing condition exclusions and actively-at-work
requirements to the same extent waived under the applicable TSFG
benefit plan; and
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to give TSFG employees credit for amounts paid under
corresponding benefit plans of TSFG or its subsidiaries during
the same period for applying deductibles, co-payments and
out-of-pocket
maximums as though these amounts had been paid in accordance
with TD plans.
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The merger agreement also provides that for a period of one year
following the consummation of the merger, TD will provide
(i) severance benefits that are no less favorable to TSFG
employees (other than TSFG employees who otherwise are parties
to an individual severance agreement with TSFG or any subsidiary
or a letter agreement with TD) than the severance benefits
provided to such TSFG employees under the TSFGs severance
pay plan as in effect on the date hereof and (ii) paid
time-off benefits that are no less favorable to TSFG employees
than the paid time-off programs provided to such TSFG employees
under TSFGs paid time-off programs as in effect on the
date on which the merger agreement was executed.
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Indemnification and Directors and Officers
Insurance. Subject to certain exceptions, TD has
agreed that, following the completion of the merger, it will
cause TSFG to indemnify and hold harmless the current directors
and officers of TSFG or its subsidiaries. See The
Merger Interests of TSFGs Executive Officers
and Directors in the Merger Indemnification and
Directors and Officers Insurance beginning on
page 46.
Certain Other Covenants. The merger agreement
also contains additional covenants, including covenants relating
to the filing of this proxy statement/prospectus, cooperation
regarding filings and proceedings with governmental and other
agencies and organizations and obtaining required consents, the
listing of TD common shares to be issued in the merger or upon
exercise of stock options following the merger, the
establishment of a transition committee and the sharing of
certain information regarding TSFGs business.
Conditions
to the Merger
Conditions to Each Partys
Obligations. The respective obligations of each
of TD and TSFG to complete the merger are conditioned upon the
satisfaction or waiver of the following conditions:
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receipt of the requisite affirmative vote of the TSFG
shareholders of the merger agreement;
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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;
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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; and
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receipt of required regulatory approvals and the absence of any
injunction or other legal prohibition or restraint against the
merger.
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Conditions to TDs Obligations. The
obligation of TD and Hunt Merger Sub, Inc. to complete the
merger are subject to the satisfaction or waiver of the
following conditions:
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the accuracy of the representations and warranties of TSFG 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 TSFG;
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performance in all material respects by TSFG of the obligations
required to be performed by it at or prior to the closing date
of the merger;
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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 TSFG or TD (assuming, for this
purpose, that TD is an entity the size of TSFG in terms of
financial metrics);
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TDs purchase from the United States Department of the
Treasury of, and ownership of all right, title and interest in,
all of the issued and outstanding shares of
Series 2008-T
Preferred Stock and the associated warrant issued to the United
States Department of the Treasury in connection with the
issuance of the
Series 2008-T
Preferred Stock for an aggregate cash purchase price of
$130,579,218.75 and otherwise on terms and conditions reasonably
acceptable to TD; and
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no occurrence of an exchange event (as defined in the applicable
trust declaration) with respect to the Series 2000A
Cumulative Fixed Rate Preferred Shares of Carolina First
Mortgage Loan Trust or the Series 2002C Cumulative Floating
Rate Preferred Shares of Carolina First Mortgage Loan Trust.
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Conditions to TSFGs Obligations. The
obligations of TSFG to complete the merger are subject to the
satisfaction or waiver of the following conditions:
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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
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performance in all material respects by TD of the obligations
required to be performed by it at or prior to the closing date
of the merger.
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Termination
The merger agreement may be terminated at any time before the
completion of the merger, whether before or after approval of
the plan of merger by TSFG shareholders, in any of the following
circumstances:
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by mutual written consent of TD and TSFG; or
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by either TD or TSFG if:
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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;
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the merger has not been completed by February 17, 2011, but
neither TD nor TSFG 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;
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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 45 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 TSFG may
terminate the merger agreement for this reason if it itself is
then in material breach of the merger agreement; or
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the shareholders of TSFG fail to approve the plan of merger at
the TSFG special meeting; or
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the board of directors of TSFG has failed to recommend the
merger and the approval of the plan of merger by the
shareholders of TSFG or has effected a change in TSFG
recommendation (or has resolved to take any of the foregoing
actions), whether or not permitted under the merger agreement,
or if TSFG has materially breached its obligations under the
no solicitation covenant of the merger agreement,
which is described above under Covenants and
Agreements No Solicitation, or failed to call,
give notice of, convene or hold a special meeting of
shareholders to vote on approval of the plan of merger;
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a tender offer or exchange offer for 15% or more of the
outstanding shares of TSFG common stock has commenced (other
than by TD), and the board of directors of TSFG recommends that
the shareholders of TSFG 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; or
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TSFG has not received written approval, within 21 days
after the date of the merger agreement, by The NASDAQ Stock
Market LLC of TSFGs use of the exception provided in
Listing Rule 5635(f) (Financial Viability Exception) to
permit the issuance of the Series M Preferred Stock by TSFG
to TD as contemplated by the share purchase agreement without a
vote of TSFGs shareholders. As described in Nasdaq
Matters, TSFG issued the Series M Preferred Stock to
TD on August 23, 2010 and TD has determined to proceed with
the merger, notwithstanding Nasdaqs interpretation that
the exception provided by Listing Rule 5635(f) is not
available for the issuance of the Series M Preferred Stock.
On August 23, 2010, TSFG received a letter from Nasdaq stating
that TSFG had failed to comply with Nasdaq Listing Rules
5635(b), 5635(d) and 5640 and had taken action that raises
public interest concerns under Listing Rule 5100. The letter
stated that TSFGs common stock would be delisted from
Nasdaq on September 1, 2010 unless TSFG requested a hearing
before the Nasdaq Listing Qualifications Hearing Panel prior to
August 30, 2010. In response to the letter, TSFG intends to
request an oral hearing before the Nasdaq Listing Qualifications
Hearing Panel to appeal the Nasdaq staffs delisting
determination. Meanwhile, TSFGs common stock will
continue to trade on the Nasdaq Capital Market until a written
decision is rendered by the Nasdaq Listing Qualifications
Hearing Panel.
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Effect of
Termination
If the merger agreement is validly terminated, the agreement
will become void without any liability on the part of any of the
parties unless a party willfully and materially breaches the
merger agreement. However, the provisions of the merger
agreement relating to termination fees and expenses and the
confidentiality obligations of the parties
70
will continue in effect notwithstanding termination of the
merger agreement. A willful and material breach
means a material breach that is a consequence of an act
undertaken by the breaching party with the knowledge (actual or
constructive) that the taking of such act would, or would be
reasonably expected to, cause a breach of the merger agreement.
Termination
Fees and Expenses
A termination fee of $7.62 million will be paid by TSFG to
TD as follows:
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if TD terminates the merger agreement because:
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TSFGs board of directors has failed to recommend the
merger and the approval of the plan of merger by the
shareholders of TSFG, or effected a change in TSFGs
recommendation (or resolved to take any of the foregoing
actions), whether or not permitted under the merger agreement;
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TSFG has materially breached its obligations under the no
solicitation covenant of the merger agreement, which is
described above under Covenants and
Agreements No Solicitation;
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TSFG failed to call, give notice of, convene or hold a special
meeting of shareholders to vote on approval of the plan of
merger; or
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a tender offer or exchange offer for 15% or more of the
outstanding shares of TSFG common stock has commenced (other
than by TD), and the board of directors of TSFG recommends that
the shareholders of TSFG 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; or
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TD terminates the merger agreement because there has been a
willful and material breach by TSFG of the merger agreement,
which breach remains uncured for over 45 days or which is
not, by its nature, curable prior to closing, or either party
terminates the merger agreement because the shareholders of TSFG
have failed to approve the plan of merger at the TSFG special
meeting or a shareholder vote to approve the plan of merger at a
TSFG special meeting has not been completed by February 17,
2011; and
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in each case above, an acquisition proposal with respect to TSFG
has been publicly announced or otherwise communicated to the
senior management or board of directors of TSFG (or TSFGs
shareholders in the case of failure to obtain shareholder
approval of the plan of merger) or any person has publicly
announced, communicated or made known to the senior management
or board of directors of TSFG (or TSFGs shareholders in
the case of failure to get shareholder approval above) an
intention to make an acquisition proposal at any time prior to
the date of termination or the TSFG special meeting; and
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within 12 months after such termination, TSFG or any of its
subsidiaries enters into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement with
respect to, or consummates a transaction contemplated by, any
qualified acquisition proposal.
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A qualified acquisition proposal means any inquiry,
proposal or offer from any person (other than TD), or multiple
persons in a single transaction or series of related
transactions, relating to any direct or indirect
(i) acquisition, purchase or sale of a business, deposits
or assets that constitute more than 35% of the consolidated
business, revenues, net income, assets (including stock of
TSFGs subsidiaries) or deposits of TSFG, (ii) merger,
reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction involving TSFG, as a result of which the
TSFG shareholders immediately prior to the transaction own less
than 65% of the voting stock of the surviving or resulting
person or its ultimate parent entity immediately thereafter, or
(iii) purchase (whether of outstanding or newly-issued
shares) or sale of, or tender or exchange offer (including a
self-tender offer) for, securities of TSFG that, if consummated,
would result in any person, or multiple persons in a single
transaction or series of related transactions (or the
shareholders of such person or persons), beneficially owning
securities representing (including upon conversion, exchange or
exercise thereof) more than 35% of the equity or total voting
power of TSFG or the surviving parent entity in such transaction.
Except for the payment of a termination fee under the
circumstances described above, and further described in the
merger agreement, and for the costs and expenses related to the
filing, printing and mailing of this proxy statement/prospectus
and the registration statement of which this proxy
statement/prospectus forms a part, which
71
will be shared by TD and TSFG, all costs and expenses incurred
in connection with the merger agreement and the merger will be
paid by the party incurring the cost.
Amendments,
Extension and Waivers
Any provision of the merger agreement may be amended by action
taken or authorized by each partys respective board of
directors, extended or waived before the completion of the
merger by a written instrument signed, in the case of an
amendment, by each party to the merger agreement or, in the case
of an extension or waiver, by each party against whom the
extension or waiver is to be effective, but after the required
approval of the TSFG shareholders has been obtained, no
amendment may be made that requires the approval of the
shareholders of TSFG unless that approval is obtained.
Share
Purchase Agreement
On May 16, 2010, TSFG and TD, in connection with entering
into the merger agreement, entered into a share purchase
agreement, pursuant to which TD agreed to purchase 100 newly
issued shares of TSFGs Series M Preferred Stock,
which vote together with TSFG common stock as a single class and
represents 39.9% of the total voting power of holders of TSFG
capital stock entitled to vote, for consideration of
1,000 shares of TDs common stock and TDs entry
into the merger agreement. TD and TSFG completed the
transactions contemplated by the share purchase agreement on
August 23, 2010.
TDs
Securities Purchase Agreement with the United States Department
of the Treasury
On May 18, 2010, the Treasury Department and TD, in
connection with TD entering into the merger agreement, entered
into a securities purchase agreement, pursuant to which
immediately prior to completion of the transaction, the United
States Department of the Treasury will sell to TD its
$347 million of TSFG
Series 2008-T
Preferred Stock and the associated warrant acquired under the
Treasurys Capital Purchase Program and discharge all
accrued but unpaid dividends on that stock for total cash
consideration of approximately $130.6 million. The
completion of the purchase of the
Series 2008-T
Preferred Stock and warrant under the securities purchase
agreement is subject to the satisfaction of the conditions to
the completion of the merger, the receipt of required regulatory
approvals and the absence of any injunction or other legal
prohibition or restraint against the purchase, and will occur
immediately prior to the completion of the merger. The
securities purchase agreement will terminate automatically upon
termination of the merger agreement, and may also be terminated
by mutual agreement of TD and the United States Department
of the Treasury or by either TD or the United States Department
of the Treasury if the completion of the purchase does not occur
by February 17, 2011.
TD
Purchases of TSFG Common Stock
Following the announcement of the execution of the merger
agreement and as contemplated by the press release announcing
the transaction, TD has purchased shares of TSFG common stock on
the open market. As of the record date, TD has acquired
10,000,000 shares of TSFG common stock, representing
approximately 4.6% of the total outstanding shares of TSFG
common stock at an average price of $0.2760. TD may make
additional purchases of shares of TSFG common stock prior to the
special meeting of TSFG shareholders, subject to the
restrictions contained in the stipulation of settlement
described under The Merger Litigation Relating
to the Merger, market conditions, applicable securities
laws and receipt of any necessary regulatory approvals. TD has
informed TSFG that it intends to vote its shares of TSFG common
stock in favor of the proposal to approve the plan of merger
contained in the merger agreement at the special meeting of TSFG
shareholders.
72
DIRECTORS
AND MANAGEMENT OF TD
TDs
Board of Directors and Executive Officers
Biographical information concerning members of TDs board
of directors and executive management is set forth below and
other information with respect to such persons is included in
TDs
Form 40-F
for the year ended October 31, 2009 and proxy circular for
its 2010 annual meeting of shareholders. See Where You Can
Find More Information beginning on page 96. The
completion of the merger will not affect the composition of
TDs board of directors or executive management.
Biographical
Information Regarding Directors of TD
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William E. Bennett |
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Mr. Bennett is a member of the board of directors of TD,
which he joined in 2004. He is the retired President and Chief
Executive Officer of Draper & Kramer, Inc., a
Chicago-based financial services and real estate company, a
position he held from 1995 to 1998. Mr. Bennett became a
director of TD Bank US Holding Company (formerly
TD Banknorth Inc.) in 2005. He became a director of Capital
Power Corporation in 2009. Prior to 1994, he served as Executive
Vice President and Chief Credit Officer of First Chicago Corp.
and its principal subsidiary, The First National Bank of
Chicago. He is currently a director of various non-profit
organizations. |
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Hugh J. Bolton |
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Mr. Bolton is a member of the board of directors of TD.
Since 2000, Mr. Bolton has been the non-executive Chair of
the board of directors of EPCOR Utilities Inc., an integrated
energy company. Mr. Bolton is the retired Chairman and
Chief Executive Officer and partner of Coopers &
Lybrand Canada, Chartered Accountants. In February 2007,
Mr. Bolton became non-executive Chairman of Matrikon Inc. |
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John L. Bragg |
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Mr. Bragg is a member of the board of directors of TD.
Mr. Bragg is the Chairman, President and Co-Chief Executive
Officer of Oxford Frozen Foods Limited, a food manufacturing
company he founded in 1968. He is also an officer and/or
director of a number of associated companies including Bragg
Communications Incorporated which operates under the brand name
of Eastlink. |
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W. Edmund Clark |
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Mr. Clark is a member of the board of directors of TD and,
since December 2002 has held the position of President and Chief
Executive Officer of TD Bank Financial Group. Mr. Clark is
a director of TD Bank US Holding Company and TD AMERITRADE
Holding Corporation. Prior to December 20, 2002,
Mr. Clark served as President and Chief Operating Officer
of TD Bank Financial Group. Prior to joining TD in connection
with its acquisition of CT Financial Services Inc. on
February 1, 2000, he served as President and Chief
Executive Officer of CT Financial Services Inc. |
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Wendy K. Dobson |
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Dr. Dobson is a member of the board of directors of TD.
Dr. Dobson is Professor and
Co-Director,
Institute for International Business, Joseph L. Rotman
School of Management, University of Toronto. Dr. Dobson is
Vice Chair of the Canadian Public Accountability Board.
Dr. Dobson joined the University of Toronto in 1990 and has
been a Professor at the University of Toronto since 1990. |
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Henry H. Ketcham |
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Mr. Ketcham is a member of the board of directors of TD.
Since 1996, Mr. Ketcham has been the Chairman, President
and Chief Executive |
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Officer of West Fraser Timber Co. Ltd., an integrated forest
products company and is an officer and/or director of a number
of associated companies. |
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Pierre H. Lessard |
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Mr. Lessard is a member of the board of directors of TD.
Prior to April 15, 2008, Mr. Lessard was the President
and Chief Executive Officer of METRO INC., a food retailer and
distributor. He is the Executive Chairman. |
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Brian M. Levitt |
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Mr. Levitt is a member of the board of directors of TD.
Mr. Levitt is a Partner and Co-Chair of the law firm Osler,
Hoskin & Harcourt LLP. Mr. Levitt is the former
President and Chief Executive Officer of Imasco Limited, a
Canadian consumer goods and services company. |
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Harold H. MacKay |
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Mr. MacKay is a member of the board of directors of TD.
Mr. MacKay is of counsel to the law firm MacPherson
Leslie & Tyerman LLP. Prior to that, he was a partner
in the firm from 1969 to his retirement in 2004. Mr. MacKay
chaired the Task Force on the Future of the Canadian Financial
Services Sector and served as the Clifford Clark Visiting
Economist with the Department of Finance of Canada. In March
2007, Mr. MacKay also became non-executive Chairman of
Domtar Corporation. |
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Irene R. Miller |
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Ms. Miller is a member of the board of directors of TD.
Since 1997, Ms. Miller has been Chief Executive Officer of
Akim, Inc., an investment management and consulting firm. Until
June 1997, Ms. Miller was Vice Chairman and Chief Financial
Officer of Barnes & Noble, Inc. |
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Nadir H. Mohamed |
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Mr. Mohamed is a member of the board of directors of TD.
Mr. Mohamed is the President and Chief Executive Officer of
Rogers Communications Inc., a diversified Canadian
communications and media company. Prior to March 2009,
Mr. Mohamed was the President and Chief Operating Officer,
Communications Group of Rogers Communications Inc. |
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Wilbur J. Prezzano |
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Mr. Prezzano is a member of the board of directors of TD.
Mr. Prezzano also serves on the board of TD AMERITRADE
Holding Corporation. In 1997, he retired as Vice Chairman of
Eastman Kodak Company, an imaging products and services company.
Since 1997, Mr. Prezzano has served as a director of Roper
Industries, Inc. and is currently a director of Lance, Inc. and
EnPro Industries, Inc. |
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Helen K. Sinclair |
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Ms. Sinclair is a member of the board of directors of TD.
In 1996, Ms. Sinclair founded BankWorks Trading Inc., a
satellite communications company, and serves as its Chief
Executive Officer. Until November 2009, Ms. Sinclair was
also a director of the Canada Pension Plan Investment Board. |
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Carole S. Taylor |
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Ms. Taylor is a member of the board of directors of TD.
Ms. Taylor is a Senior Advisor for Borden Ladner Gervais
LLP. From December 2008 to January 2010, Ms. Taylor served
as Chair of the Federal Finance Ministers Economic
Advisory Council. Ms. Taylor served as Minister of Finance
for British Columbia from June 2005 to June 2008. In May 2005,
Ms. Taylor was elected to the Legislative Assembly of
British Columbia to represent the riding of
Vancouver-Langara.
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2001 to March 2005, Ms. Taylor served as Chair of
CBC/Radio-Canada. |
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John M. Thompson |
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Mr. Thompson is the non-executive Chairman of the board of
directors of TD, a position he has held since 2003.
Mr. Thompson is the retired Vice Chairman of the Board of
IBM Corporation, an information technology hardware, software
and services company, a position he held from August 2000 to
September 2002. |
Biographical
Information Regarding Executive Officers of TD
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W. Edmund Clark |
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See information regarding directors of TD in the table set forth
above. |
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Riaz Ahmed |
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Mr. Ahmed is Group Head, Corporate Development, Strategy,
and Treasury and Balance Sheet Management, Corporate Office, TD
Bank Financial Group. Prior to occupying this position
Mr. Ahmed held various offices within TD Bank Financial
Group including Executive Vice President, Corporate Development,
Group Strategy and Treasury and Balance Sheet Management,
Corporate Office, TD Bank Financial Group (2009
2010), Executive Vice President, Corporate Development and
Treasury and Balance Sheet Management, Corporate Office, TD Bank
Financial Group (2008 2009), and Senior Vice
President, Corporate Development, Corporate Office, TD Bank
Financial Group (2005 2008). |
|
Mark R. Chauvin |
|
Mr. Chauvin is Group Head and Chief Risk Officer, Risk
Management, Corporate Office, TD Bank Financial Group. Prior to
occupying this position Mr. Chauvin held various offices
within TD Bank Financial Group including Executive Vice
President and Chief Risk Officer, Risk Management, Corporate
Office, TD Bank Financial Group (2006 2010), and
Senior Vice President, Credit Risk, Risk Management, Corporate
Office (2004 2006). |
|
Theresa L. Currie |
|
Ms. Currie is Group Head, Marketing, Corporate and Public
Affairs, and People Strategies, Corporate Office, TD Bank
Financial Group. Prior to occupying this position
Ms. Currie held various offices within TD Bank Financial
Group including Executive Vice President, Human Resources and
Corporate and Public Affairs, Corporate Office, TD Bank
Financial Group (2009 2010), Executive Vice
President, Human Resources, Corporate Office, TD Bank Financial
Group (2005 2009), and Senior Vice President, Human
Resources, Corporate Office (2004 2005). |
|
Robert E. Dorrance |
|
Mr. Dorrance is Group Head, Wholesale Banking, TD Bank
Financial Group and Chairman, Chief Executive Officer and
President TD Securities. Prior to occupying this position
Mr. Dorrance held various offices within TD Bank Financial
Group and TD Securities including Vice Chair TD Bank Financial
Group, Group Head Wholesale Banking and Chairman and Chief
Executive Officer TD Securities
(2005-2007),
and Vice Chair and Chairman and Chief Executive Officer, TD
Securities
(2003-2005). |
|
Bernard T. Dorval |
|
Mr. Dorval is Group Head, Insurance and Global Development,
TD Bank Financial Group and Deputy Chair, TD Canada Trust.
Prior to occupying this position Mr. Dorval held various
offices within TD Canada Trust including Group Head, Global
Insurance and Head |
75
|
|
|
|
|
Group Strategy TD Bank Financial Group and Deputy Chair,
TD Canada Trust (2008 2009), Group Head,
Business Banking and Insurance and Co-Chair, TD Canada Trust, TD
Bank Financial Group (2005 2008), and Executive Vice
President, Business Banking and Insurance and Co-Chair,
TD Canada Trust (2005). |
|
|
|
William H. Hatanaka |
|
Mr. Hatanaka is Group Head, Global Wealth Management, TD
Bank Financial Group and Chairman and Chief Executive Officer,
TD Waterhouse Canada Inc. Prior to occupying this position
Mr. Hatanaka held the office of Executive Vice President,
Wealth Management
(2003-2005).
Previously, Mr. Hatanaka held the position of Chief
Operating Officer, RBC Wealth Management and Co-President, RBC
Dominion Securities Inc. at Royal Bank of Canada
(2001-2003). |
|
Timothy D. Hockey |
|
Mr. Hockey is Group Head, Canadian Banking, TD Bank
Financial Group and President and Chief Executive Officer, TD
Canada Trust. Prior to occupying this position Mr. Hockey
held various offices within TD Canada Trust including Group
Head, Personal Banking and Co-Chair, TD Canada Trust, TD Bank
Financial Group (2005 2008), and Executive Vice
President, Personal Banking and Co-Chair, TD Canada Trust (2005). |
|
Colleen M. Johnston |
|
Ms. Johnston is Group Head, Finance and Chief Financial
Officer, Corporate Office, TD Bank Financial Group. Prior to
occupying this position Ms. Johnston held various offices
within TD Bank Financial Group including Executive Vice
President and Chief Financial Officer, Corporate Office, TD Bank
Financial Group
(2005-2007)
and Executive Vice President, Finance, Corporate Office
(2004-2005). |
|
Bharat B. Masrani |
|
Mr. Masrani is Group Head, U.S. Personal and Commercial
Banking, TD Bank Financial Group, and President and Chief
Executive Officer, TD Bank, N.A. Prior to occupying this
position Mr. Masrani held various offices in TD Banknorth
and TD Bank Financial Group including Group Head, U.S. Personal
and Commercial Banking, TD Bank Financial Group and President
and Chief Executive Officer, TD Banknorth (2007
2008), President and Chief Executive Officer of TD Banknorth
(2007), President, TD Banknorth, TD Bank Financial Group
(2006-2007),
Vice Chair. Corporate Office, TD Bank Financial Group (2006),
and Vice Chair and Chief Risk Officer, Corporate Office TD Bank
Financial Group
(2005-2006). |
|
Frank J. McKenna |
|
Mr. McKenna is Deputy Chair TD Bank Financial Group. Prior
to joining TD Financial Group in 2006, Mr. McKenna served
as the Canadian ambassador to the United States of America
(2005-2006).
Previously, Mr. McKenna acted as Counsel to the law firm of
McInnes Cooper from 1997 to 2005. |
|
Michael Pedersen |
|
Mr. Pedersen is Group Head, Corporate Operations, TD Bank
Financial Group. Prior to occupying this position
Mr. Pedersen held the office of Group Head, Corporate
Operations, TD Bank Financial Group (2007 2010).
Prior to joining TD, Mr. Pedersen served on the Board of
Directors of Barclays Private Bank
(2002-2007)
and held the positions of Managing Director, International and
Private Banking, Barclays
(2004-2006). |
76
BENEFICIAL
OWNERSHIP OF TSFG COMMON STOCK
Directors
and Executive Officers
The table below sets forth as of August 23, 2010 the
beneficial ownership of TSFG common stock by (1) all
Directors, (2) all Named Executive Officers of TSFG (as
defined in the TSFG Proxy Statement filed with the Securities
and Exchange Commission on April 7, 2010), and (3) all
Directors and executive officers of TSFG as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
|
|
|
|
Beneficially Owned(1)(2)
|
|
|
Subject to
|
|
|
Percent of
|
|
|
|
Sole
|
|
|
Shared
|
|
|
a Right to
|
|
|
Common
|
|
Name of Beneficial Owner
|
|
Power
|
|
|
Power
|
|
|
Acquire(3)
|
|
|
Stock(4)
|
|
|
William P. Crawford, Jr.
|
|
|
19,173
|
|
|
|
99
|
|
|
|
77,601
|
|
|
|
*
|
|
J.W. Davis
|
|
|
59,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Ernie Diaz(5)
|
|
|
10,260
|
|
|
|
|
|
|
|
25,000
|
|
|
|
*
|
|
James R. Gordon(6)
|
|
|
42,775
|
|
|
|
|
|
|
|
115,000
|
|
|
|
*
|
|
M. Dexter Hagy
|
|
|
148,548
|
|
|
|
5,375
|
|
|
|
9,187
|
|
|
|
*
|
|
H. Lynn Harton
|
|
|
52,451
|
|
|
|
|
|
|
|
125,000
|
|
|
|
*
|
|
Christopher T. Holmes
|
|
|
12,314
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
William S. Hummers III
|
|
|
214,953
|
|
|
|
12,393
|
|
|
|
|
|
|
|
*
|
|
Challis M. Lowe
|
|
|
37,453
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Jon W. Pritchett(7)
|
|
|
727,418
|
|
|
|
893,594
|
|
|
|
|
|
|
|
*
|
|
H. Earle Russell, Jr.(8)
|
|
|
38,801
|
|
|
|
|
|
|
|
9,187
|
|
|
|
*
|
|
John C.B. Smith, Jr.
|
|
|
207,415
|
|
|
|
6,258
|
|
|
|
9,187
|
|
|
|
*
|
|
William R. Timmons III(9)
|
|
|
104,212
|
|
|
|
1,339,371
|
|
|
|
6,483
|
|
|
|
*
|
|
David C. Wakefield III
|
|
|
70,956
|
|
|
|
3,151
|
|
|
|
9,187
|
|
|
|
*
|
|
Directors/Executive Officers as a Group (17 persons)
|
|
|
1,757,762
|
|
|
|
2,260,241
|
|
|
|
466,332
|
|
|
|
2.07
|
%
|
|
|
|
* |
|
Represents holdings of less than 1% of the outstanding shares of
TSFG common stock. |
|
(1) |
|
This is based on information reported to TSFG by its directors
and executive officers, and includes shares held by spouses,
minor children, affiliated companies, partnerships and trusts
over which the named person has beneficial ownership. It also
includes shares allocated to individual accounts under
TSFGs 401(k) Plan, voting of which is directed by the
respective named persons who participate in that plan. |
|
(2) |
|
Except as footnoted in this table, if a beneficial owner is
shown to have sole power, the owner has sole voting and sole
investment power, and if a beneficial owner is shown to have
shared power, the owner has shared voting power and shared
investment power. |
|
|
|
(3) |
|
This includes stock options for common stock that are
exercisable on August 23, 2010 or that become exercisable
within 60 days thereafter. |
|
|
|
(4) |
|
Pursuant to
Rule 13d-3
of the Exchange Act, the percentages of total beneficial
ownership have been calculated based upon the
216,401,091 shares of TSFG common stock outstanding as of
August 23, 2010, plus the assumption that shares of TSFG
common stock that can be acquired within 60 days of
August 23, 2010 upon the exercise of options or by
conversion of preferred stock by a given person are outstanding,
but no other shares similarly subject to acquisition by other
persons are outstanding. |
|
|
|
(5) |
|
Mr. Diaz holds 3,334 shares of restricted stock for
which voting power but no power of disposition. |
|
(6) |
|
Mr. Gordon owns 862 share equivalent units through the
TSFG Deferred Compensation Plan which are issuable after the
termination of his employment. |
77
|
|
|
(7) |
|
Pritchett Holdings, Inc., of which Mr. Pritchett is a
principal, holds 138,297 shares. |
|
(8) |
|
Dr. Russell holds 12,545 share equivalent units
through the TSFG Deferred Compensation Plan which are issuable
in shares of TSFG common stock at the termination of his service
on the TSFG Board of Directors. |
|
(9) |
|
Canal Insurance Company, of which Mr. Timmons is a
principal, holds 1,307,615 shares. Canal Insurance Company
Pension Trust Plan, of which Mr. Timmons is a trustee,
holds 30,642 shares. Central Investments, LP, of which
Mr. Timmons is a principal, holds 153,845 shares. The
WRT, Jr. Revocable Living Trust, of which Mr. Timmons is a
trustee, holds 8,714 shares. In addition, Mr. Timmons
owns 21,580 share equivalent units through the TSFG
Deferred Compensation Plan which are issuable in shares of TSFG
common stock at the termination of his service on the TSFG Board
of Directors. |
5%
Beneficial Owners
Beneficial
Ownership of Common Stock
TSFG knows of no person or group that owns beneficially more
than 5% of the outstanding common stock as of August 23,
2010, except as set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
Common Stock Beneficially Owned
|
|
|
|
|
|
|
Sole
|
|
|
Shared
|
|
|
Sole
|
|
|
Shared
|
|
|
Percent of
|
|
|
|
Voting
|
|
|
Voting
|
|
|
Investment
|
|
|
Investment
|
|
|
Common
|
|
Name of Beneficial Owner
|
|
Power
|
|
|
Power
|
|
|
Power
|
|
|
Power
|
|
|
Stock*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greek Investments, Inc.(1)
Harbour House Queen Street
Grand Turk, Turks and Caicos Islands
|
|
|
|
|
|
|
12,374,357
|
|
|
|
|
|
|
|
12,374,357
|
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shorewater Advisors LLC(2)
3033 Excelsior Boulevard, Suite 400 Minneapolis, MN 55416
|
|
|
|
|
|
|
10,873,476
|
|
|
|
|
|
|
|
10,873,476
|
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Centaurus Capital LP and Centaurus Capital Limited(3)
33 Cavendish Square,
16th Floor
London, W1G OPW, United Kingdom
|
|
|
|
|
|
|
12,023,295
|
|
|
|
|
|
|
|
12,023,295
|
|
|
|
5.6
|
%
|
|
|
|
* |
|
The percentages of total beneficial ownership have been
calculated based upon 216,401,091 shares of TSFG common
stock outstanding as of August 23, 2010. |
|
|
|
(1) |
|
Based on the Schedule 13G filed on March 8, 2010 by
Greek Investments, Inc. each of Jorge Constantino and Panayotis
Constantino, who are principals of Greek Investments, Inc., may
be deemed to share the power to direct the voting and
disposition of its 12,374,357 shares. |
|
|
|
(2) |
|
Based on the Schedule 13G filed on August 6, 2010 by
Shorewater Advisors LLC, Charles V. Marais may be deemed to
share the power to direct the voting and disposition of its
10,873,476 shares. |
|
|
|
(3) |
|
Based on the Schedule 13G filed on July 19, 2010 by
Centaurus Capital LP and Centaurus Capital Limited, each of
Centaurus Capital LP and Centaurus Capital Limited may be deemed
to share the power to direct the voting and disposition of its
12,023,295 shares. |
Beneficial
Ownership of Series M Preferred Stock
TD is the beneficial owner of the only outstanding shares of
TSFGs Series M Preferred Stock. The Series M
Preferred Stock will vote as a single class with TSFGs
Common Stock and has voting power equal to 39.9% of the total
voting power of holders of TSFG capital stock entitled to vote.
78
DESCRIPTION
OF TD SHARE CAPITAL
The following is a summary of the material provisions of the
Bank Act of Canada and the TD by-laws as they relate to
TDs capital stock.
TD
Capital Stock
The authorized capital of TD consists of an unlimited number of
TD common shares, without par value, and an unlimited number of
Class A First Preferred Shares, without par value, issuable
in series.
As of August 23, 2010, there were issued and outstanding
the following shares of TD capital stock: 875,430,143
TD common shares; 14,000,000 Non-Cumulative Redeemable
Class A First Preferred Shares, Series M; 8,000,000
Non-Cumulative Redeemable Class A First Preferred Shares,
Series N; 17,000,000 Non-Cumulative Redeemable Class A
First Preferred Shares, Series O; 10,000,000 Non-Cumulative
Redeemable Class A First Preferred Shares, Series P;
8,000,000 Non-Cumulative Redeemable Class A First Preferred
Shares, Series Q; 10,000,000 Non-Cumulative Redeemable
Class A First Preferred Shares, Series R; 10,000,000
Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series S;
10,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series Y;
10,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AA;
8,800,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AC;
12,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AE;
15,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AG;
11,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AI and
14,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AK.
TD Common
Shares
Voting. Holders of TD common shares are
entitled to one vote per share on all matters to be voted on by
holders of TD common shares. Unless otherwise required by the
Bank Act of Canada, any matter to be voted on by holders of TD
common shares shall be decided by a majority of the votes cast
on the matter.
Size of Board of Directors. The Bank Act of
Canada requires that the number of directors of TDs board
of directors be at least seven. All directors of TD are elected
annually. The Bank Act of Canada also requires that at least a
majority of the directors on TDs board of directors must
be, at the time of each directors election, resident
Canadians. See Comparison of Shareholder
Rights Number, Classification, and Election of
Directors TD beginning on page 84.
Liquidation Rights. Upon the liquidation,
dissolution or winding up of TD, whether voluntary or
involuntary, the holders of TD common shares are entitled to
receive ratably the net assets of TD available after the payment
of all debts and other liabilities and subject to the prior
rights of holders of any outstanding preferred shares.
Preemptive, Subscription, Redemption and Conversion
Rights. Holders of TD common shares, as such,
have no preemptive, subscription, redemption or conversion
rights.
Dividends. The holders of TD common shares are
entitled to receive dividends as and when declared by the board
of directors of TD, subject to the preference of the holders of
the preferred shares of TD. TD dividends have historically been
declared on a quarterly basis in Canadian dollars. If and when a
dividend is declared, U.S. holders of TD common shares
will, by default, receive dividends in U.S. dollars. The
declaration and payment of dividends and the amount of the
dividends is subject to the discretion of the TD board of
directors, and will be dependent upon the results of operations,
financial condition, cash requirements and future prospects of,
and regulatory restrictions on the payment of dividends by, TD
and other factors deemed relevant by the TD board of directors.
See Comparison of Shareholder Rights Dividends
and Other Distributions and Liquidation beginning on
page 93.
TD
Preferred Shares
General. TD has a single class of authorized
preferred shares, Class A First Preferred Shares, which is
without par value and issuable in series. Fourteen series of
Class A First Preferred Shares were outstanding as of
August 23, 2010, namely, 14,000,000 Non-Cumulative
Redeemable Class A First Preferred Shares, Series M;
79
8,000,000 Non-Cumulative Redeemable Class A First Preferred
Shares, Series N; 17,000,000 Non-Cumulative Redeemable
Class A First Preferred Shares, Series O; 10,000,000
Non-Cumulative Redeemable Class A First Preferred Shares,
Series P; 8,000,000 Non-Cumulative Redeemable Class A
First Preferred Shares, Series Q; 10,000,000 Non-Cumulative
Redeemable Class A First Preferred Shares, Series R;
10,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series S;
10,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series Y;
10,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AA;
8,800,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AC;
12,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AE;
15,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AG;
11,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AI and
14,000,000 Non-Cumulative
5-Year Rate
Reset Class A First Preferred Shares, Series AK.
The board of directors of TD is authorized, without shareholder
approval, to divide the unissued preferred shares into series
and to fix the number of shares of each series and the rights,
privileges, restrictions and conditions of such series, provided
that no rights, privileges, restrictions or conditions attached
to a series confer on a series a priority in respect of
dividends or distribution of assets over any series of preferred
shares then outstanding, and provided that TD shall not, without
the prior approval of the holders of the preferred shares,
create or issue any shares ranking in priority to or pari passu
with the preferred shares unless all cumulative dividends and
any declared and unpaid non-cumulative dividends have been paid
or set apart for payment.
Priority. The preferred shares rank prior to
the TD common shares and to any other shares of TD ranking
junior to the preferred shares with respect to the payment of
dividends and the distribution of assets in the event of the
liquidation, dissolution or
winding-up
of TD. Each series of preferred shares ranks on a parity with
every other series of preferred shares.
Restriction. Under the terms of the Bank Act
of Canada, the approval of the holders of the preferred shares
is required for the creation of any class of shares ranking
prior to or on a parity with the preferred shares.
Voting. Except as required under the Bank Act
of Canada, the holders of TD preferred shares are not entitled
to vote at any meeting of the shareholders of TD.
Amendment of Class Provisions. Approval
of by-law amendments to the provisions of the preferred shares
as a class may be given in writing by the holders of all the
outstanding preferred shares or by a resolution carried by an
affirmative vote of at least two-thirds of the votes cast at a
meeting at which the holders of a majority of the outstanding
preferred shares are present or represented by proxy or, if no
quorum is present at such meeting, at an adjourned meeting at
which the shareholders then present or represented by proxy may
transact the business for which the meeting was originally
called.
Priority on Liquidation, Dissolution or Winding
Up. In the event of the liquidation, dissolution
or
winding-up
of TD, before any amounts are paid to or any assets are
distributed among the holders of the common shares or shares of
any other class of TD ranking junior to the preferred shares,
the holder of a preferred share of a series shall be entitled to
receive to the extent provided for with respect to such
preferred shares by the conditions attaching to such series:
(1) an amount equal to the amount paid up for the preferred
share of such series; (2) such premium, if any, as has been
provided for with respect to the preferred shares of such
series; and (3) all unpaid cumulative dividends, if any, on
such preferred shares and, in the case of non-cumulative
preferred shares, all declared and unpaid non-cumulative
dividends. After payment to the holders of the preferred shares
of the amounts so payable to them, they shall not be entitled to
share in any further distribution of the property or assets of
TD. Each series of preferred shares ranks on a parity with every
other series of preferred shares.
Creation and Issue of Additional Preferred
Shares. TD may not, without the prior approval of
the holders of the preferred shares, create or issue any shares
ranking in priority to or on a parity with the preferred shares
or any additional series of preferred shares unless all
cumulative dividends and any declared and unpaid non-cumulative
dividends shall have been paid or set apart for payment.
Dividends. Each series of preferred shares is
entitled to receive a quarterly, non-cumulative preferential
cash dividend, as and when declared by the TD board of
directors, payable on the last day of January, April, July and
October in each year calculated quarterly at a specified rate.
If the board of directors has not declared the dividends
80
or any part of the dividends on such series of preferred shares
by the dividend payment date for such quarter, then the rights
of the holders of such series of preferred shares to such
dividend for such quarter shall be extinguished. The amount of
the quarterly dividend for each outstanding series of preferred
shares is set forth in the table below:
|
|
|
|
|
|
|
Amount of
|
|
|
Quarterly Dividend
|
|
Series M
|
|
C$
|
0.29375
|
|
Series N
|
|
C$
|
0.28750
|
|
Series O
|
|
C$
|
0.303125
|
|
Series P
|
|
C$
|
0.328125
|
|
Series Q
|
|
C$
|
0.35
|
|
Series R
|
|
C$
|
0.35
|
|
Series S
|
|
C$
|
0.3125
|
(1)
|
Series Y
|
|
C$
|
0.31875
|
(2)
|
Series AA
|
|
C$
|
0.3125
|
(3)
|
Series AC
|
|
C$
|
0.35
|
(4)
|
Series AE
|
|
C$
|
0.390625
|
(5)
|
Series AG
|
|
C$
|
0.390625
|
(6)
|
Series AI
|
|
C$
|
0.390625
|
(7)
|
Series AK
|
|
C$
|
0.390625
|
(8)
|
Redemption. Each outstanding series of
preferred shares is redeemable, with the prior approval of the
Superintendent of Financial Institutions of Canada, on and after
the date specified in the table below, at TDs option and
at specified prices. The redemption price may be paid by either
payment of cash or the issuance of TD common shares.
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Earliest Redemption Date
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Series M
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April 30, 2009
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Series N
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April 30, 2009
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Series O
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November 1, 2010
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Series P
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November 1, 2012
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Series Q
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January 31, 2013
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Series R
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April 30, 2013
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Series S
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July 31, 2013
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Series Y
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October 31, 2013
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Series AA
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January 31, 2014
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Series AC
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January 31, 2014
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Series AE
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April 30, 2014
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Series AG
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April 30, 2014
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(1) |
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For the period from June 11, 2008 to July 31, 2013. |
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(2) |
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For the period from July 16, 2008 to October 31, 2013. |
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(3) |
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For the period from September 12, 2008 to January 31,
2014. |
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(4) |
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For the period from November 5, 2008 to January 31,
2014. |
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(5) |
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For the period from January 14, 2009 to April 30, 2014. |
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(6) |
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For the period from January 30, 2009 to April 30, 2014. |
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(7) |
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For the period from March 6, 2009 to July 31, 2014. |
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(8) |
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For the period from April 3, 2009 to July 31, 2014. |
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Earliest
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Redemption
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Date
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Series AI
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July 31, 2014
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Series AK
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July 31, 2014
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Retirement of Preferred Shares. Subject to the
prior approval of the Superintendent of Financial Institutions
of Canada and to the provisions described below governing
restrictions on dividends and retirement of shares, TD may
at any time purchase any outstanding series of preferred shares
for cancellation.
Conversion into Common Shares at TDs
Option. On and after the date specified in the
table below for the applicable series of preferred shares, TD
may, subject to the approval, if required, of the stock exchange
upon which any shares of TD are listed, convert all, or from
time to time any part, of the outstanding shares of such series
into the number of whole, fully-paid and freely tradable TD
common shares determined by dividing the then applicable
redemption price per share of such series, together with
declared and unpaid dividends to the date fixed for conversion,
by the greater of (1) C$2.00 and (2) 95% of the
weighted average trading price of such TD common shares on the
Toronto Stock Exchange for the 20 trading days ending on the
last trading day ending on or before the fourth day prior to the
date fixed for conversion. Fractional TD common shares will not
be issued on any conversion of such preferred shares, but TD
will make cash payments in lieu of fractional TD common shares.
Notice of any conversion will be given by TD not more than
60 days and not less than 40 days prior to the date
fixed for conversion. If less than all of the outstanding shares
of such series of preferred shares are at any time to be
converted, the shares to be converted will be selected by lot or
pro rata, disregarding fractions, or in such other manner as TD
may determine.
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First
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Conversion
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Date
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Series M
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April 30, 2009
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Series N
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April 30, 2009
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Conversion into Common Shares at the Option of the Holder of
Preferred Shares. Subject to the rights of TD
described below, on and after the date specified below for the
applicable series of preferred shares, each share of such series
will be convertible at the option of the holder on the last
business day of each of January, April, July and October in each
year on not more than 90 and not less than 65 days
notice (which notice shall be irrevocable) into that number of
whole, fully-paid and freely tradable TD common shares
determined in the manner described above.
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First
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Conversion
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Date
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Series M
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October 31, 2013
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Series N
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January 31, 2014
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TD, subject to the provisions of the Bank Act of Canada,
including the requirement of the prior consent of the
Superintendent of Financial Institutions of Canada, and to the
provisions described above governing restrictions on dividends
and retirement of shares, as applicable, may by notice given not
later than 40 days before the date fixed for conversion to
all holders who have been given a conversion notice either
(1) redeem on the business day after the date fixed for
conversion all but not less than all of the shares of such
series of preferred shares which are the subject of the
conversion notice; or (2) cause the holder of such shares
of the series of preferred shares to sell on the business day
after the date fixed for conversion such series to another
purchaser or purchasers in the event that a purchaser or
purchasers willing to purchase all but not less than all of such
shares of the series of preferred shares is or are found. Any
such redemption or purchase shall be made by the payment of an
amount in cash of C$25.00 per share, together with declared and
unpaid dividends to the date fixed for redemption or purchase.
The shares of such series of preferred shares to be so redeemed
or purchased shall not be converted on the date set forth in the
conversion notice.
Limitations
Affecting Holders of TD Common Shares
The Bank Act of Canada contains restrictions on the issue,
transfer, acquisition, beneficial ownership and voting of all
shares of a Canadian chartered bank. For example, no person
shall be a major shareholder of a bank if
82
the bank has equity of $8 billion or more (which would
include TD). A person is a major shareholder of a bank where:
(i) the aggregate number of shares of any class of voting
shares owned by that person, by entities controlled by that
person and by any person associated or acting jointly or in
concert with that person is more than 20% of that class of
voting shares; or (ii) the aggregate number of shares of
any class of non-voting shares beneficially owned by that
person, by entities controlled by that person and by any person
associated or acting jointly or in concert with that person is
more than 30% of that class of non-voting shares. 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 a class of voting shares of TD, provided, in each
case, that the person acquiring those shares does not have
direct or indirect influence over TD that, if exercised, would
result in that person having control in fact of TD. No person
shall have a significant interest in any class of
shares of a bank, including TD, unless the person first receives
the approval of the Minister of Finance (Canada). In addition,
TD is not permitted to record any transfer or issue of any
shares of TD if the transfer or issue would cause the person to
have a significant interest in a class of shares, unless the
prior approval of the Minister of Finance is obtained. No person
who has a significant interest in TD may exercise any voting
rights attached to the shares held by that person, unless the
prior approval of the Minister of Finance for the acquisition of
the significant interest is obtained. For purposes of the Bank
Act of Canada, a person has a significant interest in a class of
shares of a bank where the aggregate of any shares of the class
beneficially owned by that person, by entities controlled by
that person and by any person associated or acting jointly or in
concert with that person exceeds 10% of all of the outstanding
shares of that class of shares of such bank. 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. Holders of securities of TD may be
required to furnish declarations relating to ownership in a form
prescribed by TD. In addition, the Bank Act of Canada prohibits
banks, including TD, from recording a transfer or issuing shares
of any class to the Government of Canada, or of any province
thereof, to any foreign government or the government of any
state, province or other political subdivision of a foreign
country or to any agent or agency of any of the foregoing.
Under the Bank Act of Canada, TD cannot redeem or purchase any
of its shares, including the common shares, unless the consent
of the Superintendent of Financial Institutions of Canada has
been obtained. In addition, the Bank Act of Canada prohibits a
payment to purchase or redeem any shares or the declaration and
payment of a dividend if there are reasonable grounds for
believing that TD is, or the payment would cause TD to be, in
contravention of the capital adequacy and liquidity regulations
of the Bank Act of Canada or any capital or liquidity directions
of the Superintendent of Financial Institutions of Canada.
TDs ability to pay dividends is also restricted in the
event that TD Capital Trust II, TD Capital Trust III
or TD Capital Trust IV (each a subsidiary of TD) fails to
pay semi-annual distributions or interest, as applicable, in
full to holders of trust securities issued by those entities. In
addition, the ability to pay dividends on the TD common shares
without the approval of the holders of TDs outstanding
preferred shares is restricted unless all dividends on the
preferred shares of TD have been declared and paid or set apart
for payment.
The government of Canada placed a moratorium on mergers among
Canadas largest financial institutions in 2003, including
TD and its peers, pending a further review of Canadas bank
merger policy. The current Minister of Finance has previously
stated that a review of the governments bank merger policy
is not currently a priority, and as a result, it is unlikely
that the Minister would grant an approval for a merger between
any large Canadian financial institutions at this time.
The restrictions contained in the Bank Act of Canada and the
Canadian governments policies may deter, delay or prevent
a future amalgamation involving TD and will prevent the
acquisition of control of TD, including transactions that could
be perceived as advantageous to TDs shareholders.
Amendments
to the Rights, Privileges, Restrictions and Conditions of
TDs Share Capital
Under the Bank Act of Canada, the rights of holders of TDs
shares can be changed by the board of directors of TD by making,
amending or repealing the by-laws of TD. The board of directors
of TD must submit such a by-law, or amendment to or repeal of a
by-law, to the shareholders of TD in accordance with the
procedures of the Bank Act of Canada and the TD by-laws, and the
shareholders must approve the by-law, amendment to or repeal of
the by-law by special resolution to be effective. Under the Bank
Act of Canada, a special resolution is a resolution passed by
not
83
less than two-thirds of the votes cast by or on behalf of the
shareholders who voted in respect of that resolution or signed
by all the shareholders entitled to vote on that resolution. In
some circumstances, the Bank Act of Canada mandates that holders
of shares of a class or a series are entitled to vote separately
as a class or series on a proposal to amend the by-laws of TD.
COMPARISON
OF SHAREHOLDER RIGHTS
The rights of holders of TSFG stock are governed principally by
the laws of South Carolina, particularly the SCBCA, TSFGs
articles of incorporation and TSFGs bylaws.
As a result of the merger, holders of TSFG common stock will
receive TD common shares except to the extent a holder makes a
valid cash election with respect to its shares of TSFG common
stock. The rights and privileges of those shares will be
governed principally by the Bank Act of Canada, which is
TDs charter, and TDs by-laws.
Although the rights and privileges of shareholders of a South
Carolina corporation and the rights and privileges of
shareholders of a bank chartered under the Bank Act of Canada
are, in many instances, comparable, there are differences. The
following is a summary of the key differences among the rights
of holders of TSFG common stock as of the date of this document
and the rights of holders of TD common shares as of the date of
this document. These differences arise principally from
differences between the SCBCA and the Bank Act of Canada, and
between TSFGs articles of incorporation and bylaws, on the
one hand, and TDs charter and by-laws, on the other hand.
While TD and TSFG believe that this summary describes the key
differences among the rights of holders of TSFG common stock as
of the date of this document and the rights of holders of TD
common shares as of the date of this document, it may not
contain all of the information that is important to you. We urge
you to read the governing instruments of each company and the
provisions of the SCBCA and the Bank Act of Canada, which are
relevant to a full understanding of the governing instruments,
fully and in their entirety.
Authorized
Capital Stock
TSFG
TSFGs articles of incorporation authorize the issuance of
up to 325,000,000 shares of TSFG common stock,
$1.00 par value per share, and up to 10,000,000 shares
of TSFG preferred stock, no par value per share. TSFG preferred
stock is issuable in series, each series having such rights and
preferences as the board of directors may fix and determine by
resolution. Under TSFGs articles of incorporation, the
vote or consent of the holders of
662/3%
of the shares of Series M Preferred Stock at the time
outstanding, voting as a separate class, is necessary for the
creation of any other series of preferred stock or other new
class or series of capital stock or other securities having
general voting rights or having the right to vote on the merger
agreement or certain other transactions. TSFGs articles of
incorporation also require the vote or consent of the holders of
at least
662/3%
of the shares of
Series 2008-T
Preferred Stock at the time outstanding, voting as a separate
class, for the creation of any shares of any class or series of
capital stock of TSFG ranking senior to the
Series 2008-T
Preferred Stock with respect to either or both the payment of
dividends
and/or the
distribution of assets on any liquidation, dissolution or
winding up of TSFG.
TD
TDs charter and by-laws permit TD to issue common shares
without nominal or par value and Class A First Preferred
Shares issuable in one or more series without nominal or par
value. There is no limit on the number of TD common shares or
Class A First Preferred Shares that TD can issue.
Number,
Classification, and Election of Directors
TSFG
TSFGs bylaws provide that the number of directors may be
increased or decreased by the action of the board of directors
at any meeting or by the shareholders at any annual meeting of
shareholders. Directors are elected by the shareholders at the
annual shareholders meeting. TSFGs articles of
incorporation contain a provision eliminating
84
cumulative voting in the election of directors. Therefore, in
accordance with South Carolina law, directors are elected by a
plurality of the votes of the shares present, in person or by
proxy, and entitled to vote on the election of directors at a
meeting of shareholders at which a quorum is present.
TSFGs board of directors is currently divided into three
classes of directors, with directors of each class being elected
for staggered three-year terms. However, pursuant to an
amendment adopted by TSFGs shareholders at the 2008 Annual
Meeting of Shareholders, this classified board structure began
being phased out with the 2008 Annual Meeting, and it will be
eliminated upon completion of the 2010 Annual Meeting of
Shareholders.
Whenever dividends payable on the shares of TSFGs
Series 2008-T
Preferred Stock have not been paid for an aggregate of six
quarterly dividend periods or more, whether or not consecutive,
the authorized number of directors of TSFG will automatically be
increased by two and the holders of
Series 2008-T
Preferred Stock will have the right, with the holders of shares
of any one or more other classes or series of stock with equal
voting rights outstanding at the time, voting together as a
class, to elect two directors, who we refer to as the
Series 2008-T
Directors, to fill the newly created directorships at
TSFGs next annual meeting of shareholders (or at a special
meeting called for that purpose prior to the next annual
meeting). The right to elect directors will continue at each
subsequent annual meeting of shareholders until all accrued and
unpaid dividends for all past dividend periods, including the
latest completed dividend period, on all outstanding shares of
Series 2008-T
Preferred Stock have been declared and paid in full, at which
time the right to elect directors will terminate with respect to
the
Series 2008-T
Preferred Stock, subject to revesting in the event of each
subsequent default. It is a qualification for the election of
any such
Series 2008-T
Directors that the election not cause TSFG to violate any
corporate governance requirement of any securities exchange on
which the securities of TSFG are then listed or traded that TSFG
must have a majority of independent directors.
TD
Under the Bank Act of Canada, the TD board must have at least
seven members and TD may establish by by-law a minimum and
maximum number of directors. The Bank Act of Canada also
requires that no more than two-thirds of the directors may be
affiliated with TD, as specified by the Bank Act of Canada, and
no more than 15% of the directors may be employees of TD or a
subsidiary of TD, except that up to four of these employees may
be directors if they constitute not more than 50% of the
directors. Under the Bank Act of Canada, a majority of the
directors of TD must be resident Canadians and, except in
limited circumstances, directors may not transact business at a
meeting of directors or a committee of directors at which a
majority of the directors present are not resident Canadians.
The Bank Act of Canada also requires the directors of a bank to
appoint from their members a chief executive officer who must
ordinarily be resident in Canada. Under the TD by-laws, the
minimum number of directors is 12 and the maximum number of
directors is 22. The TD by-laws provide that the number of
directors to be elected at any annual meeting of shareholders of
TD will be fixed by the TD board of directors before the meeting
and all directors are elected to one-year terms. Currently, the
number of directors of TD is 17.
Filling
Vacancies on the Board of Directors and Removing
Directors
TSFG
Generally, under TSFGs bylaws, shareholders may fill a
vacancy on the board of directors, including a vacancy resulting
from an increase in the number of directors. During the time
that the shareholders fail or are unable to fill such vacancy,
the board of directors may fill the vacancy by majority vote,
even if the directors remaining in office constitute fewer than
a quorum of the board. Under the SCBCA, shareholders may remove
one or more directors with or without cause unless the articles
of incorporation provide that directors may be removed only for
cause. TSFGs articles of incorporation do not contain such
a provision, but do require the affirmative vote of the holders
of not less than 80% of the outstanding voting securities of
TSFG to remove any director or the entire board without cause.
The notice of a meeting at which removal of a director is voted
on must state that a purpose of the meeting is the removal of
the director. The SCBCA provides that a director may be removed
only if the number of votes cast to remove him exceeds the
number of votes cast not to remove the director, and further
provides that if a director is elected by a voting group of
shareholders, only the shareholders of that voting group may
participate in the vote to remove the director or fill a vacancy
in that directors office.
85
Any
Series 2008-T
Director may be removed at any time, with or without cause, and
any vacancy created thereby may be filled, only by the
affirmative vote of the holders a majority of the shares of
Series 2008-T
Preferred Stock at the time outstanding voting separately as a
class together with the holders of shares of any one or more
other classes or series of stock with equal voting rights
outstanding at the time. If the office of any
Series 2008-T
Director becomes vacant for any reason other than removal from
office, the remaining
Series 2008-T
Director may choose a successor who will hold office for the
unexpired term in respect of which the vacancy occurred.
TD
Under the Bank Act of Canada, a quorum of directors may appoint
one or more directors to fill a vacancy among the directors and
any director so appointed will hold office for the unexpired
term of the directors predecessor in office, provided that
the directors may not appoint a person to fill a vacancy
resulting from a change in the minimum or maximum number of
directors established by TDs by-laws or from a failure to
elect the number or the minimum number of directors required by
TDs by-laws. Under TDs by-laws, the directors of TD
may otherwise increase the number of directors and appoint one
or more additional directors who will hold office for a term
expiring not later than the close of the next annual meeting of
shareholders. Under the Bank Act of Canada, the total number of
additional directors appointed by the directors may not exceed
one-third of the number of directors elected at the previous
annual meeting of shareholders. Under the Bank Act of Canada,
the shareholders of TD may by resolution at a special meeting
remove any director or directors from office. This resolution
must be passed by a vote of not less than a majority of the
votes cast by shareholders who voted in respect of the
resolution.
Voting
Rights Generally; Voting on Mergers, Share Exchanges,
Conversions, and Sales of Assets
TSFG
Each share of TSFG common stock is entitled to one vote per
share on all matters submitted to shareholders. Each share of
TSFG Series M Preferred Stock is entitled to vote, on all
matters submitted to shareholders, that number of votes equal to
(x) 39.9% of the aggregate voting power of all capital
stock issued and outstanding (including TSFG common stock and
the Series M Preferred Stock) and entitled to vote thereon
divided by (y) the number of shares of Series M
Preferred Stock issued and outstanding, in each case as of the
applicable record date. Generally, corporate actions taken by
vote of TSFG shareholders are authorized upon receiving the
affirmative vote of a majority of the votes cast by all TSFG
shareholders entitled to vote on such action.
Under the SCBCA, unless a corporations articles of
incorporation otherwise provide, the affirmative vote of at
least (1) two-thirds of the votes entitled to be cast,
regardless of the class or voting group to which the shares
belong, and (2) two-thirds of the votes entitled to be cast
within each voting group entitled to vote as a separate voting
group is required to approve a plan of merger, share exchange,
or conversion or any sale, lease, exchange, or other disposition
of all or substantially all of the assets of the corporation
other than in the usual and regular course of business. Under
TSFGs articles of incorporation, any plan of merger, share
exchange, sale of substantially all of the companys
assets, consolidation or dissolution (for which shareholder
approval is required pursuant to applicable South Carolina law)
to be adopted, must be approved by (1) a majority of the
votes entitled to be cast on the plan, regardless of the class
or voting group to which the shares belong, and (2) a
majority of the votes entitled to be cast on the plan within
each voting group entitled to vote as a separate group on the
plan. This majority vote standard is in lieu of the two-thirds
vote standard set forth in the SCBCA.
Under TSFGs articles of incorporation, the vote or consent
of holders of at least
662/3%
of the shares of
Series 2008-T
Preferred Stock at the time outstanding, voting as a separate
class, is necessary for certain mergers and consolidations, and
the vote or consent of the holders of
662/3%
of the shares of Series M Preferred Stock at the time
outstanding, voting as a separate class, is necessary for
(i) the issuance of additional shares of Series M
Preferred Stock or rights to acquire such stock; (ii) an
increase or decrease in the number of authorized shares of
Series M Preferred Stock; and (iii) any amendments to
TSFGs articles of incorporation or bylaws that would
adversely affect the rights, privileges or voting powers of the
Series M Preferred Stock.
86
TD
Under the Bank Act of Canada, if voting rights are attached to
any share of a bank, the voting rights may confer only one vote
in respect of that share. The TD by-laws provide that holders of
TD common shares are entitled to one vote per share on all
matters to be voted on by holders of TD common shares, and
unless otherwise required by the Bank Act of Canada, matters to
be voted on by holders of TD common shares shall be decided by a
majority of the votes cast on such matter.
Under the Bank Act of Canada, a sale of all or substantially all
of TDs assets to another financial institution or an
amalgamation must also be approved by the shareholders by
special resolution passed by a vote of not less than two-thirds
of the votes cast by shareholders who voted in respect of the
resolution, with each share carrying the right to vote whether
or not it otherwise carries the right to vote. The holders of
each class or series of shares which is affected differently by
the transaction from the shares of any other class or series are
entitled to vote separately as a class or series. The Minister
of Finance must also approve any such transaction involving TD.
Exculpation
of Liability
TSFG
TSFGs articles of incorporation provide that TSFGs
directors are not personally liable to TSFG or any of its
shareholders for monetary damages for breach of fiduciary duty
as a director, except that the provision does not eliminate or
limit the liability of a director (i) for any breach of the
directors duty of loyalty to TSFG or its shareholders;
(ii) for acts or omissions not in good faith or which
involve gross negligence, intentional misconduct, or a knowing
violation of laws; (iii) imposed under
Section 33-8-330
of the SCBCA (improper distribution to shareholder); or
(iv) for any transaction from which the director derived an
improper personal benefit. Such a provision is permitted under
Section 33-2-102(e)
of the SCBCA for any corporation, such as TSFG, that either has
a class of voting shares registered with the SEC or another
federal agency under Section 12 of the Securities Exchange
Act of 1934, has gross assets at the end of its most recent
fiscal year totaling $25 million or more or having 500 or
more shareholders of any class of stock.
TD
Under the Bank Act of Canada, a bank may not, by contract,
resolution or by-law, limit the liability of its directors for
breaches of their duty to act in accordance with the Bank Act of
Canada. However, under the Bank Act of Canada, directors and
officers are not liable in respect of certain of their duties
imposed under the Bank Act of Canada, including their duty of
care, if they relied in good faith on financial statements
represented to the directors or officers by an officer of the
bank or in a written report of the banks auditors to
reflect fairly the financial condition of the bank or on a
report of a person whose profession lends credibility to a
statement made by the professional.
Director
and Officer Indemnification
TSFG
Under South Carolina law, TSFG may indemnify a past or present
director against liability incurred in a proceeding if
(i) the director conducted himself in good faith,
(ii) the director reasonably believed (a) in the case
of conduct in his or her official capacity with the corporation,
that his or her conduct was in its best interest, and
(b) in all other cases, that his or her conduct was at
least not opposed to its best interest, and (iii) in the
case of any criminal proceedings, the director had no reasonable
cause to believe his or her conduct was unlawful. However, TSFG
may not indemnify a director (a) in connection with a
proceeding by or in the right of TSFG in which the director is
adjudged liable to TSFG, or (b) in connection with any
other proceeding charging improper personal benefit to him or
her in which he or she is adjudged liable on the basis that
personal benefit was improperly received by him or her. Such
indemnification in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses
incurred in connection with the proceeding.
Under South Carolina law, unless limited by TSFGs articles
of incorporation, TSFG must indemnify a director who is wholly
successful, on the merits or otherwise, in the defense of any
proceeding to which he or she was a party
87
because he or she is or was a director against reasonable
expenses incurred by him or her in connection with the
proceeding. TSFGs articles of incorporation contain no
such limitation.
Under South Carolina law, an officer, employee or agent of a
corporation is entitled to the benefit of the same
indemnification provisions as apply to directors, but in
addition, a corporation may indemnify and advance expenses to an
officer, employee or agent who is not a director to the extent,
consistent with public policy, provided by the
corporations articles of incorporation, the
corporations bylaws, general or specific action of the
board of directors, or contract.
TSFGs bylaws provide that TSFG will indemnify any
individual made a party to a proceeding because he or she is or
was a director of TSFG against liability incurred in the
proceeding to the fullest extent permitted by law. TSFG may, to
the extent authorized from time to time by the board of
directors, grant rights to indemnification to any officer,
employee or agent of TSFG to the fullest extent permitted by the
bylaws and applicable law.
TD
Under the Bank Act of Canada, except in respect of an action by
or on behalf of the bank to procure a judgment in its favor, a
bank may indemnify a director or officer against liability
incurred by him or her because of any civil, criminal,
administrative, investigative or other proceeding in which he or
she is involved because of that association, if: (1) that
person acted honestly and in good faith with a view to the best
interests of, as the case may be, the bank or the other entity;
and (2) in the case of a criminal or administrative action
or proceeding that is enforced by a monetary penalty, that
person had reasonable grounds for believing that his or her
impugned conduct was lawful.
These individuals are entitled to an indemnity from the bank if
the person was not judged by the courts or other competent
authority to have committed any fault or omitted to do anything
that they ought to have done and fulfilled the conditions set
out in (1) and (2) above. Under TDs by-laws, TD
has indemnified its directors and officers to the full extent
permitted by the Bank Act of Canada. A bank may, with the
approval of a court, also indemnify that person regarding an
action by or on behalf of the bank or other entity to procure a
judgment in its favor, to which the person is made a party
because of the association referred to above with the bank or
other entity, if he or she fulfills the conditions set out in
(1) and (2) above.
Special
Meetings of Shareholders
TSFG
TSFGs bylaws provide that special meetings of shareholders
may be called at any time for any purpose by TSFGs
president or board of directors. TSFGs bylaws provide that
TSFGs president must call a special meeting when requested
in writing by shareholders owning shares representing at least
one-tenth of all outstanding votes entitled to be cast on any
issue at the meeting.
TD
Under the Bank Act of Canada, special meetings of shareholders
may be called at any time by the board of directors. In
addition, subject to certain provisions of the Bank Act of
Canada, the holders of not less than 5% of the issued and
outstanding shares of TD that carry the right to vote at a
meeting may request that the directors call a meeting of
shareholders for the purpose stated in the request and may call
the special meeting if the directors do not do so within
21 days after receiving the request.
Quorum
Requirements
TSFG
Except as otherwise provided by TSFGs articles of
incorporation or the SCBCA, a majority of the votes entitled to
be cast on a matter by a voting group of shareholders
constitutes a quorum of that voting group for action on that
matter. TSFGs articles of incorporation contain no quorum
requirements.
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TD
The Bank Act of Canada permits a bank to establish by by-law the
quorum requirement for meetings of shareholders. TDs
by-laws provide that a quorum at any meeting of shareholders
will be two persons present in person and each entitled to vote
at the meeting and representing either in their own right or by
proxy at least 10% of the issued and outstanding shares of TD
that carry a right to vote.
Shareholder
Nominations and Proposals
TSFG
TSFGs articles of incorporation provide that any
shareholder entitled to vote for the election of directors may
make nominations for the election of directors only by giving
written notice to the Secretary of TSFG at least 30 days
but not more than 60 days prior to the annual meeting of
shareholders at which directors are to be elected, unless such
requirement is waived in advance of the meeting by the board of
directors. TSFGs bylaws further provide that, to be in
proper form, such shareholders notice must set forth in
writing (a) as to each person whom the shareholder proposes
to nominate for election or re-election as a director, all
information relating to such Person that is required to be
disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, including such
persons written consent to being named in the proxy
statement as a nominee and to serving as a director if elected
and (b) the name, address and share ownership information
for the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination is made.
TSFGs bylaws provide that a shareholder wanting to submit
a shareholder proposal must deliver written notice to the
Secretary of TSFG at least 60 days but not more than
90 days prior to the first anniversary of the preceding
years annual meeting; provided, however, that if the date
of the annual meeting is more than 30 days before or more
than 60 days after the anniversary date, notice must be
delivered no more than 90 days and no less than
60 days prior to the annual meeting or no later than the
10th day following the public announcement of the meeting
date. To be in proper form, a shareholders notice to the
Secretary must set forth in writing as to each matter the
shareholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (ii) the name, address
and share ownership information for the shareholder proposing
such business and the beneficial owner, if any, on whose behalf
the proposal is made and (iii) any material interest of the
shareholder and such beneficial owner in such business.
TD
Under the Bank Act of Canada, nominations by shareholders for
election of a director may be submitted to an annual meeting
provided that they are signed by holders of not less than 5% of
the issued and outstanding shares that carry a right to vote, or
not less than 5% of the issued and outstanding shares of a class
of shares entitled to vote at the meeting.
Under the Bank Act of Canada, shareholder proposals may be
submitted only at annual meetings of shareholders. A shareholder
entitled to vote at an annual meeting of shareholders may submit
to TD notice of any matter that the shareholder proposes to
raise at the meeting, provided that the proposal is submitted to
TD at least 90 days before the anniversary date of the
notice of meeting that was sent to shareholders in respect of
TDs previous annual meeting of shareholders. Shareholders
may also requisition special meetings as described under
Special Meetings of Shareholders above.
Shareholder
Action Without a Meeting
TSFG
South Carolina law and TSFGs bylaws provide that any
action that may be taken by shareholders at a meeting may be
taken without a meeting only if the action is taken by all the
shareholders entitled to vote on the action. The action must be
evidenced by one or more written consents describing the action
taken, signed by all the shareholders entitled to vote on the
action, and delivered to TSFG for inclusion in the minutes or
filing with the corporate records.
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TSFGs bylaws provide that no written consent is effective
to take the corporate action referred to therein unless, within
60 days of the earliest dated written consent received by
TSFG, a written consent or consents signed by all the
shareholders entitled to vote on such corporate action are
delivered to TSFG. In the case of TSFG, the common stock is
widely held and it would be unlikely that signed written
consents could be obtained from all shareholders in respect of
any action.
TD
Under the Bank Act of Canada, shareholder action may be taken
without a meeting by written resolution signed by all
shareholders who would be entitled to vote on the matter at a
meeting except with respect to a meeting called for the purpose
of (1) removing a director or the auditor of a bank or
(2) electing or appointing a director or auditor of a bank
following the resignation, removal or expiration of the term of
office of a director or auditor of the bank where, in either
case, the director or auditor has submitted a written statement
giving the reasons for the resignation or why he opposes the
proposed revocation of his appointment or appointment of a
successor. In the case of TD, as the Bank Act of Canada
prohibits any person from being a major shareholder, the voting
shares are widely held and it would be unlikely that the
signatures of all shareholders could be obtained in respect of
any resolution.
Amendments
of Governing Instruments
TSFG
Amendment of Articles of Incorporation. Under
the SCBCA, TSFGs articles of incorporation generally may
be amended if the board of directors proposes and recommends the
amendment to the shareholders and the amendment is approved by
at least two-thirds of the votes entitled to be cast on the
amendment. The affirmative vote of holders of at least
662/3%
of the outstanding shares of
Series 2008-T
Preferred Stock, voting as a separate class, is needed to
approve certain amendments to TSFGs articles of
incorporation, and the affirmative vote of holders of at least
662/3%
of the outstanding shares of Series M Preferred Stock,
voting as a separate class, is needed to approve certain
amendments to TSFGs articles of incorporation.
Amendment of Bylaws. The board of directors
may amend or repeal TSFGs bylaws unless:
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TSFGs articles of incorporation or South Carolina law
reserves this power exclusively to shareholders;
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TSFGs shareholders, in adopting, amending or repealing any
bylaw, provide expressly that the board of directors may not
amend that bylaw or any bylaw on that subject; or
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the bylaw either establishes, amends or deletes a supermajority
shareholder quorum or voting requirement.
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A bylaw that fixes a supermajority quorum or supermajority
director voting requirement may be amended or repealed
(1) if originally adopted by the shareholders, only by the
shareholders (unless otherwise provided by the shareholders) or
(2) if originally adopted by the board of directors, either
by the shareholders or by the board of directors. Action by the
board of directors to adopt, amend, or repeal a bylaw that
changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted
by the same vote required to take action under the quorum and
voting requirement then in effect or proposed to be adopted,
whichever is greater.
TSFGs bylaws may also be amended by a majority vote of
shareholders, except that the shareholders may not adopt or
amend a bylaw that fixes a greater quorum or voting requirement
for shareholders (or voting groups of shareholders) than is
required by the SCBCA. The SCBCA and TSFGs bylaws provide
that any notice of a meeting of shareholders at which bylaws are
to be adopted, amended, or repealed shall state that the
purpose, or one of the purposes, of the meeting is to consider
the adoption, amendment, or repeal of bylaws and contain or be
accompanied by a copy or summary of the proposal.
The affirmative vote of the holders of at least
662/3%
of the outstanding shares of Series M Preferred Stock,
voting as a separate class, is needed to approve certain
amendments to TSFGs bylaws.
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TD
Under the Bank Act of Canada, any amendment to a banks
incorporating instrument requires approval by special
resolution. This resolution must be passed by a vote of not less
than two-thirds of the votes cast by shareholders who voted in
respect of the resolution. Any amendment to a banks
incorporating instrument also requires the approval of the
Minister of Finance.
The TD board of directors may, by resolution, make, amend or
repeal any by-laws that regulate the business or affairs of TD.
Any change to the by-laws made by the board of directors remains
in effect until it is approved or rejected by the shareholders
by a majority of the votes cast at the next meeting of
shareholders following the change. Certain changes of a
substantial nature to the TD by-laws must be approved by special
resolution of the shareholders before going into effect. This
resolution must be passed by a vote of not less than two-thirds
of the votes cast by shareholders who voted in respect of the
resolution. Certain changes entitle the holders of each class of
shares (and each series of a class, if the shares of that series
are affected differently by the amendment from other shares of
that class) to vote separately as a class or series, with each
share carrying the right to vote whether or not it otherwise
carries the right to vote. Substantial by-law changes requiring
approval by special resolution include creating new classes of
shares, changing the designation or attributes of any class or
series of shares, dividing any class of shares into series,
increasing or decreasing the number of directors (including the
maximum or minimum number of directors), changing the province
in Canada where TDs head office is situated or changing
the name of the bank. A shareholder entitled to vote at an
annual meeting of shareholders of TD may make a proposal to
make, amend or repeal a by-law in accordance with the
shareholder proposal requirements of the Bank Act of Canada.
Anti-Takeover
and Ownership Provisions
TSFG
Banking Regulations. The Change in Bank
Control Act prohibits a person who are acting in concert or
group of persons from acquiring control of a bank
holding company unless (i) the acquisition has been
approved by the Board of Governors of the Federal Reserve Board
under the BHC Act or (ii) the Federal Reserve Board has
been given 60 days prior written notice of the
proposed acquisition and within that time period the Federal
Reserve Board has not issued a notice (a) disapproving the
proposed acquisition or (b) extending for up to another
30 days the period during which such a disapproval may be
issued. In addition, the Federal Reserve Board may extend the
period for two additional periods not to exceed 45 days
each in certain circumstances. Under a rebuttable presumption
established by the Federal Reserve Board, the acquisition by a
person or group of persons who are acting in concert of more
than ten percent of a class of voting stock of a bank holding
company with a class of securities registered under
Section 12 of the Exchange Act, such as TSFG, would, under
the circumstances set forth in the presumption, constitute the
acquisition of control.
In addition, any entity that is a company as defined
in the BHC Act would be required to obtain the approval of the
Federal Reserve Board under the BHC Act before acquiring
25 percent (five percent in the case of an acquirer that is
a bank holding company) or more of the outstanding shares of
TSFG common stock, or otherwise obtaining control
over TSFG. Under the BHC Act, control generally
means the ownership, control or power to vote 25 percent or
more of any class of voting securities of the bank holding
company, the ability to control in any manner the election of a
majority of the bank holding companys directors or the
ability, directly or indirectly, to exercise a controlling
influence over the management and policies of the bank holding
company, as determined by the Federal Reserve Board.
South Carolina Law. TSFG has opted out of the
control share acquisition provisions of South Carolina law but
is subject to the business combination provisions of
Title 35, Chapter 2, Article 2 of the South
Carolina Code of Laws of 1976, as amended, as described below.
South Carolina law prohibits specified business
combinations between a resident domestic
corporation and an interested shareholder
within two years after the date on which the interested
shareholder became an interested shareholder, which we refer to
as the share acquisition date, unless the business combination
or the purchase of shares by which the interested shareholder
became an interested shareholder was approved by a majority of
the disinterested directors of the resident domestic corporation
before the share acquisition date. A
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resident domestic corporation is defined as a
domestic corporation that has a class of voting shares
registered with the Securities and Exchange Commission or
another federal agency under Section 12 of the Exchange
Act, such as TSFG, and an interested shareholder is
defined as any person (other than the corporation or any of its
subsidiaries) that (i) beneficially owns 10% or more of the
corporations outstanding voting shares or (ii) at any
time within the preceding two-year period beneficially owned 10%
of the voting power of the corporations outstanding shares
and is an affiliate or associate of the corporation.
Covered business combinations with an interested shareholder or
an affiliate or associate of an interested shareholder include,
among other transactions, merger of the corporation, sale or
other disposition of assets having a value equal to 10% or more
of the value of the corporation and transfer of shares of the
corporation equaling 5% or more of the market value of all
outstanding shares of the corporation. Covered business
combinations are prohibited unless (i) the board of
directors of the corporation approved the business combination,
or the transaction by which the interested shareholder became an
interested shareholder, before the share acquisition date;
(ii) the holders of a majority of the outstanding voting
shares not beneficially owned by the interested shareholder or
any affiliate or associate of the interested shareholder
approved the business combination at a meeting called for that
purpose no earlier than two years after the share acquisition
date; or (iii) certain transactional requirements are met.
TD
Rules and policies of certain Canadian securities regulatory
authorities, including Multilateral Instrument
61-101,
contain requirements in connection with related party
transactions. A related party transaction means, among
other things, any transaction by which an issuer directly or
indirectly engages in the following with a related party:
acquires, sells, leases or transfers an asset, acquires the
related party, acquires or issues treasury securities, amends
the terms of a security if the security is owned by the related
party or assumes or becomes subject to a liability or takes
certain other actions with respect to debt.
Related party includes directors, senior officers
and holders of more than 10% of the voting rights attached to
all outstanding voting securities of the issuer or holders of a
sufficient number of any securities of the issuer to materially
affect control of the issuer.
Multilateral Instrument
61-101
requires, subject to certain exceptions, the preparation of a
formal valuation relating to certain aspects of the transaction
and more detailed disclosure in the proxy material sent to
security holders in connection with a related party transaction
including related to the valuation.
Multilateral Instrument
61-101 also
requires, subject to certain exceptions, that an issuer not
engage in a related party transaction unless the shareholders of
the issuer, other than the related parties, approve the
transaction by a simple majority of the votes cast.
The Bank Act of Canada also contains restrictions on the
purchase or other acquisition, issue, transfer and voting of TD
shares. See Description of TD Share Capital
Limitations Affecting Holders of TD Common Shares
beginning on page 82.
Appraisal
and Dissent Rights
TSFG
Shareholders of a South Carolina corporation, such as TSFG, who
do not consent to certain major corporate transactions,
including a merger, may, under varying circumstances, be
entitled to dissenters rights pursuant to which such
shareholders may receive cash in the amount of the fair market
value of their shares in place of the consideration which
otherwise would have been received in the transaction. However,
because TSFGs common stock was listed on the NASDAQ
Capital Market as of the record date for determining those TSFG
shareholders entitled to notice of, and to vote at, the special
meeting and any adjournments or postponements of the special
meeting, holders of TSFGs common stock are not entitled to
dissenters rights under South Carolina law.
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TD
The only circumstance under which the Bank Act of Canada extends
appraisal or dissent rights to shareholders is in respect of a
compulsory acquisition of shares following a takeover bid
through which an acquiror has acquired not less than 90% of the
shares of the class that were the subject of the bid or as part
of a going-private or squeeze-out transaction. Due to the
ownership restrictions applicable to TD under the Bank Act of
Canada, the shares of TD may not be the subject of a
takeover bid, going private or squeeze-out transaction. See
Description of TD Share Capital Limitations
Affecting Holders of TD Common Shares beginning on
page 82.
Dividends
and Other Distributions and Liquidation
TSFG
The holders of the TSFG common stock are entitled to dividend
distributions ratably when, as and if declared by the board of
directors in their discretion out of legally available assets.
South Carolina law prohibits the payment of a distribution if,
after giving it effect: (1) the corporation would not be
able to pay its debts as they become due in the usual course of
business; or (2) the corporations total assets would
be less than the sum of its total liabilities plus (unless the
articles of incorporation permit otherwise) the amount that
would be needed, if the corporation were to be dissolved at the
time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are
superior to those receiving the distribution. TSFGs
articles of incorporation prohibit the payment of distributions
on TSFGs common stock if any accrued dividends for past
dividend periods on the
Series 2008-T
Preferred are unpaid. Because TSFG is a legal entity separate
and distinct from its subsidiaries and because it does not
conduct revenue-generating operations at the holding company
level, TSFG depends on the payment of dividends from its
subsidiaries for its revenues. There are various statutory and
regulatory limitations on the ability of TSFGs subsidiary
institutions to pay dividends to TSFG.
In the event of the liquidation, dissolution or
winding-up
of the affairs of TSFG, holders of TSFG common stock are
entitled to share, pro rata, in TSFGs assets and funds
remaining after payment, or provision for payment, of all debts
and other liabilities of TSFG and after payment of all amounts
due to holders of TSFGs preferred stock upon liquidation.
TD
Under the Bank Act of Canada, TD is prohibited from declaring
dividends on its preferred or common shares if there are
reasonable grounds for believing that TD is, or the payment
would cause TD to be, in contravention of the capital adequacy
and liquidity regulations of the Bank Act of Canada or any
capital or liquidity directions of the Superintendent of
Financial Institutions of Canada.
TD is also restricted from paying dividends on its preferred or
common shares in the event that either of its subsidiaries that
have issued capital trust securities fails to pay semi-annual
distributions or interest, as applicable, in full to holders of
their capital trust securities. In addition, the ability to pay
dividends on TDs common shares without the approval of the
holders of the outstanding preferred shares is restricted unless
all dividends on the preferred shares have been declared and
paid or set apart for payment. Currently, these limitations do
not restrict the payment of dividends on preferred or common
shares.
In the event of the liquidation, dissolution or
winding-up
of the affairs of TD, holders of TD common shares are entitled
to share, pro rata, in TDs assets and funds remaining
after payment, or provision for payment, of all debts and other
liabilities of TD and after payment of all amounts due to
holders of TDs preferred shares upon liquidation.
Consideration
of Other Constituencies
TSFG
TSFGs articles of incorporation provide that the board of
directors, when evaluating any proposed business combination
with TSFG, shall give due consideration to all relevant factors,
including without limitation, the social, legal, environmental
and economic effects on the employees, customers, suppliers and
other constituencies of
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TSFG, and on its subsidiaries, the communities and geographical
areas in which TSFG and its subsidiaries operate or are located,
and on any of the businesses and properties of TSFG or any of
its subsidiaries, as well as such other factors as the directors
deem relevant, and not only the consideration being offered in
relation to the then current market price for TSFGs
outstanding shares, but also in relation to the then current
value of TSFG in a freely-negotiated transaction and in relation
to the board of directors estimate of the future value of
TSFG (including the unrealized value of its properties and
assets) as an independent going concern.
TD
TDs charter and by-laws do not contain a requirement that
the board of directors consider the effect of the merger on
TDs constituencies. However, as noted on page 43
(TDs Reasons for the Merger), TDs board
of directors did consider the effect of the merger on the
various constituencies served by TD, including its customers,
employees and communities.
PROPOSAL NO. 2:
ADJOURNMENT OF THE SPECIAL MEETING
In the event that there are not sufficient votes to constitute a
quorum or approve the plan of merger at the time of the special
meeting, the proposal to approve the plan of merger could not be
approved unless the special meeting was adjourned or postponed
to a later date in order to permit further solicitation of
proxies. In order to allow proxies that have been received by
TSFG at the time of the special meeting to be voted for
adjournment or postponement, you are being asked to consider a
proposal to approve the adjournment or postponement of the
special meeting, if necessary or appropriate, including to
permit further solicitation of proxies if necessary to obtain
additional votes in favor of approval of the plan of merger.
Approval of the proposal relating to the adjournment or
postponement of the special meeting, if necessary or
appropriate, including to solicit additional proxies requires
the affirmative vote of a majority of the votes cast on such
proposal at the special meeting by the holders of TSFG common
stock and the Series M Preferred Stock, voting together as
a single class, even if less than a quorum.
The board of directors of TSFG unanimously recommends that
TSFG shareholders vote FOR the proposal to approve
the adjournment or postponement of the TSFG special meeting, if
necessary or appropriate, including to permit further
solicitation of proxies if necessary to obtain additional votes
in favor of approval of the plan of merger.
TD MARKET
ACTIVITIES INVOLVING TD COMMON SHARES
Since the announcement of the merger, TD and certain of its
affiliates have engaged, and intend to continue to engage
throughout the proxy solicitation period, in various dealing,
brokerage, asset management, insurance and related activities
involving TD common shares outside the United States (and, to a
limited extent, within the United States). Among other things,
TD or one or more of its affiliates intends to effect
transactions in TD common shares and derivative securities
related to TD common shares on the Toronto Stock Exchange and
other
non-U.S. exchanges,
for its own account, in order to provide liquidity to the market
and to facilitate customer transactions, and to readjust
TDs ownership position in TD common shares as appropriate
following such transactions. TD also intends to engage in trades
in TD common shares for its own account and the accounts of its
customers (and, to the extent described below, its employees and
directors) for the purpose of hedging their positions
established in connection with the trading of certain
derivatives relating to TD common shares, hedging TDs
position in respect of market making obligations related to
certain exchange traded funds, adjusting TDs proprietary
index-related portfolios in response to changes in the
applicable indices, effecting brokerage transactions in TD
common shares for its customers, and effecting delivery of TD
common shares as required pursuant to certain of TDs
benefit or compensation plans for employees and directors.
Further, certain of TDs asset management and insurance
affiliates may buy and sell TD common shares, or funds or
indices including TD common shares, outside the United States
(and, in the case of certain asset management activities, within
the United States) as part of their ordinary investment
management activities on behalf of their customers and ordinary
insurance activities relating to obligations to customers. These
activities occur outside the United States and, in the
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case of unsolicited brokerage transactions (including in the
context of asset management activities) and certain trades in
broad-based indices that include TD common shares, in the United
States and the transactions in TD common shares and derivative
securities are effected on the Toronto Stock Exchange, the
Montréal Exchange and, in limited circumstances, the New
York Stock Exchange. The foregoing activities could have the
effect of preventing or retarding a decline in the market price
of TD common shares. TD has received from the SEC certain
exemptive relief from Regulation M under the Exchange Act
in order to permit TD and certain of its affiliates to engage in
the foregoing activities during the proxy solicitation period.
EXPERTS
The financial statements and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this proxy
statement/prospectus by reference to the Annual Report on
Form 10-K
of The South Financial Group for the year ended
December 31, 2009 have been so incorporated on reliance on
the report of PricewaterhouseCoopers LLP, an independent
registered public accounting firm, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements of TD as at
October 31, 2009 and 2008 and for the years ended
October 31, 2009, 2008 and 2007 and the effectiveness of
internal control over financial reporting of TD as of
October 31, 2009, incorporated by reference into this proxy
statement/prospectus from TDs annual report on
Form 40-F
for the year ended October 31, 2009, have been audited by
Ernst & Young LLP, an independent registered public
accounting firm, as set forth in their reports thereon. Such
consolidated financial statements have been incorporated herein
by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
LEGAL
MATTERS
Certain legal matters relating to the TD common shares offered
by this proxy statement/prospectus will be passed upon for TD by
McCarthy Tétrault, Canadian counsel to TD.
OTHER
MATTERS
As of the date of this proxy statement/prospectus, the TSFG
board of directors knows of no matters that will be presented
for consideration at the special meeting other than as described
in this proxy statement/prospectus. If any other matters
properly come before TSFGs shareholders at the TSFG
special meeting, or any adjournment or postponement of the
meeting, and are voted upon, the enclosed proxy will be deemed
to confer discretionary authority on the individuals that it
names as proxies to vote the shares represented by the proxy as
to any of these matters. The individuals named as proxies intend
to vote in accordance with the recommendation of the TSFG board
of directors.
SHAREHOLDER
PROPOSALS FOR NEXT ANNUAL MEETING
If the merger is completed, TSFG will not reschedule or hold its
2010 Annual Meeting of Shareholders and there will be no TSFG
Annual Meeting of Shareholders in 2011 or thereafter. If the
merger is not completed, set forth below is information relevant
to TSFGs postponed 2010 Annual Meeting of Shareholders.
A TSFG shareholder who wishes to either (1) present a
proposal for inclusion in the proxy materials relating to
TSFGs rescheduled 2010 Annual Meeting of Shareholders or
(2) propose one or more Director nominees for consideration
by the Nominating and Corporate Governance Committee, will be
required to submit his or her proposals on or before a deadline
to be specified by TSFG, to the Corporate Secretary of The South
Financial Group, 102 S. Main Street, Greenville, South
Carolina 29601. TSFG will inform shareholders of the date of any
such rescheduled 2010 Annual Meeting of Shareholders, and the
date of the deadline for submission of the proposals referred to
in (1) and (2) above shall be a reasonable time before
TSFG begins to print and send proxy materials for such meeting
and within the applicable time period set forth in TSFGs
bylaws. A proposal that is not submitted by the specified
deadline will not be considered timely. TSFG shareholders
submitting proposals for
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inclusion in the proxy statement and form of proxy must comply
with the proxy rules under the Securities Exchange Act of 1934,
as amended, and the bylaw requirements described below.
The bylaws of TSFG require timely advance written notice of
shareholder nominations of Director candidates and of any other
proposals to be presented at an annual meeting of shareholders.
In the case of Director nominations by shareholders, the bylaws
require that a shareholders notice be delivered to the
principal executive offices of TSFG during the period of time
from the 30th day to the 60th day prior to the annual
meeting of shareholders at which Directors are to be elected,
unless such requirement is expressly waived in advance of the
meeting by formal action of the Board of Directors. In the case
of other proposals by shareholders at an annual meeting, the
bylaws require that advance written notice be delivered to
TSFGs Corporate Secretary (at the address indicated
above). To be timely, a shareholders notice must be
delivered to or mailed and received at the principal executive
offices of TSFG between the 60th and 90th days prior
to the first anniversary of the preceding years annual
meeting. However, in the event that the date of the annual
meeting is more than 30 days before or more than
60 days after such anniversary date, such shareholder
notice must be so delivered between the 60th and
90th days prior to such annual meeting or within
10 days following the day on which public announcement of
the date of such meeting is first made by TSFG. Such written
notification to the Board must contained certain information
about the shareholder making the proposal (as detailed in
TSFGs bylaws) and otherwise comply with the procedure set
forth in TSFGs bylaws. A copy of the bylaws is available
upon request to the Corporate Secretary of TSFG at the address
indicated above.
The deadline for a TD shareholder to submit a proposal for
inclusion in the management proxy material for the 2011 annual
meeting of TD is November 26, 2010. All proposals should
have been sent to the Corporate Secretary of TD at
P.O. Box 1, Toronto Dominion Centre, Toronto, Ontario
M5K 1A2, Canada.
WHERE YOU
CAN FIND MORE INFORMATION
TSFG files reports, proxy statements and other information with
the SEC as required under the Exchange Act. TD is a
foreign private issuer and, under the rules adopted
under the Exchange Act, is exempt from certain of the
requirements of that Act, including the proxy and information
provisions of Section 14 of the Exchange Act and the
reporting and liability provisions applicable to officers,
directors and significant shareholders under Section 16 of
the Exchange Act.
You may read and copy any reports, statements or other
information filed by TD or TSFG at the SECs Public
Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the Public Reference
Room. You may also obtain copies of this information by mail
from the Public Reference Section of the SEC,
100 F Street, N.E., Washington, D.C. 20549, at
prescribed rates, or from commercial document retrieval services.
The SEC maintains a website that contains reports, proxy
statements and other information, including those filed by TD
and TSFG, at
http://www.sec.gov.
You may also access the SEC filings and obtain other information
about TD and TSFG through the websites maintained by TD and TSFG
at
http://www.td.com
and
http://www.thesouthgroup.com,
respectively. The information contained in those websites is not
incorporated by reference in, or in any way part of, this proxy
statement/prospectus.
TD files reports, statements and other information with the
Canadian provincial and territorial securities administrators.
TD filings are also electronically available to the public from
the Canadian System for Electronic Document Analysis and
Retrieval, the Canadian equivalent of the SECs EDGAR
system, at
http://www.sedar.com.
After the merger, TD will furnish to you the same annual reports
that it currently furnishes to TD shareholders in the same
manner and at the same time as it furnishes them to current TD
shareholders, including audited annual consolidated financial
statements, unaudited quarterly consolidated financial
statements and proxy circulars and related materials for
meetings of shareholders. In addition, you will be able to
request TDs
Form 40-F.
TD has filed a registration statement on
Form F-4
to register with the SEC the TD common shares to be issued in
the merger. This document is a part of that registration
statement and constitutes the prospectus of TD in addition to
being a proxy statement for the TSFG shareholders.
96
As allowed by SEC rules, this proxy statement/prospectus does
not contain all the information you can find in the registration
statement on
Form F-4
filed by TD and the exhibits to the registration statement. In
addition, the SEC allows us to incorporate by
reference information into this proxy
statement/prospectus, which means that we can disclose important
information to you by referring you to other documents filed
separately with the SEC. The information incorporated by
reference is deemed to be part of this proxy
statement/prospectus, except for any information superseded by
information included directly in this proxy
statement/prospectus. This proxy statement/prospectus
incorporates by reference the documents set forth below that TD
and TSFG have previously filed with the SEC. These documents
contain important information about the companies and their
financial condition.
|
|
|
TD Filings with the SEC
|
|
|
(File No. 001-14446)
|
|
Period and/or Filing Date
|
|
Annual Report on
Form 40-F
|
|
Year ended October 31, 2009, as filed December 3, 2009
|
Report of Foreign Issuer on
Form 6-K
|
|
Filed December 4, 2009, January 19, 2010, January 21, 2010,
February 25, 2010, February 26, 2010, March 4, 2010 (3
filings) March 25, 2010, April 20, 2010, May 12, 2010, May 17,
2010, May 27, 2010 (3 filings), June 3, 2010 and July 20,
2010 (other than the portions of those documents not deemed to
be filed).
|
|
|
|
TSFG Filings with the SEC
|
|
|
(File No. 000-15083)
|
|
Period and/or Filing Date
|
|
Annual Report on
Form 10-K
|
|
Year ended December 31, 2009, as filed March 16, 2010
|
Quarterly Reports on
Form 10-Q
|
|
For the quarters ended March 31, 2010 and June 30, 2010, as
filed May 6, 2010 and August 6, 2010, respectively.
|
Current Reports on
Form 8-K
|
|
Filed January 15, 2010, February 3, 2010, February 11,
2010, March 11, 2010, March 25, 2010, May 17, 2010, May 20,
2010, June 4, 2010, July 20, 2010, July 28, 2010, August 9, 2010
and August 24, 2010 (other than the portions of those
documents not deemed to be filed).
|
All documents filed by TD and TSFG under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act from the date of this
proxy statement/prospectus to the date of the TSFG special
meeting will also be deemed to be incorporated into this proxy
statement/prospectus by reference. To the extent that any
information contained in any such Current Report on
Form 8-K,
or any exhibit thereto, was furnished to, rather than filed
with, the SEC, such information or exhibit is specifically not
incorporated by reference into this proxy/statement prospectus.
In addition, the description of TD common shares contained in
TDs registration statements under Section 12 of the
Exchange Act is incorporated by reference.
You may also obtain copies of any document incorporated in this
proxy statement/prospectus, without charge, by requesting them
in writing or by telephone from the appropriate company at the
following addresses:
|
|
|
The South Financial Group, Inc.
Investor Relations
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, SC 29601
(888) 592-3001
|
|
TD Bank Financial Group
Investor Relations
TD Tower, 15th Floor
66 Wellington Street West
Toronto, Ontario, Canada M5K 1A2
(416) 308-9030
|
If you would like to request documents, please do so by
September 21, 2010 to receive them before the special
meeting. If you request any incorporated documents from us,
we will mail them to you by first class mail, or another equally
prompt means, within one business day after we receive your
request.
97
Neither TD nor TSFG has authorized anyone to give any
information or make any representation about the merger that is
different from, or in addition to, that contained in this proxy
statement/prospectus or in any of the materials that are
incorporated by reference in this proxy statement/prospectus.
Therefore, if anyone does give you information of this sort, you
should not rely on it. If you are in a jurisdiction where offers
to exchange or sell, or solicitations of offers to exchange or
purchase, the securities offered by this proxy
statement/prospectus are unlawful, or if you are a person to
whom it is unlawful to make these types of offers, then the
offer presented in this proxy statement/prospectus does not
extend to you. The information contained in this proxy
statement/prospectus speaks only as of the date of this document
unless the information specifically indicates that another date
applies.
98
Appendix A
AGREEMENT
AND PLAN OF MERGER
BY AND AMONG
THE TORONTO-DOMINION BANK
HUNT MERGER SUB, INC.
AND
THE SOUTH FINANCIAL GROUP, INC.
DATED AS OF MAY 16, 2010
TABLE
OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE I
THE MERGER
|
1.1.
|
|
The Merger
|
|
|
A-1
|
|
1.2.
|
|
Effective Time
|
|
|
A-1
|
|
1.3.
|
|
Closing of the Merger
|
|
|
A-1
|
|
1.4.
|
|
Effects of the Merger
|
|
|
A-2
|
|
1.5.
|
|
Articles of Incorporation
|
|
|
A-2
|
|
1.6.
|
|
Bylaws
|
|
|
A-2
|
|
1.7.
|
|
Directors
|
|
|
A-2
|
|
1.8.
|
|
Officers
|
|
|
A-2
|
|
|
ARTICLE II
CONSIDERATION; EXCHANGE PROCEDURES
|
2.1.
|
|
Effect on Company Capital Stock
|
|
|
A-2
|
|
2.2.
|
|
No Fractional Shares
|
|
|
A-3
|
|
2.3.
|
|
Merger Sub Capital Stock; Issuance of Surviving Company Common
Stock
|
|
|
A-3
|
|
2.4.
|
|
Treatment of Options and Other Stock Based Awards
|
|
|
A-3
|
|
2.5.
|
|
Reservation of Right to Revise Structure
|
|
|
A-5
|
|
2.6.
|
|
Withholding
|
|
|
A-5
|
|
2.7.
|
|
Certain Adjustments
|
|
|
A-5
|
|
2.8.
|
|
Cash Election
|
|
|
A-5
|
|
|
ARTICLE III
EXCHANGE OF CERTIFICATES FOR MERGER CONSIDERATION
|
3.1.
|
|
Parent to Make Merger Consideration Available
|
|
|
A-6
|
|
3.2.
|
|
Exchange of Certificates
|
|
|
A-6
|
|
|
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
4.1.
|
|
Corporate Organization
|
|
|
A-8
|
|
4.2.
|
|
Capitalization
|
|
|
A-9
|
|
4.3.
|
|
Authority; No Violation
|
|
|
A-11
|
|
4.4.
|
|
Consents and Approvals
|
|
|
A-12
|
|
4.5.
|
|
SEC Documents; Other Reports; Internal Controls
|
|
|
A-12
|
|
4.6.
|
|
Financial Statements; Undisclosed Liabilities
|
|
|
A-13
|
|
4.7.
|
|
Brokers Fees
|
|
|
A-14
|
|
4.8.
|
|
Absence of Certain Changes or Events
|
|
|
A-14
|
|
4.9.
|
|
Legal Proceedings
|
|
|
A-14
|
|
4.10.
|
|
Taxes
|
|
|
A-14
|
|
4.11.
|
|
Employees; Employee Benefit Plans
|
|
|
A-15
|
|
4.12.
|
|
Compliance With Applicable Law
|
|
|
A-17
|
|
4.13.
|
|
Certain Contracts
|
|
|
A-18
|
|
4.14.
|
|
Agreements with Regulatory Agencies
|
|
|
A-19
|
|
4.15.
|
|
Derivative Instruments and Transactions
|
|
|
A-19
|
|
4.16.
|
|
Company Information
|
|
|
A-19
|
|
A-i
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
4.17.
|
|
Title to Property
|
|
|
A-19
|
|
4.18.
|
|
Insurance
|
|
|
A-20
|
|
4.19.
|
|
Environmental Liability
|
|
|
A-20
|
|
4.20.
|
|
Opinion Of Financial Advisor
|
|
|
A-21
|
|
4.21.
|
|
Intellectual Property
|
|
|
A-21
|
|
4.22.
|
|
Loan Matters
|
|
|
A-21
|
|
4.23.
|
|
Allowance for Loan Losses
|
|
|
A-22
|
|
4.24.
|
|
Transactions with Affiliates
|
|
|
A-22
|
|
4.25.
|
|
Community Reinvestment Act Compliance
|
|
|
A-22
|
|
4.26.
|
|
Labor Matters
|
|
|
A-22
|
|
|
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
|
5.1.
|
|
Corporate Organization
|
|
|
A-23
|
|
5.2.
|
|
Capitalization
|
|
|
A-23
|
|
5.3.
|
|
Authority; No Violation
|
|
|
A-24
|
|
5.4.
|
|
Consents and Approvals
|
|
|
A-24
|
|
5.5.
|
|
SEC Documents; Other Reports; Internal Controls
|
|
|
A-25
|
|
5.6.
|
|
Financial Statements; Undisclosed Liabilities
|
|
|
A-25
|
|
5.7.
|
|
Brokers Fees
|
|
|
A-26
|
|
5.8.
|
|
Absence of Certain Changes or Events
|
|
|
A-26
|
|
5.9.
|
|
Legal Proceedings
|
|
|
A-26
|
|
5.10.
|
|
Board Approval; No Shareholder Vote Required
|
|
|
A-26
|
|
5.11.
|
|
Compliance With Applicable Law
|
|
|
A-26
|
|
5.12.
|
|
Agreements With Regulatory Agencies
|
|
|
A-27
|
|
5.13.
|
|
Parent Information
|
|
|
A-27
|
|
|
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
|
6.1.
|
|
Conduct of Business Prior to the Effective Time
|
|
|
A-27
|
|
6.2.
|
|
Company Forbearances
|
|
|
A-27
|
|
6.3.
|
|
No Fundamental Parent Changes
|
|
|
A-30
|
|
6.4.
|
|
Tax Matters
|
|
|
A-31
|
|
|
ARTICLE VII
ADDITIONAL AGREEMENTS
|
7.1.
|
|
Regulatory Matters
|
|
|
A-31
|
|
7.2.
|
|
Access to Information
|
|
|
A-32
|
|
7.3.
|
|
Shareholder Approval
|
|
|
A-32
|
|
7.4.
|
|
Acquisition Proposals
|
|
|
A-33
|
|
7.5.
|
|
Reasonable Best Efforts
|
|
|
A-35
|
|
7.6.
|
|
Employees; Employee Benefit Plans
|
|
|
A-35
|
|
7.7.
|
|
Indemnification; Directors and Officers Insurance
|
|
|
A-36
|
|
7.8.
|
|
Advice of Changes
|
|
|
A-37
|
|
A-ii
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
7.9.
|
|
Financial Statements and Other Current Information
|
|
|
A-38
|
|
7.10.
|
|
Stock Exchange Listing
|
|
|
A-38
|
|
7.11.
|
|
Takeover Laws
|
|
|
A-38
|
|
7.12.
|
|
Exemption from Liability Under Section 16(b)
|
|
|
A-38
|
|
7.13.
|
|
Shareholder Litigation
|
|
|
A-38
|
|
7.15.
|
|
Transition Committee
|
|
|
A-38
|
|
|
ARTICLE VIII
CONDITIONS PRECEDENT
|
8.1.
|
|
Conditions to Each Partys Obligation to Effect the Merger
|
|
|
A-39
|
|
8.2.
|
|
Conditions to Obligations of Parent
|
|
|
A-39
|
|
8.3.
|
|
Conditions to Obligations of the Company
|
|
|
A-40
|
|
|
ARTICLE IX
TERMINATION
|
9.1.
|
|
Termination
|
|
|
A-40
|
|
9.2.
|
|
Effect of Termination
|
|
|
A-41
|
|
|
ARTICLE X
GENERAL PROVISIONS
|
10.1.
|
|
Nonsurvival of Representations, Warranties and Agreements
|
|
|
A-42
|
|
10.2.
|
|
Amendment
|
|
|
A-42
|
|
10.3.
|
|
Extension; Waiver
|
|
|
A-43
|
|
10.4.
|
|
Expenses
|
|
|
A-43
|
|
10.5.
|
|
Notices
|
|
|
A-43
|
|
10.6.
|
|
Interpretation
|
|
|
A-44
|
|
10.7.
|
|
Counterparts
|
|
|
A-44
|
|
10.8.
|
|
Entire Agreement
|
|
|
A-44
|
|
10.9.
|
|
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial
|
|
|
A-44
|
|
10.10.
|
|
Specific Performance
|
|
|
A-45
|
|
10.11.
|
|
Severability
|
|
|
A-45
|
|
10.12.
|
|
Publicity
|
|
|
A-45
|
|
10.13.
|
|
Assignment; Third Party Beneficiaries
|
|
|
A-45
|
|
10.14.
|
|
Construction
|
|
|
A-46
|
|
A-iii
INDEX
OF DEFINED TERMS
|
|
|
|
|
Acquisition Proposal
|
|
|
47
|
|
affiliate
|
|
|
30
|
|
Agreement
|
|
|
1
|
|
Articles of Merger
|
|
|
1
|
|
Bank Subsidiary
|
|
|
12
|
|
BHC Act
|
|
|
11
|
|
Business Day
|
|
|
2
|
|
Canadian GAAP
|
|
|
11
|
|
Capitalization Date
|
|
|
12
|
|
Cash Consideration
|
|
|
3
|
|
Cash Election
|
|
|
7
|
|
Certificates
|
|
|
8
|
|
Change in Company Recommendation
|
|
|
45
|
|
Closing
|
|
|
2
|
|
Closing Date
|
|
|
2
|
|
Company
|
|
|
1
|
|
Company Board Approval
|
|
|
15
|
|
Company Common Stock
|
|
|
3
|
|
Company Contract
|
|
|
25
|
|
Company Disclosure Schedule
|
|
|
10
|
|
Company Employees
|
|
|
21
|
|
Company ESPPs
|
|
|
6
|
|
Company Option
|
|
|
4
|
|
Company Preferred Stock
|
|
|
12
|
|
Company Recommendation
|
|
|
45
|
|
Company Regulatory Agreement
|
|
|
25
|
|
Company Reports
|
|
|
17
|
|
Company Restricted Shares
|
|
|
5
|
|
Company RSU
|
|
|
5
|
|
Company SAR
|
|
|
5
|
|
Company Shareholders Meeting
|
|
|
45
|
|
Company Stock Incentive Plan
|
|
|
5
|
|
Company Stock Option Plan
|
|
|
4
|
|
Confidentiality Agreement
|
|
|
45
|
|
control
|
|
|
30
|
|
Control Group Liability
|
|
|
22
|
|
Convertible Preferred Stock
|
|
|
13
|
|
CRA
|
|
|
31
|
|
Derivative Transaction
|
|
|
26
|
|
Effective Time
|
|
|
2
|
|
Electing Company Shares
|
|
|
3
|
|
Election Date
|
|
|
7
|
|
End Date
|
|
|
56
|
|
Environmental Laws
|
|
|
28
|
|
A-iv
|
|
|
|
|
ERISA
|
|
|
21
|
|
ERISA Affiliate
|
|
|
21
|
|
Exchange Act
|
|
|
17
|
|
Exchange Agent
|
|
|
8
|
|
Exchange Ratio
|
|
|
3
|
|
FDIC
|
|
|
12
|
|
Federal Reserve Board
|
|
|
16
|
|
FHLB
|
|
|
12
|
|
Form F-4
|
|
|
16
|
|
Form of Election
|
|
|
7
|
|
Governmental Entity
|
|
|
16
|
|
Hazardous Substances
|
|
|
28
|
|
incentive stock options
|
|
|
4
|
|
Indemnified Parties
|
|
|
50
|
|
Injunction
|
|
|
54
|
|
Insurance Amount
|
|
|
51
|
|
IT Assets
|
|
|
29
|
|
Law
|
|
|
15
|
|
Liens
|
|
|
14
|
|
Loans
|
|
|
29
|
|
Material Adverse Effect
|
|
|
11
|
|
Merger
|
|
|
1
|
|
Merger Consideration
|
|
|
3
|
|
Merger Sub
|
|
|
1
|
|
New Company Preferred Stock
|
|
|
1
|
|
New Plans
|
|
|
49
|
|
Notice Period
|
|
|
46
|
|
Old Plans
|
|
|
50
|
|
Parent
|
|
|
1
|
|
Parent Common Shares
|
|
|
3
|
|
Parent Disclosure Schedule
|
|
|
31
|
|
Parent Option
|
|
|
4
|
|
Parent Plans
|
|
|
49
|
|
Parent Preferred Shares
|
|
|
32
|
|
Parent Process Agent
|
|
|
62
|
|
Parent Regulatory Agreement
|
|
|
37
|
|
Parent Reports
|
|
|
34
|
|
Parent SAR
|
|
|
5
|
|
Plan
|
|
|
21
|
|
Proprietary Rights
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28
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Proxy Statement/Prospectus
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16
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Qualified Acquisition Proposal
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58
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REIT Preferred Stock
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38
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REIT Trust Declaration
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13
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Related Agreements
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1
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A-v
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Requisite Regulatory Approvals
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54
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SCBCA
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1
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SEC
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10
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Securities Act
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17
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Share Purchase Agreement
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1
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Significant Subsidiary
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12
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Stock Consideration
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3
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Subsidiary
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12
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Superior Proposal
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47
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Surviving Company
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1
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Tax
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21
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Tax Return
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21
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Taxes
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21
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Termination Payment
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58
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Transferred Employees
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49
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Transition Committee
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53
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U.S. GAAP
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11
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Warrant
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13
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willful and material breach
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57
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Exhibit A Form of Share Purchase Agreement
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Exhibit B Certificate of Designations of
Preferred Stock, Series M
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A-vi
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 16, 2010 (as
amended, supplemented or otherwise modified from time to time,
this Agreement), by and among The
Toronto-Dominion Bank, a Canadian chartered bank
(Parent), Hunt Merger Sub, Inc., a South
Carolina corporation and a wholly-owned subsidiary of Parent
(Merger Sub) and The South Financial Group,
Inc., a South Carolina corporation (the
Company).
WHEREAS, the boards of directors of each of the Company and
Merger Sub have determined that it is in the best interests of
their respective companies and their shareholders to consummate
the strategic business combination transaction provided for in
this Agreement, on the terms and subject to the conditions
contained herein, as a result of which Merger Sub will be merged
with and into the Company (the Merger);
WHEREAS, concurrently and in connection herewith, and as a
condition to the entry by Parent into this Agreement, Parent and
the Company are entering into a share purchase agreement in
substantially the form attached hereto as Exhibit A
(as amended, supplemented or otherwise modified from time to
time, the Share Purchase Agreement), pursuant
to which, among other things and subject to the terms and
conditions set forth herein, Parent will acquire from the
Company shares of its Preferred Stock, Series M with the
rights, privileges and voting powers as set forth in the
Certificate of Designations attached as Exhibit B
(the New Company Preferred Stock and such
Certificate of Designations and the Share Purchase Agreement,
the Related Agreements); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein and
in the Related Agreements, and intending to be legally bound
hereby and thereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to
the terms and conditions of this Agreement, in accordance with
the South Carolina Business Corporation Act, as amended (the
SCBCA), at the Effective Time, Merger Sub
shall merge with and into the Company, whereupon the separate
corporate existence of Merger Sub shall cease. The Company shall
be the surviving corporation (hereinafter sometimes referred to
as the Surviving Company) in the Merger, and
shall continue its corporate existence under the Laws of the
State of South Carolina.
1.2. Effective Time. On the
Closing Date, the Company and Merger Sub shall cause the Merger
to be consummated by executing, delivering and filing articles
of merger (the Articles of Merger) with the
Secretary of State of the State of South Carolina in accordance
with the relevant provisions of the SCBCA and other applicable
South Carolina Law and shall make such other filings or
recordings required under the SCBCA in connection with the
Merger. The Merger shall become effective at such time as the
Articles of Merger are duly filed with the Secretary of State of
the State of South Carolina, or at such later date or time as
may be agreed by Parent and the Company in writing and specified
in the Articles of Merger in accordance with the SCBCA (such
time as the Merger becomes effective is referred to herein as
the Effective Time).
1.3. Closing of the
Merger. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the
Closing) will take place at
10:00 a.m. Eastern time on (i) the date that is
the second Business Day after the satisfaction or waiver
(subject to applicable Law) of the conditions set forth in
Article VIII hereof, other than conditions which by
their terms are to be satisfied at Closing, or (ii) such
other date or time as the parties may mutually agree (the date
on which the Closing occurs, the Closing
Date). The Closing shall be held at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West
52nd Street, New York, New York 10019, unless another place
is agreed upon in writing by the parties. For purposes of this
Agreement, a Business Day shall mean any day
that is not a Saturday, a Sunday or other day on which banking
organizations in Greenville, South Carolina, New York, New York,
or Toronto, Ontario, Canada are required or authorized by Law to
be closed.
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1.4. Effects of the
Merger. At and after the Effective Time, the
Merger shall have the effects set forth in the SCBCA.
1.5. Articles of
Incorporation. The articles of incorporation,
as amended, of the Company, as in effect as of immediately prior
to the Effective Time, shall be the articles of incorporation of
the Surviving Company following the Merger until thereafter
amended in accordance with the provisions thereof and of
applicable Law.
1.6. Bylaws. The bylaws of
the Company, as in effect as of immediately prior to the
Effective Time, shall be amended and restated as of the
Effective Time so as to read in their entirety in the form of
the bylaws of Merger Sub as in effect immediately prior to the
Effective Time, and as so amended and restated shall be the
bylaws of the Surviving Company until thereafter amended in
accordance with the provisions thereof, the articles of
incorporation of the Surviving Company and applicable Law.
1.7. Directors. The
directors of Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Company as of the
Effective Time, each to hold office in accordance with the
articles of incorporation and bylaws of the Surviving Company as
amended as of the Effective Time, until their respective
successors are duly elected or appointed (as the case may be)
and qualified, or their earlier death, resignation or removal.
1.8. Officers. The officers
of Merger Sub immediately prior to the Effective Time shall be
the officers of the Surviving Company as of the Effective Time,
each to hold office in accordance with the articles of
incorporation and bylaws of the Surviving Company as amended as
of the Effective Time, until their respective successors are
duly appointed, or their earlier death, resignation or removal.
ARTICLE II
CONSIDERATION;
EXCHANGE PROCEDURES
2.1. Effect on Company Capital Stock.
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of
common stock, par value $1.00 per share, of the Company (the
Company Common Stock) or of any other
security of the Company:
(i) All shares of Company Common Stock that are owned by
the Company (other than shares in trust accounts, managed
accounts and the like, or otherwise held in a fiduciary or
agency capacity, for the benefit of customers or clients, and
other than shares held in satisfaction of a debt previously
contracted) shall be cancelled and retired, and no common
shares, no par value per share, of Parent (Parent
Common Shares), cash or other consideration shall be
delivered in exchange therefor. All shares of Company Common
Stock that are owned by any wholly owned Subsidiary of the
Company, by Parent or by any wholly owned Subsidiary of Parent,
shall remain outstanding, and no Parent Common Shares, cash or
other consideration shall be delivered in exchange therefor.
(ii) Except as otherwise provided in clause (i) of
this Section 2.1(a), and subject to
Section 2.2, each share of Company Common Stock
outstanding immediately prior to the Effective Time shall be
cancelled and converted into the right to receive the following
(the Merger Consideration):
(A) for each such share of Company Common Stock with
respect to which an election to receive cash has been
effectively made and not revoked or lost pursuant to
Section 2.8 (the Electing Company
Shares), the right to receive $0.28 in cash, without
interest (the Cash Consideration); and
(B) for each such share of Company Common Stock (other than
Electing Company Shares), the right to receive 0.004 Parent
Common Shares, subject to adjustment in accordance with
Section 2.7 (the Exchange Ratio
and, together with any cash in lieu of fractional Parent Common
Shares to be paid pursuant to Section 2.2, the
Stock Consideration).
(b) Each share of the Companys
Series 2008-T
Preferred Stock and each share of New Company Preferred Stock
outstanding immediately prior to the Effective Time shall remain
issued and outstanding and shall have the
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rights, preferences, privileges and voting powers, and
limitations and restrictions thereof, as set forth in the
Surviving Companys articles of incorporation.
2.2. No Fractional
Shares. Notwithstanding any other provision
of this Agreement, neither certificates nor scrip for fractional
Parent Common Shares shall be issued in the Merger. Each holder
of Company Common Stock who otherwise would have been entitled
to a fraction of a Parent Common Share shall receive in lieu
thereof cash (without interest) in an amount determined by
multiplying the fractional share interest to which such holder
would otherwise be entitled (after taking into account all
shares of Company Common Stock owned by such holder at the
Effective Time to be converted into Parent Common Shares) by the
average of the daily volume weighted average prices of Parent
Common Shares based on information reported by the Toronto Stock
Exchange as reported in The Toronto Stock Exchange Daily
Record (with each such trading days applicable price
converted into United States dollars using the exchange rate
reported by the Bank of Canada at 12:00 p.m. on such day),
for the five trading days immediately preceding the Closing
Date. No such holder shall be entitled to dividends, voting
rights or any other rights in respect of any fractional share.
2.3. Merger Sub Capital Stock; Issuance of
Surviving Company Common Stock. (a) All
shares of common stock, no par value per share, of Merger Sub
outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share
of common stock of the Surviving Company.
(b) In exchange for, and in consideration of
(i) Parent delivering the Merger Consideration pursuant to
Section 2.1, (ii) Parents commitments
under Section 2.4 and (iii) payment of $10.00 by
Parent to the Surviving Company, the Surviving Company shall
issue to Parent at the Effective Time 999,999 (or such other
number as is agreed by the Surviving Company and Parent) fully
paid and nonassessable shares of common stock of the Surviving
Company.
2.4. Treatment of Options and Other Stock Based
Awards. (a) Each option to purchase
shares of Company Common Stock (a Company
Option) granted pursuant to the TSFG Stock Option
Plan, the TSFG Long Term Incentive Plan, the Carolina First
Corporation Directors Stock Option Plan, the Carolina
First Corporation Amended and Restated Fortune 50 Plan, the 1995
Nonstatutory Stock Option Plan of Gulf West Banks, Inc., the
MountainBank 1997 Employee Stock Option Plan, the Florida Banks,
Inc. 1998 Stock Option Plan, the 1998 Performance-Based
Incentive Plan of CNB, Inc. and the Pointe Financial Corporation
1998 Incentive Compensation and Stock Award Plan (each, a
Company Stock Option Plan), whether
vested or unvested, that is outstanding immediately prior to the
Effective Time shall cease to represent a right to acquire
shares of Company Common Stock and shall be converted, at the
Effective Time, into an option to purchase Parent Common Shares
(a Parent Option), on the same terms and
conditions as were applicable under such Company Option but
taking into account any changes thereto, including, (1) for
Company Options that are outstanding under the Florida Banks,
Inc. 1998 Stock Option Plan and the MountainBank 1997 Employee
Stock Option Plan, the full acceleration of vesting thereof to a
date that is at least 60 days prior to the Closing Date (or
such earlier date as may be otherwise required under the
MountainBank 1997 Employee Stock Option Plan) and the
termination, without payment therefor, of such Company Options
at the Effective Time and (2) for Company Options that are
outstanding under the TSFG Stock Option Plan, the full
acceleration of vesting thereof immediately prior to the Closing
Date and the termination, without payment therefor, of such
Company Option no less than 31 days after the Effective
Time. The number of Parent Common Shares subject to each Parent
Option shall be the number of shares of Company Common Stock
subject to each such Company Option multiplied by the Exchange
Ratio, rounded, if necessary, down to the nearest whole Parent
Common Share, and such Parent Option shall have an exercise
price per share equal to the per share exercise price specified
in such Company Option divided by the Exchange Ratio, rounded,
if necessary, up to the nearest cent; provided, however, in the
case of any Company Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 of
the Code (incentive stock options), the
exercise price, the number of shares purchasable pursuant to
such Company Option and the terms and conditions of exercise of
such Company Option shall be determined in accordance with the
method set forth above unless the use of such method will not
preserve the status of such Company Options as incentive stock
options, in which case the manner of determination shall be
adjusted in a manner that both complies with Section 424(a)
of the Code and results in the smallest adverse modification in
the economic values that otherwise would be achieved by the
holder pursuant to the method set forth above. In all events,
the foregoing substitution of all Company Options with Parent
Options shall comply with the requirements of Section 409A
of the Code.
A-3
(b) Each share of Company Common Stock granted subject to
vesting or other lapse restrictions (including any Company
Common Stock dividend equivalents accrued in respect of such
shares) (each, a Company Restricted Shares)
pursuant to the TSFG Amended and Restated Restricted Stock
Agreement Plan or any Company Stock Option Plan (each, a
Company Stock Incentive Plan) which is
outstanding immediately prior to the Effective Time shall vest
and become free of such restrictions as of the Effective Time to
the extent provided by the terms thereof and, at the Effective
Time, such Company Restricted Shares shall be treated in the
same manner as all other shares of Company Common Stock under
Section 2.1 of this Agreement.
(c) Each outstanding stock appreciation right (a
Company SAR) granted pursuant to a Company
Stock Incentive Plan, whether vested or unvested, that is
outstanding immediately prior to the Effective Time shall cease
to represent a right to receive cash upon exercise of such
Company SAR and shall be converted, at the Effective Time, into
a stock appreciation right with respect to Parent Common Shares
(a Parent SAR), on the same terms and
conditions as were applicable under such Company SAR (including
the settlement of such Parent SARs in cash), but taking into
account any changes thereto, including the acceleration of
vesting thereof if provided for in the Company Stock Incentive
Plans, in any award agreement or in such Company SAR by reason
of this Agreement or the transactions contemplated hereby. The
number of Parent Common Shares subject to each such Parent SAR
shall be the number of shares of Company Common Stock subject to
each such Company SAR multiplied by the Exchange Ratio, rounded,
if necessary, down to the nearest whole Parent Common Share, and
such Parent SAR shall have an exercise price per share equal to
the per share exercise price specified in such Company SAR
divided by the Exchange Ratio, rounded, if necessary, up to the
nearest cent.
(d) At the Effective Time, each restricted stock unit
(including any Company Common Stock dividend equivalents accrued
in respect of such restricted stock unit) (a Company
RSU), whether vested or unvested, which is outstanding
immediately prior to the Effective Time shall cease to represent
a right or award with respect to shares of Company Common Stock
and shall be converted, at the Effective Time, into a vested
right to receive cash, in accordance with the terms of the
applicable Company Stock Incentive Plan, equal to the product of
(x) the Cash Consideration and (y) the number of
shares of Company Common Stock (including any Company Common
Stock dividend equivalents accrued in respect of such shares)
subject to each Company RSU outstanding, which cash shall be
paid out in accordance with the terms of the applicable Company
Stock Incentive Plan.
(e) Further, as soon as practicable after the Effective
Time, Parent shall or shall cause the Surviving Company to,
deliver to the holders of Parent Options and Parent SARs, as
applicable, appropriate notices setting forth such holders
rights pursuant to the respective Company Stock Incentive Plans
and agreements evidencing the grant agreements and stating that
the corresponding Company Options and Company SARs, as
applicable, and agreements have been assumed by Parent and shall
continue in effect on the same terms and conditions (subject to
the adjustments required by this Section 2.4 after
giving effect to the Merger and the terms of the Company Stock
Incentive Plans) as provided above.
(f) The provisions of clauses (a) through (e) of
this Section 2.4 shall not apply to the Amended and
Restated TSFG Employee Stock Purchase Plan or any other plan,
program or arrangement intending to qualify as a stock purchase
plan under Section 423 of the Code (the Company
ESPPs). The Company shall, prior to the Effective
Time, take all actions necessary to terminate the Company ESPPs
effective as of the Effective Time and all outstanding rights
thereunder at the Effective Time, and ensure that no new
offering periods thereunder commence during the period from the
date of this Agreement through the Effective Time. The offering
periods thereunder currently in effect as of the date of this
Agreement shall end in accordance with the terms of the
applicable Company ESPP; provided, that there will be no
increase in the amount of payroll deductions permitted to be
made by the participants therein during such period; and
provided further that, on the last day of the current
offering periods, each participant in the applicable Company
ESPP will be credited with the number of share(s) of Company
Common Stock purchased for his or her account(s) under the
applicable Company ESPP in respect of the applicable offering
period in accordance with the terms of the applicable Company
ESPP.
(g) The Company shall take such action as shall be required
to (i) terminate the Dividend Reinvestment Plan immediately
prior to and effective as of the Effective Time and
(ii) ensure that all Company Common Stock and, if
applicable, all Company Preferred Stock held in the Company
tax-qualified defined contribution plan and in respect
A-4
of any liabilities under the Companys Executive Deferred
Compensation Plan is treated in the same manner as all other
shares of Company Common Stock under Section 2.1 of
this Agreement.
(h) Prior to the Effective Time, the Company shall pass
such resolutions for the treatment of Company Options and
Company SARs as contemplated by the provisions of this
Section 2.4. Parent shall reserve for issuance a
number of Parent Common Shares at least equal to the number of
Parent Common Shares that will be subject to Parent Options and
Parent SARs as a result of the actions contemplated by this
Section 2.4. As soon as practicable after the
Effective Time, Parent shall file a registration statement on
Form F-3
or
Form F-8
(or any successor or other appropriate form) with respect to the
Parent Common Shares subject to such Parent Options and other
Parent stock-based awards and shall use its reasonable best
efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for
so long as such Parent Options or Parent stock-based awards
remain outstanding.
2.5. Reservation of Right to Revise
Structure. Parent may at any time change the
method of effecting the business combination contemplated by
this Agreement if and to the extent that it deems such a change
to be desirable; provided, however, that no such
change shall (A) alter or change the amount or kind of the
consideration to be issued to holders of Company Common Stock as
merger consideration or the right to the election thereof,
(B) materially impede or delay consummation of the Merger
or (C) provide for a merger of the Company in which the
Company is not the surviving corporation. In the event Parent
elects to make such a change, the parties agree to execute
appropriate documents to reflect the change.
2.6. Withholding. Parent or
any of its Subsidiaries shall be entitled to deduct and withhold
from any payment otherwise payable pursuant to this Agreement
such amounts as are required to be deducted and withheld with
respect to such payment under all applicable Tax laws. To the
extent that amounts are so deducted or withheld, such amounts
shall be treated for all purposes of this Agreement as having
been paid to the recipient of the payment in respect of which
such deduction and withholding was made.
2.7. Certain
Adjustments. The Exchange Ratio shall be
subject to appropriate adjustments from time to time after the
date of this Agreement in the event that, subsequent to the date
of this Agreement but prior to the Effective Time, the
outstanding Parent Common Shares shall have been increased,
decreased, changed into or exchanged for a different number or
kind of shares or securities through (in any such case) any
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other like
changes in Parents capitalization, or any special or
extraordinary dividend or distribution shall have been declared,
paid or made with respect to the Parent Common Shares, unless
the record date therefor is after the date of the Effective Time
(for the avoidance of doubt, regular quarterly dividends,
including any increases thereto from time to time, by Parent
shall not constitute a special or extraordinary dividend or
distribution).
2.8. Cash
Elections. (a) Each person who, on or
prior to the Election Date (as defined below), is a record
holder of shares of Company Common Stock shall be entitled, with
respect to all or any portion of such persons shares, to
make an unconditional election (a Cash
Election) on or prior to the Election Date to receive
the Cash Consideration, on the basis hereinafter set forth.
(b) Parent shall prepare a form of election (the
Form of Election), which shall be subject to
the approval of the Company (which approval shall not be
unreasonably withheld), and the Company shall mail or cause to
be mailed the Form of Election with the Proxy
Statement/Prospectus to the record holders of shares of Company
Common Stock as of the record date for the Company Shareholders
Meeting. The Form of Election shall be used by each record
holder of shares of Company Common Stock (or, in the case of
nominee record holders, the beneficial owner through proper
instructions and documentation) who wishes to elect to receive
cash for any or all shares of Company Common Stock held by such
holder. The Company shall use its reasonable best efforts to
make the Form of Election available to all persons who become
holders of shares of Company Common Stock during the period
between the record date for the Company Shareholders Meeting and
the Election Date. Any holders election to receive cash
shall have been properly made only if the Exchange Agent shall
have received at its designated office, by 5:00 p.m., New
York City time, on (1) the date of the Company Shareholders
Meeting or (2) if the Closing Date is more than four
Business Days following the Company Shareholders Meeting, two
Business Days preceding the Closing Date (the Election
Date), a Form of Election properly completed and
signed and accompanied by Certificates representing the shares
of Company Common Stock to which such Form of Election relates,
duly
A-5
endorsed in blank or otherwise in form acceptable for transfer
on the books of the Company (or by an appropriate guarantee of
delivery of such Certificates as set forth in such Form of
Election from a firm which is an eligible guarantor
institution (as defined in
Rule 17Ad-15
under the Exchange Act); provided that such Certificates are in
fact delivered to the Exchange Agent by the time set forth in
such guarantee of delivery), and, in the case of book-entry
shares, any additional documents specified in the procedures set
forth in the Form of Election. If it is determined that the
Election Date will not be the date of the Company Shareholders
Meeting, Parent and the Company shall publicly announce the
anticipated Election Date at least five Business Days prior to
the anticipated Closing Date. If the Closing Date is delayed to
a subsequent date, the Election Date shall be similarly delayed
to a subsequent date, and Parent and the Company shall promptly
announce any such delay and, when determined, the rescheduled
Election Date. Any Form of Election may be revoked by the
shareholder submitting it only by written notice received by the
Exchange Agent prior to 5:00 p.m., New York City time, on
the Election Date. If a Form of Election is revoked, the
Certificate or Certificates for the shares of Company Common
Stock to which such Form of Election relates shall be promptly
returned by the Exchange Agent to the shareholder of the Company
submitting the same. For the avoidance of doubt, any shares of
Company Common Stock with respect to which there shall not have
been submitted an effective, properly completed Form of Election
in accordance with the terms of this Section 2.8
(other than shares described in Section 2.1(a)(i)),
shall be converted into the right to receive the Stock
Consideration in accordance with
Section 2.1(a)(ii)(B).
(c) The determination of the Exchange Agent (or the mutual
determination of the Company and Parent in the event that the
Exchange Agent declines to make any such determination) shall be
binding as to whether or not Cash Elections have been properly
made or revoked pursuant to this Section 2.8 with
respect to shares of Company Common Stock and as to when Cash
Elections and revocations were received by it. If the Exchange
Agent reasonably determines in good faith that any Cash Election
was not properly made with respect to shares of Company Common
Stock, such shares shall be treated by the Exchange Agent as
shares which were not Electing Company Shares at the Effective
Time, and such shares shall be converted in the Merger into the
right to receive the Stock Consideration pursuant to
Section 2.1(a)(ii)(B). The Exchange Agent (or the
Company and Parent by mutual agreement in the event that the
Exchange Agent declines to make any such determination) shall
also make all computations as to the allocation, and any such
computation shall be conclusive and binding on the shareholders
of the Company. The Exchange Agent may, with the mutual written
agreement of the Company and Parent, make such rules as are
consistent with this Section 2.8 for the
implementation of the Cash Elections provided for herein and as
shall be necessary or desirable to fully effect such Cash
Elections.
ARTICLE III
EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION
3.1. Parent to Make Merger Consideration
Available. At or promptly after the Effective
Time, Parent or one of its Subsidiaries shall deposit, or shall
cause to be deposited, with an exchange agent selected by Parent
(subject to the consent, not to be unreasonably withheld, of the
Company) (the Exchange Agent), for the
benefit of the holders of certificates that immediately prior to
the Effective Time evidenced shares of Company Common Stock (the
Certificates), for exchange in accordance
with this Article III, (i) evidence of Parent
Common Shares in book-entry form issuable pursuant to
Section 2.1(a) (and/or certificates representing
such Parent Common Shares, at Parents election) and
(ii) cash sufficient to pay the aggregate Cash
Consideration and cash in lieu of fractional Parent Common
Shares pursuant to Section 2.2.
3.2. Exchange of
Certificates. (a) As soon as reasonably
practicable after the Effective Time and in any event not later
than the fifth Business Day following the Effective Time, the
Exchange Agent shall mail to each holder of record of a
Certificate immediately prior to the Effective Time whose shares
of Company Common Stock were converted into the right to receive
the Stock Consideration pursuant to Section 2.1
(other than such holders who properly made an election to
receive cash with respect to such Certificates in accordance
with Section 2.8) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the
Certificates in exchange for the Stock Consideration. Upon
proper surrender of a Certificate for exchange and cancellation
to the Exchange Agent, together with a letter of transmittal,
duly
A-6
completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor
the Stock Consideration in respect of the shares of Company
Common Stock formerly represented by such Certificate and such
Certificate so surrendered shall forthwith be cancelled. After
the Effective Time, with respect to properly made elections to
receive cash for Certificates in accordance with
Section 2.8 or upon surrender, in accordance with
this Section 3.2, to the Exchange Agent of a
Certificate, together with such letter of transmittal, duly
completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor
the applicable Merger Consideration in respect of the shares of
Company Common Stock formerly represented by such Certificate
and such Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued for the benefit
of holders of the Certificates on the Merger Consideration
payable upon the surrender of the Certificates.
(b) No dividends or other distributions with respect to
Parent Common Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate
with respect to Parent Common Shares that such holder would be
entitled to receive upon surrender of such Certificate and no
Merger Consideration shall be paid to any such holder until such
holder shall surrender such Certificate in accordance with this
Article III. After the surrender of a
Certificate in accordance with this Article III,
such holder thereof entitled to receive Parent Common Shares
shall be entitled to receive any such dividends or other
distributions, without any interest thereon, with a record date
after the Effective Time and which theretofore had become
payable with respect to whole Parent Common Shares issuable to
such holder in respect of such Certificate.
(c) If the payment of the Merger Consideration is to be
made to a person other than the registered holder of the
Certificate surrendered in exchange therefor, it shall be a
condition of payment that the Certificate so surrendered shall
be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such payment shall pay
to the Exchange Agent in advance any applicable stock transfer
or other Taxes or shall establish to the reasonable satisfaction
of the Exchange Agent that such Taxes have been paid or are not
payable.
(d) At and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the
shares of Company Common Stock that were issued and outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration as provided in this
Article III.
(e) Any portion of the property deposited with the Exchange
Agent pursuant to Section 3.1 that remains unclaimed
by the shareholders of the Company for six (6) months after
the Effective Time shall be paid, at the request of Parent, to
or as directed by Parent. Any shareholders of the Company who
have not theretofore complied with this Article III
shall thereafter look only to Parent for payment of the Merger
Consideration and unpaid dividends and distributions on the
Parent Common Shares deliverable in respect of each share of
Company Common Stock held by such shareholder at the Effective
Time as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding anything to the
contrary contained herein, none of Parent, the Company, the
Exchange Agent or any other person shall be liable to any former
holder of shares of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
(f) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen
or destroyed and, if required by Parent, the posting by such
person of a bond in such amount as Parent or one of its
Subsidiaries may determine is reasonably necessary as indemnity
against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof pursuant to this
Agreement.
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ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in any publicly available report,
schedule, form or other document filed with, or furnished to,
the Securities and Exchange Commission (SEC)
by the Company prior to the date of this Agreement and on or
after January 1, 2010 (excluding, in each case, any
disclosures set forth in any risk factor section and in any
section relating to forward-looking statements or any other
disclosures included in such filings to the extent that they are
cautionary, predictive or forward-looking in nature) or
(ii) as disclosed in the disclosure schedule (the
Company Disclosure Schedule) delivered by the
Company to Parent prior to the execution of this Agreement
(which schedule sets forth, among other things, items the
disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a
provision hereof or as an exception to one or more
representations or warranties contained in this
Article IV, or to one or more of the Companys
covenants contained herein, provided, however,
that disclosure in any section of such schedule shall apply only
to the indicated Section of this Agreement except to the extent
that it is reasonably apparent on the face of such disclosure
that it is relevant to another Section of this Agreement), the
Company hereby represents and warrants to Parent and Merger Sub
as follows:
4.1. Corporate
Organization. (a) The Company is a
corporation duly organized, validly existing and in good
standing under the Laws of the State of South Carolina. The
Company has all requisite corporate power and authority to own,
lease or operate all of its properties, rights and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the
character or location of the properties, rights and assets
owned, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so
licensed or qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect (as
defined below) on the Company. As used in this Agreement, the
term Material Adverse Effect means, with
respect to the Company, Parent or the Surviving Company, as the
case may be, any fact, circumstance, event, change, effect,
development or occurrence that, individually or in the aggregate
with all other facts, circumstances, events, changes, effects,
developments or occurrences, (i) has a material adverse
effect on the financial condition, results of operations or
business of such party and its Subsidiaries taken as a whole
(provided, however, that, with respect to this
clause (i), a Material Adverse Effect shall not be
deemed to include effects to the extent resulting from
(A) changes after the date of this Agreement in United
States generally accepted accounting principles
(U.S. GAAP) (or in the case of Parent or
any other party to this Agreement (or their respective
assignees) that is a Canadian entity, Canadian generally
accepted accounting principles (Canadian
GAAP) or regulatory accounting requirements applicable
generally to banks and their holding companies generally,
(B) changes after the date of this Agreement in laws,
rules, regulations or the written interpretation of laws, rules
or regulations by Governmental Entities of general applicability
to banks and their holding companies, (C) actions or
omissions expressly required by this Agreement, (D) changes
after the date of this Agreement in global, national or regional
political conditions (including acts of terrorism or war) or in
general business, market and economic conditions in the United
States or any region thereof (or, in the case of Parent, the
U.S. or Canada or any region thereof), including changes
generally in prevailing interest rates, currency exchange rates,
credit markets and price levels or trading volumes in the United
States or foreign securities markets, in each case affecting
banks and their holding companies generally, (E) the
execution of this Agreement or the public disclosure of this
Agreement or the transactions contemplated hereby, including the
impacts thereof on relationships with customers and employees,
or (F) failure, in and of itself, to meet earnings
projections, but not including any underlying causes thereof
unless separately excluded hereunder, or changes in the trading
price of a partys common stock, in and of itself, but not
including any underlying causes unless separately excluded
hereunder, except, with respect to clauses (A), (B) and
(D), to the extent that the effects of such change are
disproportionately adverse to the financial condition, results
of operations or business of such party and its Subsidiaries,
taken as a whole, as compared to other companies in the industry
in which such party and its Subsidiaries operate) or
(ii) prevents or materially impairs the ability of such
party to timely consummate the transactions contemplated hereby.
The Company is a bank holding company duly registered under the
Bank Holding Company Act of 1956, as amended (BHC
Act). The articles of incorporation and bylaws of the
Company, copies of which have been made available to Parent, are
true, complete and correct copies of such documents as in full
force and effect as of the date of this Agreement.
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(b) Section 4.1(b) of the Company Disclosure
Schedule sets forth, as of the date hereof, each Subsidiary of
the Company and all other entities in which the Company or any
of its Subsidiaries owns, directly or indirectly, any shares of
capital stock or equity interests. Each Subsidiary of the
Company (i) is duly organized and validly existing as a
bank, corporation, partnership or other entity and is in good
standing under the laws of its jurisdiction of organization,
(ii) is duly licensed or qualified to do business and is in
good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so licensed or
qualified and (iii) has all requisite corporate or other
power and authority to own or lease its properties, rights and
assets and to carry on its business as now conducted, except, in
the case of clauses (ii) and (iii), where the failure to be
so licensed or qualified or to have such power or authority
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
Subsidiary means, with respect to any
person, any bank, corporation, partnership, joint venture,
limited liability company or other organization, whether
incorporated or unincorporated (i) of which such person or
a subsidiary of such person is a general partner or managing
member or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or persons
performing similar functions with respect to such entity is
directly or indirectly owned by such person
and/or one
or more subsidiaries thereof. Significant
Subsidiaries means each Subsidiary of a party that is
a significant subsidiary within the meaning of
Rule 1-02
of
Regulation S-X.
The articles of incorporation, bylaws and similar governing
documents of each Significant Subsidiary of the Company, copies
of which have been made available to Parent, are true, complete
and correct copies of such documents as in full force and effect
as of the date of this Agreement.
(c) Except for its ownership of Carolina First Bank (the
Bank Subsidiary), the Company does not own,
beneficially or of record, either directly or indirectly, any
stock or equity interest in any depository institution (as
defined in 12 U.S.C. Section 1813(c)(1)). The deposits
of the Bank Subsidiary are insured by the Federal Deposit
Insurance Corporation (the FDIC) to the
fullest extent permitted by Law, and all insurance premiums and
assessments required to be paid in connection therewith have
been paid when due. No proceedings for the revocation or
termination of such deposit insurance are pending or, to the
knowledge of the Company, threatened. The Bank Subsidiary is a
member in good standing of the Federal Home Loan Bank
(FHLB) of Atlanta.
4.2. Capitalization. (a) The
authorized capital stock of the Company consists of
325,000,000 shares of Company Common Stock and
10,000,000 shares of preferred stock, no par value per
share (the Company Preferred Stock). As of
May 12, 2010 (the Capitalization Date),
there were 215,671,871 shares of Company Common Stock
issued and outstanding (which includes 31,214 outstanding
Company Restricted Shares) and 347,000 shares of Company
Preferred Stock outstanding (consisting of 347,000 shares
of the
Series 2008-T
Preferred Stock). No other shares of Company Common Stock or
Company Preferred Stock were issued or outstanding as of such
date. Since the Capitalization Date and through the date of this
Agreement, the Company has not (x) issued or authorized the
issuance of any shares of Company Common Stock or Company
Preferred Stock, or any securities convertible into or
exchangeable or exercisable for shares of Company Common Stock
or Company Preferred Stock, except for issuances of Company
Common Stock as a result of the exercise of Company Options
listed in Section 4.2(b) of the Company Disclosure
Schedule, (y) reserved for issuance any shares of Company
Common Stock or Company Preferred Stock or (z) repurchased
or redeemed, or authorized the repurchase or redemption of, any
shares of Company Common Stock. Without limiting the generality
of the foregoing, prior to the execution of this Agreement, all
previously outstanding shares of the Companys 10%
Mandatory Convertible Non-Cumulative Preferred Stock,
Series 2008D-V
and the 10% Mandatory Convertible Non-Cumulative Preferred
Stock,
Series 2008D-NV
(collectively, the Convertible Preferred
Stock) have been converted pursuant to their terms
into an aggregate of 715,383 shares of Company Common
Stock, and no shares of Convertible Preferred Stock are
outstanding. As of the date of this Agreement, no shares of
Company Common Stock or Company Preferred Stock were reserved
for issuance, except for (i) an aggregate of
10,106,796 shares of Company Common Stock reserved for
issuance upon the exercise of the Warrant issued to the United
States Department of the Treasury in connection with the
issuance of the
Series 2008-T
Preferred Stock (the Warrant), (ii) an
aggregate of 6,497,553 shares of Company Common Stock
reserved for issuance upon the exercise of Company Options and
Company SARs, for the settlement of Company RSUs and for future
issuance of Company Restricted Shares, in each case pursuant to
the Company Stock Incentive Plans, and (iii) an aggregate
of 97,667 shares of Company Common Stock for issuance in
connection with purchase rights under the Company ESPPs. All of
the issued and outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid,
nonassessable and free of
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preemptive rights, with no personal liability attaching to the
ownership thereof. No Subsidiary of the Company owns any shares
of Company Common Stock (other than shares in trust accounts,
managed accounts and the like for the benefit of customers or
shares held in satisfaction of a debt previously contracted).
Except as otherwise specified in this Section 4.2(a)
and the Share Purchase Agreement, neither the Company nor any of
its Subsidiaries has or is bound by any outstanding
subscriptions, options, warrants, calls, convertible securities,
preemptive rights, redemption rights, stock appreciation rights,
stock-based performance units or other similar rights,
agreements or commitments of any character relating to the
purchase or issuance of any shares of the capital stock of the
Company or of any of its Subsidiaries or other equity securities
of the Company or any of its Subsidiaries or any securities
representing the right to purchase or otherwise receive any
shares of the capital stock of the Company or any of its
Subsidiaries (including any rights plan or agreement) or
equity-based awards, nor is there any other agreement to which
the Company or any of its Subsidiaries is a party or by which
any of them is bound obligating the Company or any of its
Subsidiaries to (A) register, issue, deliver, transfer or
sell any shares of capital stock or other equity interests of
the Company or any of its Subsidiaries or securities convertible
into or exchangeable or exercisable for such shares or equity
interests, (B) issue, grant, extend or enter into any such
subscription, option, warrant, call, convertible securities,
stock-based performance units or other similar right, agreement,
arrangement or commitment, (C) redeem or otherwise acquire
any such shares of capital stock, voting securities, other
equity interests or rights (other than a cashless exercise of
Company Options outstanding, and in accordance with the terms in
effect, as of the date hereof) or (D) provide a material
amount of funds to, or make any material investment (in the form
of a loan, capital contribution or otherwise) in, the Company or
any of its Subsidiaries. Except as set forth in
Section 4.2(a) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any other
trust capital securities or other similar securities
outstanding. No (i) Exchange Event (as such
term is defined in Exhibit E to the First Amended and
Restated Declaration of Trust of Carolina First Mortgage Loan
Trust, dated as of December 8, 2000 (as amended, the
REIT Trust Declaration)) with
respect to the Series 2000 A Cumulative Fixed Rate
Preferred Shares of Carolina First Mortgage Loan Trust or
(ii) Exchange Event (as such term is defined in
Exhibit G to the REIT Trust Declaration) with respect
to the Series 2002C Cumulative Floating Rate Preferred
Shares of Carolina First Mortgage Loan Trust has occurred.
(b) Section 4.2(b) of the Company Disclosure
Schedule contains a list setting forth, as of the date of this
Agreement, all outstanding Company Options and all other equity
or equity-based awards relating to Company Common Stock, the
names of the optionees or grantees thereof, identification of
any such optionees or grantees that are not current or former
employees, directors or officers of the Company, the date each
such Company Option or other award was granted, the number of
shares of Company Common Stock subject to each such Company
Option or underlying each such other award, the expiration date
of each such Company Option or other award, any vesting schedule
with respect to a Company Option which is not yet fully vested
and the date on which each other award is scheduled to be
settled or become free of restrictions, the price at which each
such Company Option and Company SARs may be exercised, and the
fair market value of one share of Company Common Stock on the
date of grant of each of the foregoing. The exercise price per
share of each Company Option was, on the applicable date of
grant of the Company Option, no less than the fair market value
of one share of Company Common Stock on such grant date.
(c) Section 4.2(c) of the Company Disclosure
Schedule lists the name, jurisdiction of incorporation,
authorized and outstanding shares of capital stock or other
equity interests and record and beneficial owners of such
capital stock or other equity interests for each Subsidiary. The
Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of or all other equity
interests in each of the Companys Subsidiaries, free and
clear of any material liens, licenses, pledges, charges,
encumbrances, adverse rights or claims and security interests
whatsoever (other than liens for Taxes not yet due and payable,
Liens), and all of such shares or other
equity interests are, to the extent applicable, duly authorized
and validly issued and are fully paid, nonassessable (except to
the extent provided in 12 U.S.C. § 55 and similar
state laws) and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
(d) Except for the ownership of the Companys
Subsidiaries and for investments held in a fiduciary capacity
for the benefit of customers or acquired after the date of this
Agreement in satisfaction of debts previously contracted in good
faith, neither the Company nor any of its Subsidiaries
beneficially owns or controls, directly or indirectly, any
shares of stock or other equity interest in any corporation,
firm, partnership, joint venture or other entity.
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(e) The Company does not have outstanding any bonds,
debentures, notes or other indebtedness having the right to vote
(or are convertible into, or exchangeable for, securities having
the right to vote) on any matters on which holders of Company
Common Stock may vote, and neither it nor any of its
Subsidiaries is a party to any voting agreement with respect to
the voting of its capital stock, voting securities or other
equity interests.
4.3. Authority; No
Violation. (a) The Company has full
corporate power and authority to execute and deliver this
Agreement and, subject to the required approval of this
Agreement by the shareholders of the Company, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly
approved by all necessary corporate action of the Company, and
no other corporate and no shareholder proceedings (subject, in
the case of the consummation of the Merger, to the required
approval of this Agreement by the shareholders of the Company)
on the part of the Company are necessary to approve this
Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered
by the Company and (assuming due authorization, execution and
delivery by Parent and Merger Sub) constitutes a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency
and similar laws affecting creditors rights and remedies
generally.
(b) Neither the execution and delivery of this Agreement by
the Company nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company
with any of the terms or provisions hereof, will
(i) violate any provision of the articles of incorporation
or bylaws of the Company or any of the similar governing
documents of any of its Subsidiaries or (ii) assuming that
the consents, approvals and waiting periods referred to in
Section 4.4 are duly obtained or satisfied,
(x) violate any law, statute, code, ordinance, rule,
regulation, judgment, order, award, writ, decree or injunction
issued, promulgated or entered into by or with any Governmental
Entity (each, a Law) applicable to the
Company or any of its Subsidiaries or any of their respective
properties, rights or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any
benefit under, or require redemption or repurchase or otherwise
require the purchase or sale of any securities, constitute a
default under, result in the termination of or a right of
termination, modification or cancellation under, accelerate the
performance required by, or result in the creation of any Lien
(or have any of such results or effects upon notice or lapse of
time, or both) upon any of the respective properties, rights or
assets of the Company or any of its Subsidiaries under, any of
the terms, conditions or provisions of (1) any material
leases or related agreements related to stores or other
facilities operated by the Bank Subsidiary or any of its
affiliates or (2) any note, bond, mortgage, indenture, deed
of trust, license, lease (other than such leases covered by
clause (y)(1) above), agreement, contract, permit, concession,
franchise or other instrument or obligation to which the Company
or any of its Subsidiaries is a party, or by which they or any
of their respective properties, rights, assets or business
activities may be bound or affected, except in the case of
clause (y)(2) above, for such violations, conflicts, breaches,
defaults or other events which would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on the Company.
(c) The board of directors of the Company, by resolutions
duly adopted by unanimous vote of the entire board of directors
at a meeting duly called and held (the Company Board
Approval), has (i) determined that this
Agreement, and each of the Related Agreements and the
transactions contemplated hereby and thereby are fair to and in
the best interests of the Company and its shareholders and
declared the Merger to be advisable, (ii) approved this
Agreement and each of the Related Agreements and the
transactions contemplated hereby and thereby, and
(iii) recommended that the shareholders of the Company
approve this Agreement and directed that such matter be
submitted for consideration by the shareholders of the Company
at the Company Shareholders Meeting.
(d) In accordance with
Section 33-13-102(b)
of the SCBCA, no appraisal or dissenters rights shall be
available to holders of the Company Common Stock in connection
with the Merger.
(e) No business combination, fair
price, moratorium, control share
acquisition, takeover, affiliate
transaction, interested shareholder or other
similar anti-takeover statute or regulation enacted under the
Laws of the State of South Carolina is applicable to the Company
is applicable to this Agreement or to any of the Related
Agreements and the transactions contemplated hereby and thereby.
On May 16, 2010, the board of directors of the Company, by
resolutions duly adopted by unanimous vote of the entire board
of directors at a meeting duly called
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and held, approved the amendment to the bylaws of the Company
set forth in Section 4.3(e) of the Company
Disclosure Schedule pursuant to which Article 1 of
Chapter 2 of Title 35 of the South Carolina Code of
Laws, as amended, does not apply to control share acquisitions
of shares of the Company. The Company Board Approval is
sufficient to exempt fully the Merger and the other transactions
contemplated hereby, including the transactions contemplated by
the Related Agreements, from the provisions of
Sections 35-2-201
through
35-2-226 of
the South Carolina Code of Laws, as amended.
4.4. Consents and
Approvals. Except for (i) the filing of
any required applications and notices, as applicable, with the
Board of Governors of the Federal Reserve System (the
Federal Reserve Board ) under the BHC Act,
the Board of Financial Institutions of the State of South
Carolina, the Superintendent of Financial Institutions (Canada)
under the Bank Act (Canada) and with any other state banking,
insurance or other regulatory authorities set forth in
Section 4.4(i) of the Company Disclosure Schedule
and the approval or notice of non-objection of such applications
and notices, (ii) approval of the listing on the New York
Stock Exchange and the Toronto Stock Exchange of the Parent
Common Shares to be issued in the Merger and to be reserved for
issuance upon exercise of the Parent Options issued in
substitution for Company Options pursuant to
Section 2.4, and (iii) the filing with the SEC
of a proxy statement in definitive form relating to the meeting
of the shareholders of the Company to be held to vote on the
approval of this Agreement (the Proxy
Statement/Prospectus) and the filing and declaration
of effectiveness of the registration statement on
Form F-4
(the
Form F-4)
in which the Proxy Statement/Prospectus will be included as a
prospectus and any filings or approvals under applicable state
securities Laws, (iv) the filing of the Articles of Merger
with the Secretary of State of the State of South Carolina
pursuant to the SCBCA or other applicable Law and such other
Governmental Entities as required by the SCBCA or other
applicable Law, (v) the approval of this Agreement by the
shareholders of the Company, (vi) the consents and
approvals set forth in Section 4.4(vi) of the
Company Disclosure Schedule, (vii) the consents,
authorizations, approvals, filings or exemptions in connection
with the applicable provisions of federal or state securities
Laws or the rules or regulations of any applicable
self-regulatory organization, in any such case relating to the
regulation of broker-dealers, investment companies and
investment advisors and set forth in
Section 4.4(vii) of the Company Disclosure Schedule,
(viii) the consents, authorizations, approvals, filings or
exemptions in connection with the applicable provisions of
consumer finance, mortgage banking, insurance and other similar
Laws set forth in Section 4.4(viii) of the Company
Disclosure Schedule and (ix) the consents, authorizations,
approvals, filings and registrations of third parties which are
not Governmental Entities, the failure of which to obtain or
make would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company or
Parent, no consents or approvals of, or filings or registrations
with, any court, administrative agency or commission or other
governmental or regulatory authority or instrumentality or
self-regulatory organization (each, a
Governmental Entity) or of or with any
other third party by and on behalf of the Company or any of its
Subsidiaries (or by or on behalf of any acquiror of the Company)
are necessary in connection with (A) the execution and
delivery by the Company of this Agreement and (B) the
consummation by the Company of the Merger and the other
transactions contemplated hereby. As of the date hereof, the
Company is not aware of any reason why the necessary regulatory
approvals and consents will not be received on a timely basis
and without the imposition of a condition or restriction of the
type referred to in Section 8.2(c) in order to
permit consummation of the Merger.
4.5. SEC Documents; Other Reports; Internal
Controls. (a) The Company has filed all
required reports, forms, schedules, registration statements and
other documents with the SEC since December 31, 2007 (the
Company Reports) and has paid all fees
and assessments due and payable in connection therewith. As of
their respective dates of filing with the SEC (or, if amended or
superseded by a subsequent filing prior to the date hereof, as
of the date of such subsequent filing), the Company Reports
complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the Securities
Act), or the Securities Exchange Act of 1934, as
amended (the Exchange Act), as the case may
be, and the rules and regulations of the SEC thereunder
applicable to such Company Reports, and none of the Company
Reports when filed with the SEC, or, if amended prior to the
date hereof, as of the date of such amendment, contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has made
available to Parent true, correct and complete copies of all
written correspondence between the SEC and the Company and any
of its Subsidiaries occurring since December 31, 2007 and
prior to the date of this Agreement. There are no outstanding
comments from or unresolved issues raised by the SEC with
respect to any of the Company Reports. None of the
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Companys Subsidiaries is required to file periodic reports
with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act.
(b) The Company and each of its Subsidiaries have timely
filed all material reports, forms, schedules, registrations,
statements and other documents, together with any amendments
required to be made with respect thereto, that they were
required to file since December 31, 2007 with any
Governmental Entity (other than the SEC) and have paid all fees
and assessments due and payable in connection therewith. Except
for normal examinations conducted by a Governmental Entity in
the regular course of the business of the Company and its
Subsidiaries, no Governmental Entity notified the Company that
it has initiated any proceeding or, to the knowledge of the
Company, threatened an investigation into the business or
operations of the Company or any of its Subsidiaries since
December 31, 2007. There is no material unresolved
violation, criticism or exception by any Governmental Entity
with respect to any report, form, schedule, registration,
statement or other document filed by, or relating to any
examinations by any such Governmental Entity of, the Company or
any of its Subsidiaries.
(c) The Company has disclosed, based on its most recent
evaluation prior to the date hereof, to the Companys
auditors and the audit committee of the Companys board of
directors and in Section 4.5(c) of the Company
Disclosure Schedule (i) any significant deficiencies and
material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to
adversely affect in any material respect the Companys
ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material,
that involves management or other employees who have a
significant role in the Companys internal controls over
financial reporting.
(d) The records, systems, controls, data and information of
the Company and its Subsidiaries are recorded, stored,
maintained and operated under means (including any electronic,
mechanical or photographic process, whether computerized or not)
that are under the exclusive ownership and direct control of the
Company or its Subsidiaries or accountants (including all means
of access thereto and therefrom), except for any non-exclusive
ownership and non-direct control that would not reasonably be
expected to have a material adverse effect on the system of
internal accounting controls described in the following
sentence. The Company and its Subsidiaries have devised and
maintain a system of internal accounting controls sufficient to
provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP.
(e) The Company has designed and implemented disclosure
controls and procedures (within the meaning of
Rules 13a-15(e)
and
15d-15(e) of
the Exchange Act) to ensure that material information relating
to the Company and its Subsidiaries is made known to the
management of the Company by others within those entities as
appropriate to allow timely decisions regarding required
disclosure and to make the certifications required by the
Exchange Act with respect to the Company Reports.
(f) Since December 31, 2007, (x) neither the
Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, auditor, accountant or
representative of the Company or any of its Subsidiaries has
received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any of
its Subsidiaries or their respective internal accounting
controls, including any material complaint, allegation,
assertion or claim that the Company or any of its Subsidiaries
has engaged in questionable accounting or auditing practices,
and (y) no attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of
its Subsidiaries, has reported evidence of a material violation
of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors,
employees or agents to the board of directors of the Company or
any committee thereof or to any director or officer of the
Company.
4.6. Financial Statements; Undisclosed
Liabilities. (a) The financial
statements of the Company (including any related notes and
schedules thereto) included in the Company Reports complied as
to form, as of their respective dates of filing with the SEC
(or, if amended or superseded by a subsequent filing prior to
the date hereof, as of the date of such subsequent filing), in
all material respects, with all applicable accounting
requirements and with the published rules and regulations of the
SEC with respect thereto (except, in the case of unaudited
statements, as permitted by
Form 10-Q
of the SEC), were prepared in accordance with U.S. GAAP
applied on a
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consistent basis during the periods involved (except as may be
disclosed therein), and fairly present, in all material
respects, the consolidated financial position of the Company and
its Subsidiaries and the consolidated results of operations,
changes in shareholders equity and cash flows of such
companies as of the dates and for the periods shown (subject, in
the case of unaudited statements, to normal year-end audit
adjustments, none of which is expected to be material, and to
any other adjustments described therein, including the notes
thereto). The books and records of the Company and its
Subsidiaries have been, and are being, maintained in all
material respects in accordance with U.S. GAAP and any
other applicable legal and accounting requirements and reflect
only actual transactions.
(b) Except for (i) those liabilities that are fully
reflected or reserved for in the consolidated financial
statements of the Company included in its Quarterly Report on
Form 10-Q
for the fiscal quarter ended March 31, 2010, as filed with
the SEC, (ii) this Agreement and the Share Purchase
Agreement or (iii) liabilities incurred since
March 31, 2010 in the ordinary course of business
consistent with past practice, neither the Company nor any of
its Subsidiaries has incurred any material liability of any
nature whatsoever (whether absolute, accrued or contingent or
otherwise and whether due or to become due), that either alone
or when combined with all other liabilities of a type not
described in clause (i), (ii) or (iii), has had, or would
reasonably be expected to have, a Material Adverse Effect on the
Company.
4.7. Brokers
Fees. Except for Morgan Stanley &
Co. Incorporated (Morgan Stanley), neither
the Company nor any Subsidiary thereof nor any of their
respective officers or directors has employed any broker or
finder or incurred any liability for any brokers fees,
commissions or finders fees in connection with the Merger
or any other transaction contemplated by this Agreement. True,
correct and complete copies of all agreements with Morgan
Stanley relating to any such fees or commissions have been
furnished to Parent prior to the date hereof.
4.8. Absence of Certain Changes or
Events. (i) Since December 31, 2009
no event has occurred or circumstance has arisen which has had
or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and
(ii) since March 31, 2010, none of the Company or any
of its Subsidiaries has taken any action that would have been
prohibited by clauses (a), (b), (c), (d), (e), (f)(i), (f)(ii),
(j), (p), (q), (t) or (w) of Section 6.2
if taken after the date of this Agreement.
4.9. Legal Proceedings.
(a) Neither the Company nor any of its Subsidiaries (or, to
the knowledge of the Company, any of the current or former
directors or executive officers of the Company or any of its
Subsidiaries) is a party to any, and there are no pending or, to
the Companys knowledge, threatened legal, administrative,
arbitral or other proceedings or actions or, to the
Companys knowledge, claims or governmental or regulatory
investigations of any material nature against such person (in
the case of any such proceeding, claim, action or investigation
relating to such director or executive officer, to the extent
related to or affecting the business of the Company or any of
its Subsidiaries) or affecting the Company or any of its
Subsidiaries. There is no judgment, settlement agreement, order,
injunction, decree or regulatory restriction (other than those
of general application that apply to banks and bank holding
companies or their Subsidiaries generally) imposed upon or
entered into by the Company, any of its Subsidiaries or the
assets of the Company or any of its Subsidiaries.
(b) Since January 1, 2007, (i) there have been no
subpoenas, written demands, inquiries or information requests
received by the Company, any of its Subsidiaries or any
affiliate of the Company or any of its Subsidiaries from any
Governmental Entity, and (ii) no Governmental Entity has
requested that the Company or any of its Subsidiaries enter into
a settlement negotiation or tolling agreement with respect to
any matter related to any such subpoena, written demand, inquiry
or information request.
4.10. Taxes.
(a) Each of the Company and its Subsidiaries has
(i) duly and timely filed (including all applicable
extensions) all material Tax Returns required to be filed by it
on or prior to the date of this Agreement (all such Tax Returns
being accurate and complete), and (ii) paid all material
Taxes whether or not shown thereon as due and owing or, where
payment is not yet due, has made adequate provision in the
financial statements of the Company (in accordance with
U.S. GAAP) for all such Taxes. The federal income Tax
Returns of the Company and its Subsidiaries have been examined
by the Internal Revenue Service for all years to and including
December 31, 2005,
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and any material liability with respect thereto has been
satisfied or any material liability with respect to deficiencies
asserted as a result of such examination is covered by reserves
that are adequate under GAAP.
(b) Neither the Company nor any of its Subsidiaries
(i) is or has ever been a member of an affiliated group
(other than a group the common parent of which is the Company)
filing a consolidated Tax Return or (ii) has any material
liability for Taxes of any person (other than the Company and
any of its Subsidiaries) arising from the application of
Treasury
Regulation Section 1.1502-6
or any analogous provision of state, local or foreign law, or as
a transferee or successor, by contract, or otherwise.
(c) None of the Company or any of its Subsidiaries is a
party to, is bound by or has any obligation under any Tax
sharing, Tax indemnity or Tax allocation agreement or similar
contract or arrangement.
(d) No closing agreement pursuant to Section 7121 of
the Code (or any similar provision of state, local or foreign
law) has been entered into by or with respect to the Company or
any of its Subsidiaries.
(e) None of the Company or any of its Subsidiaries has been
either a distributing corporation or a
controlled corporation in a distribution occurring
during the last five (5) years in which the parties to such
distribution treated the distribution as one to which
Section 355 of the Code is applicable.
(f) All material Taxes required to be withheld, collected
or deposited by or with respect to the Company and each
Subsidiary have been timely withheld, collected or deposited as
the case may be, and to the extent required, have been paid to
the relevant taxing authority. The Company and each of its
Subsidiaries have complied in all material respects with all
information reporting requirements imposed by the Code (or any
similar provision under any state, local or foreign law).
(g) Neither the Company nor any of its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or
deficiency. Neither the Company nor any of its Subsidiaries
currently is the beneficiary of any extension of time within
which to file any Tax Return.
(h) Neither the Company nor any of its Subsidiaries has
participated in a listed transaction within the
meaning of Treasury
Regulation Section 1.6011-4(b)(2)
subsequent to such transaction becoming listed.
(i) [reserved.]
(j) For purposes of this Agreement:
(i) Tax or
Taxes shall mean all federal, state,
local, foreign and other taxes, levies, imposts, assessments,
duties, customs, fees, impositions or other similar government
charges, including, but not limited to income, estimated income,
business, occupation, franchise, real property, payroll,
personal property, sales, transfer, stamp, use, escheat,
employment-related, commercial rent or withholding, net worth,
occupancy, premium, gross receipts, profits, windfall profits,
deemed profits, license, lease, severance, capital, production,
corporation, ad valorem, excise, duty, utility, environmental,
value-added, recapture, withholding, backup withholding or other
taxes, including any interest, penalties, fines and additions
(to the extent applicable) thereto; and
(ii) Tax Return shall mean
any return, report, declaration, information return or other
document (including any related or supporting information) filed
with or submitted to, or required to be filed with or submitted
to any taxing authority with respect to Taxes and any
amendments, supplements or attached schedules to any of the
foregoing.
4.11. Employees; Employee Benefit
Plans. (a) Section 4.11(a) of the
Company Disclosure Schedule contains a true and complete list of
each Plan. Plan shall mean each
employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), including
multiemployer plans within the meaning of Section 3(37) of
ERISA), stock purchase, equity-based compensation, stock option,
severance, employment, loan,
change-in-control,
pension, profit sharing, retirement, fringe benefit, vacation,
paid time off, collective bargaining, bonus, incentive, deferred
compensation and all other employee benefit plans, programs,
agreements, programs, policies or other arrangements, whether or
not subject to ERISA (including any funding mechanism therefor
now in effect or required in the future as a result of the
transactions contemplated by this Agreement or otherwise),
whether formal or informal, oral or written, legally binding or
not,
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under which any current or former employee, officer, director,
consultant or independent contractor of the Company or any of
its Subsidiaries (Company Employees) has had
or has any present or future right to benefits and which are
contributed to, sponsored by or maintained by the Company, any
of its Subsidiaries. ERISA Affiliate shall
mean any person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c),
(m), or (o) of the Code.
(b) With respect to each Plan, the Company has delivered to
Parent or made available a current, accurate and complete copy
(or, to the extent no such copy exists, an accurate description)
thereof and, to the extent applicable: (i) any related
trust, insurance or group annuity agreement or other funding
instrument; (ii) the most recent Internal Revenue Service
determination letter; (iii) any summary plan description
and other written communications by the Company or any of its
Subsidiaries to Company Employees concerning the extent of the
benefits provided under a Plan; (iv) a summary of any
proposed amendments or changes anticipated to be made to the
Plans (other than amendments or changes required by applicable
Law) at any time within the twelve months immediately following
the date hereof that could reasonably be expected to result in
an increase in benefits provided under the Plan or the expense
of maintaining the Plan; and (v) for the three most recent
years (A) the Form 5500 and attached schedules,
(B) audited financial statements and (C) actuarial
valuation reports.
(c) Except as would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company, each Plan has been established and administered in
all respects in accordance with its terms, and in all respects
in compliance with the applicable provisions of ERISA, the Code
and other applicable Laws.
(d) Each Plan which is intended to be qualified within the
meaning of Section 401(a) of the Code is so qualified and
has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the
loss of such qualification. Except as would not be reasonably
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, (i) no event has occurred
and no condition exists that would subject the Company or any of
its Subsidiaries, either directly or by reason of their
affiliation with any ERISA Affiliate, to any tax, fine, lien,
penalty or other liability imposed by ERISA, the Code or other
applicable Laws; (ii) for each Plan with respect to which a
Form 5500 has been filed, no change has occurred with
respect to the matters covered by the most recent Form since the
date thereof; (iii) no non-exempt prohibited
transaction (as such term is defined in Section 406
of ERISA and Section 4975 of the Code) has occurred with
respect to any Plan; (iv) no Plan provides post-employment
welfare (including health, medical or life insurance) benefits
and neither the Company nor any of its Subsidiaries has any
obligation to provide any such post-employment welfare benefits
now or in the future, other than as required by
Section 4980B of the Code; (v) there is no present
intention that any Plan be amended, suspended or terminated, or
otherwise modified to adversely change or increase benefits (or
the levels thereof) under any Plan at any time within the twelve
months immediately following the date hereof; (vi) neither
the Company nor any ERISA Affiliate has engaged in, or is a
successor or parent corporation to an entity that has engaged
in, a transaction described in Section 4069 or 4212(c) of
ERISA; (vii) each nonqualified deferred compensation
plan (as defined in Section 409A(d)(1) of the Code)
has been operated in good faith compliance with
Section 409A of the Code and the regulations thereunder;
and (viii) there does not now exist, nor do any
circumstances exist that would reasonably be expected result in,
any Controlled Group Liability that would be a liability of the
Company or any of its subsidiaries following the Effective Time.
No Plan provides any Company Employees with any amount of
compensation, or if such Company Employees were to be provided
compensation that is or would be subject to additional income
taxes under Section 409A of the Code. Controlled
Group Liability means any and all liabilities
(i) under Title IV of ERISA, (ii) under
Section 302 of ERISA, (iii) under Sections 412
and 4971 of the Code, (iv) as a result of a failure to
comply with the continuation coverage requirements of
Section 601 et seq. of ERISA and Section 4980B of the
Code, and (v) under corresponding or similar provisions of
foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the Plans listed in
Section 4.11(a) of the Company Disclosure Schedule.
(e) None of the Plans is a multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) and none of the
Company, its Subsidiaries or any ERISA Affiliate has at any time
sponsored or contributed to, or has or had any material
liability or obligation with respect to a multiemployer plan
within the preceding six (6) years that remains unsatisfied.
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(f) With respect to any Plan, except as would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, (i) no
actions, suits or claims (other than routine claims for benefits
in the ordinary course) are pending or, to the knowledge of the
Company, threatened, (ii) no facts or circumstances exist
that would give rise to any such actions, suits or claims and
(iii) no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the
Department of Treasury, the Internal Revenue Service or other
governmental agencies are pending or, to the knowledge of the
Company, threatened. Each Company Employee who is subject to the
limitation imposed under the U.S. Emergency Economic
Stabilization Act of 2008, as amended by the U.S. American
Recovery and Reinvestment Act of 2009 has executed a waiver of
claims against the Company and its Subsidiaries with respect to
all compensation rights as required by applicable Law to be
limited or reduced to zero for so long as such limitations are
required to be imposed.
(g) No Plan exists that could (i) result in the
payment to any present or former Company Employee of any money,
benefit or other property, (ii) accelerate the time of
payment or vesting or provide any other rights or benefits to
any present or former Company Employee or otherwise increase the
amount payable or otherwise trigger any other obligation of the
Company or any of its Subsidiaries pursuant to any Plan,
(iii) require the funding of any trust or other arrangement
for the benefit of any Company Employee or (iv) limit or
restrict the right of the Company to merge, amend or terminate
any Plan, in each case, as a result of the transactions
contemplated by this Agreement (whether alone or in connection
with any subsequent event(s), including as a result of any
termination of employment on or following the Effective Time).
(h) There is no Plan that, individually or collectively,
would give, or which has given, rise to the payment of any
amount that would not be deductible pursuant to the terms of
Section 280G of the Code in connection with the
transactions contemplated under this Agreement (whether alone or
in connection with any subsequent event(s), including as a
result of any termination of employment on or following the
Effective Time).
4.12. Compliance With Applicable
Law. (a) The Company and each of its
Subsidiaries hold, and have at all times held, all licenses,
franchises, permits and authorizations which are necessary for
the lawful conduct of their respective businesses and ownership
of their respective properties, rights and assets under and
pursuant to applicable Law (and have paid all fees and
assessments due and payable in connection therewith), except
where the failure to hold such license, franchise, permit or
authorization or to pay such fees or assessments would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and, to the
knowledge of the Company, no suspension or cancellation of any
such necessary license, franchise, permit or authorization is
threatened. The Company and each of its Subsidiaries have
complied in all material respects with, and are not in default
or violation in any material respect of, (i) any applicable
Law, including all Laws related to data protection or privacy,
the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Fair Credit Reporting Act, the Truth in
Lending Act, the Home Mortgage Disclosure Act, the Fair Debt
Collection Practices Act, the Electronic Fund Transfer Act
and any other Law relating to discriminatory lending, financing
or leasing practices, money laundering prevention,
Sections 23A and 23B of the Federal Reserve Act, the
Sarbanes-Oxley Act and all applicable Laws relating to
broker-dealers, investment advisors and insurance brokers, and
(ii) any posted or internal privacy policies relating to
data protection or privacy, including without limitation, the
protection of personal information, and neither the Company nor
any of its Subsidiaries knows of, or has received since
January 1, 2007, notice of, any material defaults or
material violations of any applicable Law.
(b) The Company and each of its Subsidiaries has properly
administered all accounts for which it acts as a fiduciary,
including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the
governing documents and applicable Law, except where the failure
to so administer such accounts would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on the Company. None of the Company, any of its
Subsidiaries, or any director, officer or employee of the
Company or of any of its Subsidiaries, has committed any breach
of trust or fiduciary duty with respect to any such fiduciary
account that would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company,
and, except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company, the accountings for each such fiduciary account are
true and correct and accurately reflect the assets of such
fiduciary account.
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4.13. Certain
Contracts. (a) Neither the Company nor
any of its Subsidiaries is a party to or is bound by any
contract, arrangement, commitment or understanding (whether
written or oral) (i) that is a material
contract (as defined in Item 601(b)(10) of
Regulation S-K
of the SEC or required to be disclosed by the Company on a
Current Report on
Form 8-K)
to be performed in whole or in part after the date of this
Agreement that has not been filed or incorporated by reference
in the Company Reports filed prior to the date hereof, (ii)
(A) that contains a non-compete or client or customer
non-solicit requirement or any other provision that materially
restricts the conduct of, or the manner of conducting, any line
of business of the Company or any of its affiliates,
(B) that obligates the Company or any of its affiliates to
conduct business with any third party on an exclusive or
preferential basis, (C) that limits or restricts the
Companys or its affiliates rights to use the name
The South Financial Group, Inc., Carolina First Bank, Mercantile
Bank, Bank CaroLine or any variant thereof, or (D) that
requires referrals of business or requires the Company or any of
its affiliates to make available investment opportunities to any
person on a priority or exclusive basis, (iii) which
relates to the incurrence of indebtedness (other than deposit
liabilities and advances and loans from the FHLB of Atlanta
incurred in the ordinary course of business consistent with past
practice) by the Company or any of its Subsidiaries, including
any sale and leaseback transactions, capitalized leases and
other similar financing transactions, (iv) which grants any
right of first refusal, right of first offer or similar right
with respect to any material assets, rights or properties of the
Company or any of its Subsidiaries, (v) which limits the
payment of dividends by the Company or any of its Subsidiaries,
(vi) which relates to a joint venture, partnership, limited
liability company agreement or other similar agreement or
arrangement, or to the formation, creation or operation,
management or control of any partnership or joint venture with
any third parties, (vii) which relates to an acquisition,
divestiture, merger or similar transaction and which contains
representations, covenants, indemnities or other obligations
(including indemnification, earn-out or other
contingent obligations) that are still in effect,
(viii) which provides for material payments to be made by
the Company or any of its Subsidiaries upon a change in control
thereof, (ix) which is a consulting agreement or data
processing, software programming or licensing contract involving
the payment of more than $250,000 per annum (other than any such
contracts which are terminable by the Company or its applicable
Subsidiary on 60 days or less notice without any required
payment or other conditions (other than the condition of
notice)), (x) which is not of the type described in
clauses (i) through (ix) above and which involved
payments by, or to, the Company or any of its Subsidiaries in
fiscal year ended December 31, 2009, or which could
reasonably be expected to involve such payments during fiscal
year ending December 31, 2010, of more than $250,000 (other
than pursuant to Loans (as defined in
Section 4.22(a)) originated or purchased by the
Company and its Subsidiaries in the ordinary course of business
consistent with past practice), or (xi) which relates to
material Proprietary Rights (as defined in
Section 4.21) (including permitting the use of the
name The South Financial Group, Inc., Carolina First Bank, Bank
CaroLine or Mercantile Bank or any variant thereof). Each
contract, arrangement, commitment or understanding of the type
described in this Section 4.13(a), whether or not
publicly disclosed in the Company Reports or set forth in
Section 4.13(a) of the Company Disclosure Schedule,
is referred to herein as a Company Contract.
The Company has made available to Parent true, correct and
complete copies of each Company Contract.
(b) (i) Each Company Contract is valid and binding on
the Company or its applicable Subsidiary and in full force and
effect, and, to the knowledge of the Company, is valid and
binding on the other parties thereto, (ii) the Company and
each of its Subsidiaries and, to the knowledge of the Company,
each of the other parties thereto, has performed all obligations
required to be performed by it to date under each Company
Contract and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would
constitute a breach or default on the part of the Company or any
of its Subsidiaries or, to the knowledge of the Company, any
other party thereto, under any such Company Contract.
(c) Section 4.13(c) of the Company Disclosure
Schedule contains a schedule showing the present value of the
monetary amounts payable as of the date specified in such
schedule, whether individually or in the aggregate (including
good faith estimates of all amounts not subject to precise
quantification as of the date of this Agreement, such as excise
taxes or tax indemnification payments in respect of income or
excise taxes), under any employment,
change-in-control,
severance or similar contract with any present or former
employee, director or consultant of the Company or any of its
Subsidiaries and identifying the types and estimated amounts of
the in-kind benefits due under any Plans or Company Contract
(other than a tax-qualified plan) for each such person,
specifying the assumptions in such schedule.
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4.14. Agreements with Regulatory
Agencies. Neither the Company nor any of its
Subsidiaries is subject to any
cease-and-desist
or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar
undertaking to, or is a recipient of any extraordinary
supervisory letter from, or is subject to any order or directive
by, or has adopted any board resolutions at the request of
(each, a Company Regulatory Agreement) any
Governmental Entity that restricts, or by its terms will in the
future restrict, the conduct of its business in any material
respect or that in any material manner relates to its capital
adequacy, its credit or risk management policies, its dividend
policy, its management, its business or its operations, other
than those of general application that apply to bank holding
companies or their Subsidiaries generally.
4.15. Derivative Instruments and
Transactions. Except as would not reasonably
be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, all Derivative
Transactions (as defined below) whether entered into for the
account of the Company or any of its Subsidiaries or for the
account of a customer of the Company or any of its Subsidiaries,
(i) were entered into in the ordinary course of business
consistent with past practice and in accordance with prudent
banking practice and applicable rules, regulations and policies
of all applicable Governmental Entities and with counterparties
believed to be financially responsible at the time,
(ii) are legal, valid and binding obligations of the
Company or one of its Subsidiaries and, to the knowledge of the
Company, each of the counterparties thereto and (iii) are
in full force and effect and enforceable in accordance with
their terms. The Company or its Subsidiaries and, to the
knowledge of the Company, the counterparties to all such
Derivative Transactions, have duly performed, in all material
respects, their obligations thereunder to the extent that such
obligations to perform have accrued. To the knowledge of the
Company, there are no material breaches, violations or defaults
or allegations or assertions of such by any party pursuant to
any such Derivative Transactions. The financial position of the
Company and its Subsidiaries on a consolidated basis under or
with respect to each such Derivative Transaction has been
reflected in the books and records of the Company and such
Subsidiaries in accordance with U.S. GAAP consistently
applied. For purposes of this Agreement, the term
Derivative Transaction means any swap
transaction, option, warrant, forward purchase or sale
transaction, futures transaction, cap transaction, floor
transaction or collar transaction relating to one or more
currencies, commodities, bonds, equity securities, loans,
interest rates, catastrophe events, weather-related events,
credit-related events or conditions or any indexes, or any other
similar transaction (including any option with respect to any of
these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar
instruments or any debt or equity instruments evidencing or
embedding any such types of transactions, and any related credit
support, collateral or other similar arrangements related to
such transactions.
4.16. Company
Information. The information relating to the
Company and its Subsidiaries that is provided by the Company or
its representatives for inclusion in the Proxy
Statement/Prospectus, the
Form F-4,
any filing pursuant to Rule 165 or Rule 425 under the
Securities Act or pursuant to
Rule 14a-6
or
Rule 14a-12
under the Exchange Act, or in any other document filed with any
other Governmental Entity in connection with the transactions
contemplated by this Agreement, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The
portions of the Proxy Statement/Prospectus relating to the
Company and its Subsidiaries (except for such portions thereof
as relate only to Parent or any of its Subsidiaries) will comply
in all material respects with the provisions of the Securities
Act and Exchange Act and the rules and regulations thereunder.
4.17. Title to
Property. (a) The Company and its
Subsidiaries have good, valid and marketable title to all real
property owned by them as reflected in the most recent balance
sheet included in the Company Reports, except for properties
that have been disposed of in the ordinary course of business
since the date of such balance sheet, free and clear of all
Liens, except for (x) Liens for current Taxes not yet due
and payable and other standard exceptions commonly found in
title policies in the jurisdiction where such real property is
located, (y) such encumbrances and imperfections of title,
if any, as do not materially detract from the value of the
properties and do not materially interfere with the present or
proposed use of such properties or otherwise materially impair
such operations. All real property and fixtures used in or
relevant to the business, operations or financial condition of
the Company and its Subsidiaries are in good condition and
repair except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company.
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(b) The Company and its Subsidiaries have good, valid and
marketable title to all tangible personal property owned by them
as reflected in the most recent balance sheet included in the
Company Reports, except for assets that have been disposed of in
the ordinary course of business since the date of such balance
sheet, free and clear of all Liens except (x) Liens for
current Taxes not yet due and payable and (y) other such
Liens as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company.
(c) All leases of real property and all other leases
material to the Company and its Subsidiaries under which the
Company or a Subsidiary, as lessee, leases personal property are
valid and binding in accordance with their respective terms, and
there is not under any such lease any material existing default
by the Company or such Subsidiary or, to the knowledge of the
Company, any other party thereto, or any event which with notice
or lapse of time or both would constitute such a default, and,
in the case of leased premises, the Company or such Subsidiary
quietly enjoys the use of the premises provided for in such
lease, except in any such case as would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Section 4.17(c) of
the Company Disclosure Schedule sets forth a true, correct and
complete list of all material leases of real property under
which the Company or any of its Subsidiaries leases any real
property or interests in real property, identifying the owner
and address thereof. The Company has made available to Parent
true, correct and complete copies of each such material lease of
real property.
4.18. Insurance. The Company
and its Subsidiaries are insured with reputable insurers against
such risks and in such amounts as the management of the Company
reasonably has determined to be prudent and consistent with
industry practice. Section 4.18 of the Company
Disclosure Schedule contains a true, correct and complete list
and a brief description (including the name of the insurer,
agent, coverage and the expiration date) of all material
insurance policies in force on the date hereof with respect to
the business and assets of the Company and its Subsidiaries
(other than insurance policies under which the Company or any
Subsidiary thereof is named as a loss payee, insured or
additional insured as a result of its position as a secured
lender on specific loans and mortgage insurance policies on
specific loans or pools of loans). The Company and its
Subsidiaries are in material compliance with their insurance
policies and are not in default under any of the material terms
thereof. Each such policy is outstanding and in full force and
effect and, except for policies insuring against potential
liabilities of officers, directors and employees of the Company
and its Subsidiaries, the Company or the relevant Subsidiary
thereof is the sole beneficiary of such policies. All premiums
and other payments due under any such policy have been paid, and
all material claims thereunder have been filed in due and timely
fashion.
4.19. Environmental
Liability. Except as set forth in
Section 4.19 of the Company Disclosure Schedule,
there are no legal, administrative, arbitral or other
proceedings, claims, actions, or to the Companys
knowledge, private environmental investigations or remediation
activities or governmental investigations of any nature seeking
to impose, or that reasonably could be expected to result in the
imposition, on the Company or any of its Subsidiaries of any
material liability or obligation arising under common law
standards of conduct relating to environmental protection, human
health or safety as it relates to Hazardous Substance handling
or exposure, or under any local, state or federal Law relating
to the protection of the environment or human health or safety
as it relates to Hazardous Substance handling or exposure,
including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (collectively, the
Environmental Laws), pending or, to the
knowledge of the Company, threatened against the Company or any
of its Subsidiaries. To the knowledge of the Company, there are
no past, present, or reasonably anticipated future facts,
occurrences, circumstances or legal requirements that could
reasonably be expected to give rise to any such proceeding,
claim, action or governmental investigation that would impose
any such liability or obligation. During or, to the knowledge of
the Company, prior to the period of (i) its or any of its
Subsidiaries ownership or operation of any of their
respective current or to the Companys knowledge former
properties, (ii) its or any of its Subsidiaries
participation in the management of any property, or
(iii) its or any of its Subsidiaries holding of a
security interest or other interest in any property, there were
no releases or threatened releases of hazardous, toxic,
radioactive or dangerous materials or other materials regulated
under Environmental Laws (Hazardous
Substances) in, on, under or affecting any such
property which would reasonably be expected to result in any
claim against, or liability of, the Company or any Subsidiary
that would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company. Neither
the Company nor any of its Subsidiaries is subject to any
agreement, order, judgment, decree, letter or memorandum
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by or with any court, governmental authority, regulatory agency
or third party imposing any material liability or obligation
pursuant to or under any Environmental Law.
4.20. Opinion Of Financial
Advisor. The Company has received the opinion
of Morgan Stanley to the effect that, as of the date of such
opinion, and based upon and subject to the factors and
assumptions set forth therein, the Merger Consideration to be
received by holders of Company Common Stock is fair from a
financial point of view to such holders.
4.21. Intellectual
Property. (i) The Company and each of
its Subsidiaries owns or otherwise has the right to use, all
intellectual property rights, including all trademarks, trade
dress, trade names, service marks, domain names, patents,
inventions, trade secrets, know-how, works of authorship and
copyrights therein, that are used in and material to the conduct
of their existing businesses and all rights relating to the
plans, design and specifications of its branch facilities
(Proprietary Rights) free and clear of all
Liens and any claims of ownership by current or former
employees, contractors, designers or others and
(ii) neither the Company nor any of its Subsidiaries is
bound by or a party to any licenses or agreements of any kind
with respect to any Proprietary Rights which it claims to own or
possess, license or otherwise have the right to use. Neither the
Company nor any of its Subsidiaries, to the Companys
knowledge, is infringing, diluting, misappropriating or
violating, nor has the Company or any or its Subsidiaries
received any written communications alleging that any of them
has infringed, diluted, misappropriated or violated any of the
Proprietary Rights of any other person. To the Companys
knowledge, no other person is infringing, diluting,
misappropriating or violating, nor has the Company or any or its
Subsidiaries sent any written communications within the past two
(2) years alleging that any person has infringed, diluted,
misappropriated or violated, any of the Proprietary Rights owned
by the Company and its Subsidiaries. The Company and each of its
Subsidiaries take all reasonable actions to protect and maintain
all (a) material Proprietary Rights and (b) the
security and integrity of their software, databases, networks,
systems, equipment and hardware and protect same against
unauthorized use, modification, or access thereto, or the
introduction of any viruses or other unauthorized or damaging or
corrupting elements. The Companys and its
Subsidiaries computers, computer software, firmware,
middleware, servers, workstations, routers, hubs, switches, data
communication lines and all other information technology
equipment and all associated documents (the IT
Assets) operate and perform in all material respects
in accordance with their documentation and functional
specifications and otherwise as required by the Company in
connection with its business, and have not materially
malfunctioned or failed within the past three (3) years. To
the Companys knowledge, no person has gained unauthorized
access to the IT Assets. The Company has implemented reasonable
backup and disaster recovery technology consistent with industry
practices.
4.22. Loan Matters. (a) (i)
Section 4.22(a) of the Company Disclosure Schedule
sets forth a list of all loans and other extensions of credit
(including commitments to extend credit)
(Loans) as of the date hereof by the Company
and its Subsidiaries to any directors, executive officers and
principal shareholders (as such terms are defined in
Regulation O of the Federal Reserve Board (12 C.F.R.
Part 215)) of the Company or any of its Subsidiaries,
(ii) there are no employee, officer, director or other
affiliate Loans on which the borrower is paying a rate other
than that reflected in the note or other relevant credit or
security agreement or on which the borrower is paying a rate
which was below market at the time the Loan was originated and
(iii) all such Loans are and were originated in compliance
in all material respects with all applicable Laws.
(b) Each outstanding Loan (including Loans held for resale
to investors) was solicited and originated, and is and has been
administered and, where applicable, serviced, and the relevant
Loan files are being maintained, in all material respects in
accordance with the relevant notes or other credit or security
documents, the Companys written underwriting standards
(and, in the case of Loans held for resale to investors, the
underwriting standards, if any, of the applicable investors) and
with all applicable requirements of Laws, except for such
exceptions as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company.
(c) None of the agreements pursuant to which the Company or
any of its Subsidiaries has sold Loans or pools of Loans or
participations in Loans or pools of Loans contains any
obligation to repurchase such Loans or interests therein solely
on account of a payment default by the obligor on any such Loan.
(d) Section 4.22(d) of the Company Disclosure
Schedule identifies (A) each Loan that as of March 31,
2010 had an outstanding balance
and/or
unfunded commitment of $1,000,000.00 or more and that as of such
date (i) was contractually past due ninety (90) days
or more in the payment of principal
and/or
interest, (ii) was on non-accrual
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status, (iii) was classified as substandard,
doubtful, loss, classified,
criticized, credit risk assets,
concerned loans, watch list or
special mention (or words of similar import) by the
Company, any of its Subsidiaries or the rules of any applicable
regulatory authority, (iv) where the interest rate terms
had been reduced
and/or the
maturity dates had been extended subsequent to the agreement
under which the Loan was originally created due to concerns
regarding the borrowers ability to pay in accordance with
such initial terms, (v) where a specific reserve allocation
existed in connection therewith, or (vi) which was required
to be accounted for as a troubled debt restructuring in
accordance with Statement of Financial Accounting Standards
No. 15 and (B) each asset of the Company or any of its
Subsidiaries that as of March 31, 2010 had a book value of
over $1,000,000.00 and that was classified as other real estate
owned or as an asset to satisfy Loans, including repossessed
equipment, and the book value thereof as of such date. For each
Loan identified in response to clause (A) above,
Section 4.22(d) of the Company Disclosure Schedule
sets forth the outstanding balance, including accrued and unpaid
interest, on each such Loan and the identity of the borrower
thereunder as of March 31, 2010.
(e) Each outstanding Loan (i) is evidenced by notes,
agreements or other evidences of indebtedness that are true,
genuine and what they purport to be, (ii) to the extent
secured, has been secured by valid Liens which have been
perfected and (iii) to the Companys knowledge, is a
legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of
general applicability relating to or affecting creditors
rights and to general equity principles. The notes or other
credit or security documents with respect to each such
outstanding Loan were in compliance in all material respects
with all applicable Laws at the time of origination or purchase
by the Company or its Subsidiaries and are complete and correct
in all material respects.
4.23. Allowance for Loan
Losses. The Companys allowance for loan
losses as of March 31, 2010 was in compliance with the
Companys methodology for determining the adequacy of its
allowance for loan losses as well as the standards established
by applicable Governmental Entities and the Financial Accounting
Standards Board in all material respects.
4.24. Transactions with
Affiliates. There are no agreements,
contracts, plans, arrangements or other transactions between the
Company or any of its Subsidiaries, on the one hand, and any
(i) officer or director of the Company or any of its
Subsidiaries, (ii) record or beneficial owner of five
percent (5%) or more of the voting securities of the Company,
(iii) affiliate or family member of any such officer,
director or record or beneficial owner or (iv) any other
affiliate of the Company, on the other hand, except those of a
type available to employees of the Company generally. As used in
this Agreement, affiliate means (unless
otherwise specified), with respect to any person, any other
person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common
control with, such specified person and
control, with respect to the relationship
between or among two or more persons, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the affairs or management of a person, whether
through the ownership of voting securities, as trustee or
executor, by contract or any other means.
4.25. Community Reinvestment Act
Compliance. The Bank Subsidiary is in
compliance in all material respects with the applicable
provisions of the Community Reinvestment Act of 1977, as
amended, and the regulations promulgated thereunder
(collectively, CRA) and has received a CRA
rating of satisfactory in its most recently
completed exam, and the Company has no knowledge of the
existence of any fact or circumstance or set of facts or
circumstances which could reasonably be expected to result in
the Bank Subsidiary failing to be in compliance in all material
respects with such provisions or having its current rating
lowered.
4.26. Labor Matters. Neither
the Company nor any of its Subsidiaries is a party to or is
bound by or is currently negotiating any collective bargaining
agreement, contract or other agreement or understanding with a
labor union or labor organization. Neither the Company nor any
of its Subsidiaries is the subject of a proceeding asserting
that it or any such Subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations
Act) or seeking to compel the Company or any such Subsidiary to
bargain with any labor organization as to wages or conditions of
employment, nor, to the Companys knowledge, is any such
proceeding threatened, and there is no strike or other material
labor dispute or disputes involving it or any of its
Subsidiaries pending, or to the Companys knowledge,
threatened. To the knowledge of the Company, there is no
activity involving its or any of its Subsidiaries
employees involving an attempt to certify a collective
bargaining unit or
A-22
other organizational activity. No material action, suit,
arbitration, proceeding or, to the Companys knowledge,
claim or investigation by or before any court, governmental
agency, administrative agency or commission brought by or on
behalf of any employee, prospective employee, former employee,
retiree, labor organization or other representative of the
Company or any of its Subsidiaries employees is pending
or, to the best knowledge of the Company, threatened. Each
individual who is treated by the Company or its Subsidiaries as
an exempt employee under any federal or state law, or as an
independent contractor, is properly so treated under applicable
law. As of the date hereof, neither the Company nor any of its
Subsidiaries have closed any plant or facility or effectuated
any layoffs of employees, nor has any such action or program
been announced for the future, that would reasonably be expected
to give rise to any material liability under the Worker
Adjustment and Retraining Notification Act of 1988, as amended,
or any similar state or local law or regulation.
ARTICLE V
REPRESENTATIONS
AND WARRANTIES OF PARENT
Except (i) as disclosed in any publicly available report,
schedule, form or other document filed with, or furnished to,
the SEC by Parent prior to the date of this Agreement and on or
after November 1, 2009 (excluding, in each case, any
disclosures set forth in any risk factor section and in any
section relating to forward-looking statements or any other
disclosures included in such filings to the extent that they are
cautionary, predictive or forward-looking in nature) or
(ii) as disclosed in the disclosure schedule (the
Parent Disclosure Schedule) delivered
by Parent to the Company prior to the execution of this
Agreement (which schedule sets forth, among other things, items
the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a
provision hereof or as an exception to one or more
representations or warranties contained in this
Article V, or to one or more of Parents
covenants contained herein, provided, however,
that disclosure in any section of such schedule shall apply only
to the indicated Section of this Agreement except to the extent
that it is reasonably apparent on the face of such disclosure
that it is relevant to another Section of this Agreement),
Parent and Merger Sub hereby represent and warrant to the
Company as follows:
5.1. Corporate
Organization. (a) Parent is duly
organized and validly existing as a bank under the laws of
Canada. Parent has all requisite corporate power and authority
to own, lease or operate all of its properties, rights and
assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties, rights and
assets owned, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so
licensed or qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Parent. The charter of Parent is the Bank Act (Canada). The copy
of the bylaws of Parent, which has been made available to the
Company, is a true, complete and correct copy of such document
as in full force and effect as of the date of this Agreement.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of
South Carolina. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has not owned
any properties, rights or assets other than in connection with
the transactions contemplated by this Agreement, and has engaged
in no other business other than in connection with the
transactions contemplated by this Agreement. Merger Sub is a
wholly owned Subsidiary of Parent.
5.2. Capitalization. The
authorized capital stock of Parent consists of an unlimited
number of Parent Common Shares and an unlimited number of
Preferred Shares, no par value per share (the Parent
Preferred Shares). As of May 13, 2010, there were
869,317,342 Parent Common Shares outstanding and 157,800,000
Parent Preferred Shares outstanding and no Parent Common Shares
or Parent Preferred Shares were reserved for issuance. Since
May 13, 2010 and through the date of this Agreement, and
other than in connection with the transactions contemplated by
this Agreement, Parent has not issued or authorized the issuance
of any Parent Common Shares or Parent Preferred Shares, or any
securities convertible into or exchangeable or exercisable for
shares of Parent Common Shares or Parent Preferred Shares,
except for any such issuances of Parent Common Shares or Parent
Preferred Shares as a result of exercise of Parent Options
outstanding as of May 13, 2010. All of the issued and
outstanding Parent Common Shares have been duly authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. The Parent Common
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Shares to be issued pursuant to the Merger have been duly
authorized and, at the Effective Time, all such shares will be
validly issued, fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership
thereof.
5.3. Authority; No
Violation. (a) Parent and Merger Sub
have full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation by Parent and Merger Sub of the transactions
contemplated hereby have been duly and validly approved by all
necessary corporate action of Parent and Merger Sub, and no
other corporate and no shareholder proceedings on the part of
Parent and Merger Sub are necessary to approve this Agreement or
to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and (assuming the due authorization,
execution and delivery of this Agreement by the Company)
constitutes a valid and binding obligation of Parent and Merger
Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws
affecting creditors rights and remedies generally.
(b) Neither the execution and delivery of this Agreement
nor the consummation by Parent and Merger Sub of the
transactions contemplated hereby, nor compliance by Parent and
Merger Sub with any of the terms or provisions of this
Agreement, will (i) violate any provision of the charter,
bylaws or similar governing documents of Parent and Merger Sub
or any of the similar governing documents of any of their
respective Subsidiaries or (ii) assuming that the consents,
approvals and waiting periods referred to in
Section 5.4 are duly obtained or satisfied,
(x) violate any Law applicable to Parent or any of its
Subsidiaries or any of their respective properties, rights or
assets, or (y) violate, conflict with, result in a breach
of any provision of or the loss of any benefit under, or require
redemption or repurchase or otherwise require the purchase or
sale of any securities, constitute a default under, result in
the termination of or a right of termination, modification or
cancellation under, accelerate the performance required by, or
result in the creation of any Lien (or have any of such results
or effects upon notice or lapse of time, or both) upon any of
the respective properties, rights or assets of Parent or Merger
Sub or any of their respective Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, contract,
permit, concession, franchise or other instrument or obligation
to which Parent or Merger Sub or any of their respective
Subsidiaries is a party, or by which they or any of their
respective properties, rights, assets or business activities may
be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches, defaults or
other events which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Parent.
5.4. Consents and
Approvals. Except for (i) the filing of
any required applications and notices, as applicable, with the
Federal Reserve Board under the BHC Act, the Board of Financial
Institutions of the State of South Carolina, the Superintendent
of Financial Institutions (Canada) under the Bank Act (Canada)
and with any other state banking, insurance or other regulatory
authorities set forth in Section 5.4 of the Parent
Disclosure Schedule and the approval or notice of non-objection
of such applications and notices, (ii) approval of
(A) the listing on the New York Stock Exchange and the
Toronto Stock Exchange of the Parent Common Shares to be issued
in the Merger and to be reserved for issuance upon exercise of
the Parent Options issued in substitution for Company Options
pursuant to Section 2.4, (iii) the filing with
the SEC of the Proxy Statement/Prospectus and the filing and
declaration of effectiveness of the registration statement on
Form F-4
in which the Proxy Statement/Prospectus will be included as a
prospectus and any filings or approvals under applicable state
securities Laws, (iv) the filing of the Articles of Merger
with the Secretary of State of the State of South Carolina
pursuant to the SCBCA or other applicable Law and such other
Governmental Entities as required by the SCBCA or other
applicable Law, (v) the approval of this Agreement by the
shareholders of the Company, (vi) the consents and
approvals set forth in Section 5.4 of the Parent
Disclosure Schedule, (vii) the consents, authorizations,
approvals, filings or exemptions in connection with the
applicable provisions of federal, state or provincial securities
Laws or the rules or regulations of any applicable
self-regulatory organization, in any such case relating to the
regulation of broker-dealers, investment companies and
investment advisors, (viii) the consents, authorizations,
approvals, filings or exemptions in connection with the
applicable provisions of consumer finance, mortgage banking,
insurance and other similar Laws and (ix) the consents,
authorizations, approvals, filings and registrations of third
parties which are not Governmental Entities, the failure of
which to obtain or make would not be reasonably expected to
have,
A-24
individually or in the aggregate, a Material Adverse Effect on
Parent, no consents or approvals of, or filings or registrations
with, any Governmental Entity or of or with any other third
party by and on behalf of Parent or Merger Sub are necessary in
connection with (A) the execution and delivery by Parent
and Merger Sub of this Agreement and (B) the consummation
by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby. As of the date hereof, Parent
is not aware of any reason why the necessary regulatory
approvals and consents will not be received on a timely basis
and without the imposition of a condition or restriction of the
type referred to in Section 8.2(c) in order to
permit consummation of the Merger.
5.5. SEC Documents; Other Reports; Internal
Controls. (a) Parent has filed all
required reports, forms, schedules, registration statements and
other documents with the SEC and the Canadian securities
regulatory authorities since December 31, 2007 (the
Parent Reports) and has paid all fees and
assessments due and payable in connection therewith. As of their
respective dates of filing with the SEC or the applicable
Canadian securities regulatory authority (or, if amended or
superseded by a subsequent filing prior to the date hereof, as
of the date of such subsequent filing), the Parent Reports
complied in all material respects with the requirements of the
Securities Act, the Exchange Act or the applicable Canadian
securities Laws, as the case may be, and the rules and
regulations of the SEC or the applicable Canadian securities
regulatory authority, thereunder applicable to such Parent
Reports, and none of the Parent Reports when filed with the SEC
or the applicable Canadian securities regulatory authority; and
if amended prior to the date hereof, as of the date of such
amendment, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. There
are no material outstanding comments from or unresolved issues
raised by the SEC or any Canadian securities regulatory
authority, as applicable, with respect to any of the Parent
Reports. None of Parents Subsidiaries is required to file
periodic reports with the SEC pursuant to Section 13 or
15(d) of the Exchange Act.
(b) Except as would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on
Parent, Parent and each of its Subsidiaries have timely filed
all reports, forms, schedules, registrations, statements and
other documents, together with any amendments required to be
made with respect thereto, that they were required to file since
October 31, 2007 with any Governmental Entity (other than
the SEC and the Canadian securities regulatory authorities) and
have paid all fees and assessments due and payable in connection
therewith.
(c) Parent has disclosed, based on its most recent
evaluation prior to the date hereof, to Parents auditors
and the audit committee of Parents board of directors
(i) any significant deficiencies and material weaknesses in
the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect in any
material respect Parents ability to record, process,
summarize and report financial information and (ii) any
fraud, whether or not material, that involves management or
other employees who have a significant role in Parents
internal controls over financial reporting.
(d) The records, systems, controls, data and information of
Parent and its Subsidiaries are recorded, stored, maintained and
operated under means (including any electronic, mechanical or
photographic process, whether computerized or not) that are
under the exclusive ownership and direct control of Parent or
its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to
have a material adverse effect on the system of internal
accounting controls described in the following sentence. Parent
has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
Canadian GAAP.
(e) Parent has designed and implemented disclosure controls
and procedures (within the meaning of
Rules 13a-15(e)
and
15d-15(e) of
the Exchange Act and the applicable Canadian securities Laws) to
ensure that material information relating to Parent and its
Subsidiaries is made known to the management of Parent by others
within those entities as appropriate to allow timely decisions
regarding required disclosure and to make the certifications
required by the Exchange Act and the applicable Canadian
securities Laws with respect to the Parent Reports.
5.6. Financial Statements; Undisclosed
Liabilities. (a) The financial
statements of Parent (including any related notes and schedules
thereto) included in the Parent Reports complied as to form, as
of their respective dates of filing with the SEC or the
applicable Canadian securities regulatory authority (or, if
amended or superseded by a
A-25
subsequent filing prior to the date hereof, as of the date of
such subsequent filing), in all material respects, with all
applicable accounting requirements and with the published rules
and regulations of the SEC or the applicable Canadian securities
regulatory authority with respect thereto (except, in the case
of unaudited statements, as permitted by the rules of the
applicable Canadian regulatory authorities), have been prepared
in accordance with Canadian GAAP applied on a consistent basis
during the periods involved (except as may be disclosed
therein), and fairly present, in all material respects, the
consolidated financial position of Parent and its Subsidiaries
and the consolidated results of operations, changes in
shareholders equity and cash flows of such companies as of
the dates and for the periods shown (subject, in the case of
unaudited statements, to normal year-end audit adjustments, none
of which is expected to be material, and to any other
adjustments described therein, including the notes thereto). The
books and records of Parent and its Subsidiaries have been, and
are being, maintained in all material respects in accordance
with Canadian GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
(b) Except for (i) those liabilities that are fully
reflected or reserved for in the consolidated financial
statements of Parent included in its Quarterly Report to
Shareholders filed on
Form 6-K
for the quarter ended January 31, 2010, as filed with the
SEC or otherwise disclosed in the Parent Reports filed
subsequent to the date of the filing of such quarterly financial
statements and prior to the date hereof, (ii) this
Agreement and the Related Agreements or (iii) liabilities
incurred since January 31, 2010 in the ordinary course of
business consistent with past practice, neither Parent nor any
of its Subsidiaries has incurred any liability of any nature
whatsoever (whether absolute, accrued or contingent or otherwise
and whether due or to become due) that, either alone or when
combined with all other liabilities of a type not described in
clause (i), (ii) or (iii), has had, or would be reasonably
expected to have, a Material Adverse Effect on Parent.
5.7. Brokers
Fees. Except for the persons set forth in
Section 5.7 of the Parent Disclosure Schedule, whose
fees and expenses shall be paid by Parent, neither Parent nor
any Subsidiary thereof nor any of their respective officers or
directors has employed any broker or finder or incurred any
liability for any brokers fees, commissions or
finders fees in connection with the Merger or any other
transaction contemplated by this Agreement.
5.8. Absence of Certain Changes or
Events. Since October 31, 2009, no event
has occurred or circumstance has arisen which has had or would
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
5.9. Legal
Proceedings. (a) Neither Parent nor any
of its Subsidiaries is a party to any, and there are no pending
or, to the best of Parents knowledge, threatened legal,
administrative, arbitral or other proceedings, actions, or,
claims or governmental or regulatory investigations of any
nature against or affecting Parent or any of its Subsidiaries or
challenging the validity or propriety of the transactions
contemplated by this Agreement as to which there is a reasonable
possibility of an adverse determination and which, if adversely
determined, would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent.
(b) There is no injunction, order, award, judgment,
settlement, decree, or regulatory restriction specifically
imposed upon Parent, any of its Subsidiaries or the assets of
Parent or any of its Subsidiaries which would reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
5.10. Board Approval; No Shareholder Vote
Required. (a) The board of directors of
Parent has duly approved this Agreement and the transactions
contemplated hereby and thereby. The board of directors of
Merger Sub has duly approved this Agreement, the Merger and the
other transactions contemplated hereby, declared it advisable
for Merger Sub to enter into this Agreement and this Agreement
has been approved by the sole shareholder of Merger Sub.
(b) No vote of the shareholders of Parent is necessary to
approve and adopt this Agreement or the transactions
contemplated hereby or thereby.
5.11. Compliance with Applicable
Law. Parent and each of its Subsidiaries
hold, and have at all times held, all licenses, franchises,
permits and authorizations which are necessary for the lawful
conduct of their respective businesses and ownership of their
respective properties, rights and assets under and pursuant to
each, and have complied with and are not in default or violation
of any, applicable Law relating to Parent or any of its
Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance,
default or
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violation would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent, and
neither Parent nor any of its Subsidiaries knows of, or has
received since January 1, 2007 notice of, any defaults or
violations of applicable Law which would reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
5.12. Agreements With Regulatory
Agencies. Except as would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent, neither Parent nor any of its
Subsidiaries is subject to any
cease-and-desist
or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar
undertaking to, or is a recipient of any extraordinary
supervisory letter from, or is subject to any order or directive
by, or has adopted any board resolutions at the request of
(each, a Parent Regulatory Agreement), any
Governmental Entity that restricts, or by its terms will in the
future restrict, the conduct of its business in any material
respect or that in any material manner relates to its capital
adequacy, its credit or risk management policies, its dividend
policy, its management, its business or its operations.
5.13. Parent
Information. The information relating to
Parent and its Subsidiaries to be provided by Parent for
inclusion in the Proxy Statement/Prospectus, the
Form F-4,
any filing pursuant to Rule 165 or Rule 425 under the
Securities Act or pursuant to
Rule 14a-6
or
Rule 14a-12
under the Exchange Act, or in any other document filed with any
other Governmental Entity in connection herewith, will not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in
light of the circumstances in which they are made, not
misleading. The Proxy Statement/Prospectus (except for such
portions thereof to the extent relating to the Company or any of
its Subsidiaries) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules
and regulations promulgated thereunder. The
Form F-4
(except for such portions thereof to the extent relating to the
Company or any of its Subsidiaries) will comply as to form in
all material respects with the provisions of the Securities Act
and the rules and regulations promulgated thereunder.
ARTICLE VI
COVENANTS
RELATING TO CONDUCT OF BUSINESS
6.1. Conduct of Business Prior to the Effective
Time. Except as otherwise expressly
contemplated or permitted by this Agreement or with the prior
written consent of Parent (which consent shall not be
unreasonably withheld), during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall
cause each of its Subsidiaries to, (i) conduct its business
only in the usual, regular and ordinary course consistent with
past practice (provided, that no action by the Company or
its Subsidiaries with respect to matters specifically addressed
by any provision of Section 6.2 shall be deemed a
breach of this clause (i) unless such action constitutes a
breach of such provision of Section 6.2),
(ii) use reasonable best efforts to maintain and preserve
intact its business organization, and its rights,
authorizations, franchises and other authorizations issued by
Governmental Entities, preserve its advantageous business
relationships with customers, vendors and others doing business
with it and retain the services of its officers and key
employees and (iii) take no action which would reasonably
be expected to adversely affect or delay (x) the receipt of
any approvals of any Governmental Entity required to consummate
the transactions contemplated by this Agreement or the Share
Purchase Agreement or (y) the consummation of the
transactions contemplated by this Agreement or the Share
Purchase Agreement.
6.2. Company
Forbearances. Except as expressly
contemplated or permitted by this Agreement or as set forth in
Section 6.2 of the Company Disclosure Schedule,
during the period from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any
of its Subsidiaries to, without the prior written consent of
Parent (which consent shall not be unreasonably withheld):
(a) (i) adjust, split, combine or reclassify any
capital stock or other equity interest; (ii) set any record
or payment dates for the payment of any dividends or
distributions on its capital stock or other equity interest or
make, declare or pay any dividend or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or other equity
interest or any securities or obligations convertible into or
exchangeable or exercisable for any shares of its capital stock
or other equity interest or stock appreciation rights or grant
any person any right to acquire any shares of its capital stock
or other equity
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interest, other than (A) regular cash dividends on the
Series 2008-T
Preferred Stock paid in accordance with its terms, except if at
any time dividends payable on the Series 2000A Cumulative
Fixed Rate Preferred Shares and Series 2002C Cumulative
Floating Rate Preferred Shares of Carolina First Mortgage Loan
Trust (collectively, the REIT Preferred
Stock) have not been paid, (B) regular cash
dividends on the REIT Preferred Stock, except if at any time
dividends payable on the
Series 2008-T
Preferred Stock have not been paid, (C) regular quarterly
cash dividends on Company Common Stock equal to the rate paid
during the fiscal quarter immediately preceding the date hereof
with record and payment dates consistent with past practice and
(D) dividends paid by any of the Subsidiaries of the
Company so long as such dividends are only paid to the Company
or any of its other wholly owned Subsidiaries; or
(iii) issue or commit to issue any additional shares of
capital stock or other equity interest (except (x) pursuant
to (1) the exercise of the Warrant, (2) the exercise
of Company Options or Company SARs or in connection with the
settlement of any Company RSUs, in each such case, outstanding
as of the date hereof and included in Section 4.2(b)
of the Company Disclosure Schedule or (3) the exercise of
purchase rights under any Company ESPP outstanding on the date
hereof and in accordance with their terms on the date hereof and
(y) for issuances of capital stock or other equity
interests by Subsidiaries of the Company so long as such capital
stock or other equity interests are only issued to the Company
or any of its wholly owned Subsidiaries), or any securities
convertible into or exercisable or exchangeable for, or any
rights, warrants or options to acquire, any additional shares of
capital stock or other equity interest (including Company
Options, Company SARs, Company RSUs or any other equity or
phantom equity grant under any Company Stock
Incentive Plan or otherwise), except pursuant to the Share
Purchase Agreement;
(b) incur or guarantee any material indebtedness for
borrowed money other than deposits, FHLB borrowings, repurchase
agreements and similar liabilities in the ordinary course of
business consistent with past practice;
(c) amend its articles of incorporation or bylaws or
similar governing documents;
(d) sell, license, lease, transfer, mortgage, encumber or
otherwise dispose of, or abandon or fail to maintain, any of its
material rights, assets, deposits or properties or cancel or
release any material indebtedness owed to any person or any
claims held by any person, except (i) sales of Loans and
sales of investment securities, in each case in the ordinary
course of business consistent with past practice, (ii) as
expressly required by the terms of any contracts or agreements
in force at the date of this Agreement and set out in
Section 6.2(d) of the Company Disclosure Schedule or
(iii) pledges of assets to secure public deposits accepted
in the ordinary course of business consistent with past practice;
(e) enter into any new line of business or change in any
material respect its lending, investment, risk and
asset-liability management and other material banking or
operating policies except as required by Law or by rules or
policies imposed by a Governmental Entity;
(f) (i) make any acquisition of or investment in any
person other than a wholly owned Subsidiary of the Company, by
purchase or other acquisition of stock or other equity interests
(other than in a fiduciary capacity in the ordinary course of
business consistent with past practice), by merger,
consolidation, asset purchase or other business combination, or
by formation of any joint venture or other business organization
or by contributions to capital; (ii) enter into a plan of
consolidation, merger, share exchange, share acquisition,
reorganization or complete or partial liquidation with any
person (other than consolidations, mergers or reorganizations
solely among wholly owned Subsidiaries of the Company), or a
letter of intent, memorandum of understanding or agreement in
principle with respect thereto; or (iii) make any purchases
or other acquisitions of any debt securities, property or assets
(including any investments or commitments to invest in real
estate or any real estate development project) in or from any
person other than a wholly owned Subsidiary of the Company,
except for (A) foreclosures and other similar transactions
in connection with securing or collecting debts previously
contracted and (B) purchases of U.S. government agency
securities which are investment grade rated and, in the case of
any such securities that are fixed rate instruments, have a
final maturity of five years or less, and (C) transactions
in the ordinary course of business consistent with past practice
and that, together with all other such transactions, are not
material to the Company;
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(g) foreclose on or take a deed or title to any real estate
other than single-family residential without first conducting a
Phase I environmental assessment of the property that satisfies
the requirements of the all appropriate inquiries standard of
CERCLA §101(35), 42 U.S.C. §9601(35), or
foreclose on or take a deed or title to any real estate other
than single-family residential if such environmental assessment
indicates the presence of a hazardous, toxic, radioactive or
dangerous materials or other materials regulated under
Environmental Laws;
(h) enter into, renew, extend or terminate (i) any
lease, license, contract or other agreement that calls for
aggregate annual payments of $50,000 or more other than in the
ordinary course of business consistent with past practice,
(ii) any Company Contract of the type set forth in
Section 4.13(a)(ii), (iv), (v),
(vi), (vii), (viii) or (ix) or
(iii) any agreement referenced in Section 4.7
(or any other agreement with any broker or finder in connection
with the Merger or any other transaction contemplated by this
Agreement or any of the Related Agreements) or any agreement,
contract, plan, arrangement or other transaction of the type
described in Section 4.24; or make any material
change in any of such Loans, leases, licenses, contracts or
other agreements, other than in the case of clauses (i) and
(ii), renewals of such leases, licenses, contracts or other
agreements for a term of one (1) year or less without
material changes to the terms thereof;
(i) except as required by Law or the terms of any Plan in
effect as of the date hereof and disclosed in
Section 4.11(a) of the Company Disclosure Schedule,
or as expressly provided for in Section 2.4 of this
Agreement: (i) increase the compensation or benefits of any
Company Employee; (ii) grant or pay any
change-in-control,
retention bonus, severance or termination pay to any Company
Employee; (iii) loan or advance any money or other property
to, or sell, transfer or lease any properties, rights or assets
to, any Company Employee; (iv) establish, adopt, enter
into, amend, terminate or grant any waiver or consent under any
Plan or any plan, agreement, program, policy, trust, fund or
other arrangement that would be a Plan if it were in existence
as of the date of this Agreement; (v) grant any equity or
equity-based awards; (vi) hire or terminate the employment
of any Company Employee with an annual base salary in excess of
$150,000; (vii) effectuate any layoffs of Company Employees
without compliance with the Worker Adjustment and Retraining
Notification Act of 1988, as amended, and any similar state or
local law or regulation to the extent applicable;
(viii) allow for the commencement of any new offering
periods under any Company ESPP; or (ix) take any action to
accelerate the vesting or payment of any compensation or benefit
under any Plan or awards made thereunder.
(j) make, or commit to make, any capital expenditures in
excess of $100,000 individually or $1 million in the
aggregate;
(k) permit the commencement of any construction of new
structures or facilities upon, or purchase or lease any real
property in respect of any branch or other facility, or make any
application to open, relocate or close, or open, relocate or
close, any branch or other facility;
(l) without previously notifying and consulting with
Parent, (i) except for Loans or commitments for Loans that
have previously been approved by the Company prior to the date
of this Agreement, make or acquire any Loan or issue a
commitment (or renew or extend an existing commitment) for any
Loan, or amend or modify in any material respect any existing
Loan, that would result in total credit exposure to the
applicable borrower (and its affiliates) in excess of
$10,000,000, (ii) except with respect to amendments or
modifications that have previously been approved by the Company
prior to the date of this Agreement, amend or modify in any
material respect any existing Loan rated special
mention or below by the Company with total credit exposure
in excess of $5,000,000 or (iii) except with respect to any
such actions that have previously been approved by the Company
prior to the date of this Agreement, modify or amend any Loan in
a manner that would result in any additional extension of
credit, principal forgiveness, or effect any uncompensated
release of collateral, i.e., at a value below the fair market
value thereof as determined by the Company, in each case in
excess of $1,000,000;
(m) except as otherwise expressly permitted elsewhere in
this Section 6.2, engage or participate in any
material transaction (other than furnishing information and
participating in discussions to the extent permitted by
Section 7.4) or incur or sustain any material
obligation, in each case, other than in the ordinary course of
business consistent with past practice;
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(n) except pursuant to agreements or arrangements in effect
on the date hereof and specified in Section 6.2(n)
of the Company Disclosure Schedule, pay, loan or advance any
amount to, or sell, transfer or lease any properties, rights or
assets (real, personal or mixed, tangible or intangible) to, or
enter into any agreement or arrangement with, any of its
officers or directors or any of their family members, or any
affiliates or associates (as such term is defined under the
Exchange Act) of any of its officers or directors other than
Loans originated in the ordinary course of the business of the
Company and its Subsidiaries consistent with past practice, and,
in the case of any such agreements or arrangements relating to
compensation, fringe benefits, severance or termination pay or
related matters, only as otherwise permitted pursuant to this
Section 6.2;
(o) (i) settle any claim, action or proceeding
involving monetary damages payable by the Company or its
Subsidiaries in excess of $100,000, or (ii) other than in
the ordinary course of business consistent with past practice,
waive or release any material rights or claims, or agree or
consent to the issuance of any injunction, decree, order or
judgment restricting or otherwise affecting its business or
operations;
(p) materially change its investment securities portfolio
policy, or its policies with respect to the classification or
reporting of such portfolios, or invest in any mortgage-backed
or mortgage related securities which would be considered
high-risk securities under applicable regulatory
pronouncements;
(q) except as required by Law or applicable regulatory
authorities, make any material changes in its policies and
practices with respect to (i) underwriting, pricing,
originating, acquiring, selling, servicing, or buying or selling
rights to service, Loans or (ii) its hedging practices and
policies;
(r) fail to use commercially reasonable efforts to take any
action that is required by a Company Regulatory Agreement, or
willfully take any action that violates a Company Regulatory
Agreement;
(s) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in
Section 8.1 or 8.2 not being satisfied or in
a Requisite Regulatory Approval not being obtained without
imposition of a condition of the type referred to in
Section 8.2(c) or in a material violation of any
provision of this Agreement;
(t) make any material changes in its methods, practices or
policies of financial or Tax accounting, except as may be
required under Law or U.S. GAAP or regulatory accounting
policies, in each case as discussed with, and with the
concurrence of, the Companys independent public
accountants;
(u) enter into any securitizations of any Loans or create
any special purpose funding or variable interest entity;
(v) other than in the ordinary course of business
consistent with past practice, introduce any material new
products or services, any material marketing campaigns or any
material new sales compensation or incentive programs or
arrangements;
(w) except as required by Law, make or change any material
Tax election, file any amended material Tax Returns, agree to an
extension or waiver of any statute of limitations with respect
to the assessment or determination of Taxes, settle or
compromise any material Tax liability of the Company or any of
its Subsidiaries, enter into any closing agreement with respect
to any material Tax or surrender any right to claim a material
Tax refund;
(x) agree to, or make any commitment to, take any of the
actions prohibited by this Section 6.2.
6.3. No Fundamental Parent
Changes. Except as expressly contemplated or
permitted by this Agreement, or as required by applicable Law,
during the period from the date of this Agreement to the
Effective Time, Parent shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of the
Company (which consent shall not be unreasonably withheld),
(i) amend, repeal or otherwise modify its bylaws in a
manner that would materially and adversely affect the economic
benefits of the Merger to the holders of Company Common Stock or
that would materially impede Parents or Merger Subs
ability to consummate the transactions contemplated hereby,
(ii) take any action that is intended or may reasonably be
expected to result in any of its
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representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the
Merger set forth in Section 8.1 or
Section 8.3 not being satisfied or in a Requisite
Regulatory Approval not being obtained without the imposition of
a condition of the type referred to in
Section 8.2(c), or in a material violation of any
provision of this Agreement, or (iii) agree to, or make any
commitment to, take any of the actions prohibited by this
Section 6.3.
6.4. Tax Matters. The
Company shall consult with Parent regarding the Companys
recognition of any material loss (either individually or in the
aggregate) for United States federal income tax purposes, and
shall consider in good faith the implementation of Parents
views on such matters.
ARTICLE VII
ADDITIONAL
AGREEMENTS
7.1. Regulatory
Matters. (a) Parent and the Company
shall cooperate in preparing and promptly cause to be filed with
the SEC the
Form F-4,
in which the Proxy Statement/Prospectus shall be included. Each
of Parent and the Company shall use reasonable best efforts to
have the
Form F-4
declared effective under the Securities Act as promptly as
practicable after such filing and to keep the
Form F-4
effective as long as is necessary to consummate the Merger and
the other transactions contemplated hereby, and the Company
shall mail or deliver the Proxy Statement/Prospectus to its
shareholders as promptly as practicable after the
Form F-4
is declared effective. Parent and the Company shall, as promptly
as practicable after receipt thereof, provide the other party
with copies of any written comments and advise the other party
of any oral comments with respect to the Proxy
Statement/Prospectus or the
Form F-4
received from the SEC. Each party shall cooperate and provide
the other party with a reasonable opportunity to review and
comment on any amendment or supplement to the Proxy
Statement/Prospectus and the
Form F-4
prior to filing such with the SEC. Parent shall also use its
reasonable best efforts to obtain all necessary state securities
laws or Blue Sky permits and approvals required to
carry out the transactions contemplated by this Agreement, and
the Company shall furnish all information concerning the Company
and the holders of Company Common Stock as may be reasonably
requested in connection with such action.
(b) Subject to the other provisions of this Agreement, the
parties shall cooperate with each other and use their respective
reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities that are necessary or
advisable to consummate the transactions contemplated by this
Agreement, and to comply with the terms and conditions of all
such permits, consents, approvals and authorizations of all such
third parties or Governmental Entities; provided,
however, that no party shall be required to take any
action in obtaining or complying with such permits, consents,
approvals or authorizations if the taking of such action or the
obtaining of or compliance with such permits, consents,
approvals and authorizations is reasonably likely to result in a
condition or restriction having an effect of the type referred
to in Section 8.2(c). In furtherance (but not in
limitation) of the foregoing, Parent shall file any required
applications, notices or other filings with the Federal Reserve
Board within 20 days of the date hereof. Each party shall
have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case
subject to applicable laws relating to the confidentiality of
information, all the information relating to such party and any
of its respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing
right, each of the parties shall act reasonably and as promptly
as practicable. The parties shall consult with each other with
respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the
other apprised of the status of matters relating to completion
of the transactions contemplated by this Agreement.
(c) Each of Parent and the Company shall, upon request,
furnish to the other all information concerning themselves,
their Subsidiaries, directors, officers and shareholders and
such other matters as may be reasonably necessary or advisable
in connection with the preparation of the Proxy
Statement/Prospectus, the
Form F-4
or any other statement, filing, notice or application made by or
on behalf of Parent, the Company or any of their respective
Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by
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this Agreement. Parent and the Company shall make any necessary
filings with respect to the Merger under the Securities Act and
the Exchange Act and the rules and regulations promulgated
thereunder and any applicable state, provincial or local
securities Laws.
(d) Parent and the Company shall promptly advise each other
upon receiving any communication from any Governmental Entity
whose consent or approval is required for consummation of the
transactions contemplated by this Agreement which causes such
party to believe that there is a reasonable likelihood that any
Requisite Regulatory Approval will not be obtained or that the
receipt of any such approval will be materially delayed or
conditioned.
(e) Without limiting the scope of the foregoing paragraphs,
the Company shall, to the extent permitted by applicable Law
(i) promptly advise Parent of the receipt of any
substantive communication from a Governmental Entity with
respect to the transactions contemplated hereby,
(ii) provide Parent with a reasonable opportunity to
participate in the preparation of any response thereto and the
preparation of any other substantive submission or communication
to any Governmental Entity with respect to the transactions
contemplated hereby and to review any such response, submission
or communication prior to the filing or submission thereof, and
(iii) provide Parent with the opportunity to participate in
any meetings or substantive telephone conversations that the
Company or its Subsidiaries or their respective representatives
may have from time to time with any Governmental Entity with
respect to the transactions contemplated hereby.
7.2. Access to
Information. (a) Upon reasonable notice
and subject to applicable Laws relating to the exchange of
information, the Company shall, and shall cause each of its
Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent access, during
normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and
records, and to its officers, employees, accountants, counsel
and other representatives, in each case in a manner not
unreasonably disruptive to the operation of the business of the
Company and its Subsidiaries, and, during such period, the
Company shall, and shall cause its Subsidiaries to, make
available to Parent (i) a copy of each report, schedule,
registration statement and other document filed or received by
it during such period pursuant to the requirements of the
federal securities Laws or federal or state banking, mortgage
lending, real estate or consumer finance or protection Laws
(other than reports or documents which the Company is not
permitted to disclose under applicable Law) and (ii) all
other information concerning its business, properties and
personnel as Parent may reasonably request. Neither the Company
nor any of its Subsidiaries shall be required to provide access
to or to disclose information where such access or disclosure
would jeopardize any attorney-client privilege, violate any
contract or agreement or contravene any Law; and in any such
event, the parties hereto will make appropriate substitute
disclosure arrangements.
(b) All information and materials provided pursuant to this
Agreement shall be subject to the confidentiality provisions of
the Confidentiality Agreement entered into between Parent and
the Company, dated December 16, 2009 (the
Confidentiality Agreement).
(c) No investigation by any of the parties or their
respective representatives shall constitute a waiver of or
otherwise affect the representations, warranties, covenants or
agreements of the others set forth herein.
7.3. Shareholder Approval.
(a) The Company shall duly take all lawful action to call,
give notice of, convene and hold a meeting of its shareholders
as promptly as practicable following the date upon which the
Form F-4
becomes effective (the Company Shareholders
Meeting) for the purpose of obtaining the approval of
this Agreement by the shareholders of the Company and, subject
to Section 7.3(b), shall use all reasonable best
efforts to obtain the approval of this Agreement by such
shareholders; provided, however, that the record
date for the Company Shareholders Meeting shall be determined in
prior consultation with and subject to the prior approval of
Parent (such approval not to be unreasonably withheld), and such
record date shall not be earlier than the date that is one
Business Day after the closing of the issuance of the New
Company Preferred Stock to Parent pursuant to the Share Purchase
Agreement. The board of directors of the Company shall recommend
approval of this Agreement by the shareholders of the Company
(the Company Recommendation) in the Proxy
Statement/Prospectus and shall not directly or indirectly
(x) withdraw, modify or qualify in any manner adverse to
Parent such recommendation or (y) take any other action
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or make any other public statement in connection with the
Company Shareholders Meeting, or in reference to an Acquisition
Proposal (as defined in Section 7.4(b)), that is
inconsistent with such recommendation (any action or public
statement described in clause (x) or (y) being
referred to as a Change in Company
Recommendation), except as and to the extent expressly
permitted by Section 7.3(b). Notwithstanding any
Change in Company Recommendation, this Agreement shall be
submitted to the shareholders of the Company at the Company
Shareholders Meeting for the purpose of voting on the approval
of this Agreement and nothing contained herein shall be deemed
to relieve the Company of such obligation; provided,
however, that if the board of directors of the Company
shall have effected a Change in Company Recommendation, then the
board of directors of the Company may submit this Agreement to
the Companys shareholders without recommendation (although
the resolutions adopting this Agreement as of the date hereof
may not be rescinded or amended), in which event the board of
directors of the Company may communicate the basis for its lack
of a recommendation to the Companys shareholders in the
Proxy Statement/Prospectus or an appropriate amendment or
supplement thereto to the extent required by applicable Law. In
addition to the foregoing, the Company shall not submit to the
vote of its shareholders any Acquisition Proposal other than the
Merger.
(b) Notwithstanding the foregoing, prior to the date of the
Company Shareholders Meeting, the Companys board of
directors shall be permitted to effect a Change in Company
Recommendation if and only to the extent that:
(i) it has complied in all material respects with
Section 7.4,
(ii) its board of directors, after consultation with (and
based on the advice of) its outside counsel, determines in good
faith that failure to take such action would be reasonably
likely to result in a violation of its fiduciary duties under
applicable Law, and
(iii) if the Companys board of directors intends to
effect a Change in Company Recommendation following an
Acquisition Proposal, (A) such Acquisition Proposal was
unsolicited and the Companys board of directors has
concluded in good faith that such Acquisition Proposal is or is
reasonably likely to constitute a Superior Proposal (as defined
in Section 7.4(c)) after taking into account any
amendment or modifications to this Agreement agreed to by
Parent, and (B) the Company has notified Parent in writing,
at least three (3) days in advance, of its intention to
effect a Change in Company Recommendation (the Notice
Period), specifying the material terms and conditions
of any such Superior Proposal (including the identity of the
party making such Superior Proposal) and furnishing to Parent a
copy of the relevant proposed transaction agreements with the
party making such Superior Proposal and all other material
documents and (C) during the Notice Period, and in any
event, prior to effecting such a Change in Company
Recommendation, the Company has negotiated, and has caused its
financial and legal advisors to negotiate, with Parent in good
faith (to the extent Parent desires to negotiate) to make such
adjustments in the terms and conditions of this Agreement so
that such Acquisition Proposal ceases to constitute a Superior
Proposal.
In the event of any material revisions to the Superior Proposal,
the Company shall be required to deliver a new written notice to
Parent and to again comply with the requirements of this
Section 7.3(b) with respect to such new written
notice, except that the Notice Period shall be reduced to two
(2) days.
7.4. Acquisition Proposals.
(a) From the date hereof until the Effective Time or, if
earlier, the date on which this Agreement is terminated in
accordance with Article IX, the Company shall not, and
shall cause its Subsidiaries and its and its Subsidiaries
respective officers, directors, employees, agents, affiliates
and representatives (including any investment bankers, attorneys
or accountants retained by it or any of its Subsidiaries) not
to, directly or indirectly, (i) initiate, solicit,
encourage or knowingly facilitate (including by way of providing
information) the submission of any inquiries, proposals or
offers or any other efforts or attempts that constitute or may
reasonably be expected to lead to, any Acquisition Proposal,
(ii) have any discussions with or provide any confidential
or non-public information or data to any person relating to or
in connection with an Acquisition Proposal, or engage in any
negotiations concerning an Acquisition Proposal,
(iii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal, (iv) approve or
recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle,
memorandum of understanding, merger agreement, asset or share
purchase or share exchange agreement, option agreement or other
similar agreement related to any Acquisition Proposal,
(v) enter
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into any agreement or agreement in principle requiring, directly
or indirectly, the Company to abandon, terminate or fail to
consummate the transactions contemplated hereby or breach its
obligations hereunder, or (vi) propose or agree to do any
of the foregoing. Notwithstanding the foregoing provisions of
this Section 7.4(a), in the event that the Company
receives an unsolicited bona fide written Acquisition Proposal
and the Companys board of directors concludes in good
faith that such Acquisition Proposal constitutes or is
reasonably likely to result in a Superior Proposal, the Company
may, and may permit its Subsidiaries and its and their officers,
directors, employees, agents, affiliates and representatives to,
prior to (but not after) the date of the Company Shareholders
Meeting, take any action described in clause (ii) above to
the extent that its board of directors concludes in good faith
(and based on the advice of its outside counsel) that failure to
take such actions would be reasonably likely to result in a
violation of its fiduciary duties under applicable Law;
provided, however, that prior to providing (or
causing to be provided) any confidential or non-public
information or data permitted to be provided pursuant to this
sentence, the Company shall have entered into a written
confidentiality agreement with such third party on terms no less
favorable to the Company than the Confidentiality Agreement; and
provided, further, that the Company shall promptly
provide Parent with any confidential or non-public information
or data concerning the Company or its Subsidiaries provided to
such person which was not previously provided to Parent (or its
representatives).
(b) For purposes of this Agreement, Acquisition
Proposal means any inquiry, proposal or offer from any
person (other than Parent or any of its Subsidiaries), or
multiple persons in a single transaction or series of related
transactions, relating to any direct or indirect
(i) acquisition, purchase or sale of a business, deposits
or assets that constitute more than 15% of the consolidated
business, revenues, net income, assets (including stock of the
Companys Subsidiaries) or deposits of the Company and its
Subsidiaries, (ii) merger, reorganization, share exchange,
consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, or (iii) purchase
(whether of outstanding or newly-issued shares) or sale of, or
tender or exchange offer (including a self-tender offer) for,
securities of the Company or any of its Subsidiaries that, if
consummated, would result in any person, or multiple persons in
a single transaction or series of related transactions (or the
shareholders of such person or persons), beneficially owning
securities representing (including upon conversion, exchange or
exercise thereof) more than 15% of the equity or total voting
power of the Company, any of its Subsidiaries or the surviving
parent entity in such transaction.
(c) For purposes of this Agreement, Superior
Proposal means a bona fide written Acquisition
Proposal by a person (or group of persons acting in concert
within the meaning of
Rule 13d-5
under the Exchange Act) to acquire, directly or indirectly, a
majority of the total voting power of the Company (or a majority
of the total voting power of the resulting or surviving entity
of such transaction or the ultimate parent of such resulting or
surviving entity), which the board of directors of the Company
concludes in good faith, after consultation with its financial
advisors and receiving the advice of its outside counsel, taking
into account timing and all legal, financial, regulatory and
other aspects of the proposal and the person making the proposal
(including any
break-up
fees, expense reimbursement provisions and conditions to
consummation), (i) is more favorable to the shareholders of
the Company from a financial point of view than the transactions
contemplated by this Agreement and (ii) is reasonably
capable of being consummated on the terms proposed.
(d) The Company will immediately cease and cause to be
terminated any activities, discussions or negotiations conducted
before the date of this Agreement with any persons other than
Parent with respect to any Acquisition Proposal, will use its
reasonable best efforts to enforce any confidentiality,
standstill or similar agreement relating to an Acquisition
Proposal, including by requiring the other parties thereto to
promptly return or destroy any confidential or non-public
information or data previously furnished by or on behalf of the
Company thereunder, and will not waive or amend any provision of
any such agreement. The Company will promptly (and in all events
within 24 hours) following receipt of any Acquisition
Proposal or any inquiry which could reasonably be expected to
lead to an Acquisition Proposal advise Parent of the material
terms thereof (including the identity of the person making such
Acquisition Proposal), and will keep Parent reasonably apprised
of any related developments, discussions and negotiations and
the status and terms thereof (including providing Parent with a
copy of all material documentation and correspondence relating
thereto) on a current basis. Without limiting the foregoing, the
Company shall notify Parent orally and in writing within
24 hours after it enters into discussions or negotiations
with another person regarding an Acquisition Proposal, executes
and delivers a confidentiality agreement with
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another person in connection with an Acquisition Proposal, or
provides confidential or non-public information or data to
another person in connection with an Acquisition Proposal.
(e) Nothing contained in this Agreement shall prevent the
Company or its board of directors from complying with
Rule 14d-9
and
Rule 14e-2(a)(2)-(3)
promulgated under the Exchange Act with respect to an
Acquisition Proposal; provided, that such Rules will in
no way eliminate or modify the effect that any action pursuant
to such Rules would otherwise have under this Agreement; and
provided, further, that any such disclosure (other
than a stop, look and listen or similar
communication of the type contemplated by
Rule 14d-9(f)
under the Exchange Act) shall be deemed to be a Change in
Company Recommendation unless the board of directors of the
Company expressly and concurrently reaffirms the Company
Recommendation.
7.5. Reasonable Best
Efforts. (a) Subject to the terms and
conditions of this Agreement, each of Parent and the Company
shall, and shall cause their respective Subsidiaries to, use
their reasonable best efforts (i) to take, or cause to be
taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on
such party or its Subsidiaries with respect to the Merger and,
subject to the conditions set forth in Article VIII
hereof, to consummate the transactions contemplated by this
Agreement (including (i) in the case of Parent, with
respect to the completion of the purchase of the
Series 2008-T
Preferred Stock and the Warrant as contemplated by
Section 8.2(d) and (ii) in the case of the Company, by
complying with its obligations under the Share Purchase
Agreement) and (ii) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity and
any other third party which is necessary or desirable in
connection with the Merger and the other transactions
contemplated by this Agreement; provided, however,
that no party shall be required to take any action pursuant to
the foregoing sentence if the taking of such action or the
obtaining of such consents, authorizations, orders, approvals or
exemptions is reasonably likely to result in a condition or
restriction having an effect of the type referred to in
Section 8.2(c).
(b) Subject to the terms and conditions of this Agreement
(including the proviso in Section 7.5(a)), each of
Parent and the Company agrees to use reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate
and make effective, as soon as practicable after the date of
this Agreement, the transactions contemplated hereby, including
using reasonable best efforts to (i) modify or amend any
contracts, plans or arrangements to which Parent or the Company
is a party (to the extent permitted by the terms thereof) if
necessary in order to satisfy the conditions to closing set
forth in Article VIII hereof, (ii) lift or
rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby and (iii) defend any
litigation seeking to enjoin, prevent or delay the consummation
of the transactions contemplated hereby or seeking material
damages.
(c) Following the execution of this Agreement, the Company
shall, at the direction and the request of Parent, use its
reasonable best efforts, and take all reasonable actions, to
facilitate the merger of the Bank Subsidiary and TD Bank,
National Association following the consummation of the Merger.
7.6. Employees; Employee Benefit Plans.
(a) From and after the Effective Time, Parent shall honor
all Plans in accordance with their terms, provided, that
nothing herein shall prohibit Parent from amending or
terminating any such Plans in accordance with their terms. To
the extent permitted by applicable Law, for a period of at least
one year following the Effective Time (or, if earlier, until the
Company Employees who are employees of the Company or a
Subsidiary of the Company at the Effective Time (collectively,
Transferred Employees) become eligible to
participate in the employee benefit plans sponsored or
maintained by Parent or its Subsidiaries (Parent
Plans ) in which similarly situated employees of Parent so
participate (it being understood that inclusion of Transferred
Employees in such Parent Plans may occur at different times with
respect to different plans)), Parent shall provide, or shall
cause to be provided, to Transferred Employees compensation and
benefits (excluding equity-based awards, retiree medical
benefits, defined benefit pension plan benefits, deferred
compensation plan benefits, supplemental executive retirement
plan benefits and employee stock purchase plan benefits) that
are substantially comparable, in the aggregate, to the
compensation and benefits provided to Transferred Employees
immediately before the Effective Time. From and after the time
Transferred Employees become eligible to participate in any
given Parent Plan, Parent shall provide, or shall cause to be
provided, Transferred Employees with compensation and benefits
that are no less favorable, in the aggregate, to the
compensation and benefits provided under such given Parent Plan
to similarly situated employees of Parent
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and its Subsidiaries, subject to the provisions of
Sections 7.6(b) and 7.6(c) below, as applicable Nothing in
this Agreement shall be construed as requiring Parent or the
Surviving Company to continue any specific employee benefit
plans or continue to employ any Transferred Employee for any
length of time following the Effective Time.
(b) For all purposes (including for purposes of vesting,
eligibility to participate, accrual of benefits and level of
benefits) under the employee benefit plans of Parent and its
Subsidiaries providing benefits to any Transferred Employees
after the Effective Time (the New Plans),
Parent shall cause each Transferred Employee to be credited for
his or her years of service with the Company and its
Subsidiaries and their respective predecessors before the
Effective Time, to the same extent as such Transferred Employee
was entitled, before the Effective Time, to credit for such
service under any similar Company employee benefit plan in which
such Transferred Employee participated or was eligible to
participate immediately prior to the Effective Time,
provided, however, that the foregoing shall not
apply (x) with respect to benefit accrual under any defined
benefit pension plan, post-retirement medical plan or core
contributions under the Parent 401(k) New Plan or
(y) to the extent that its application would result in a
duplication of benefits. In addition, and without limiting the
generality of the foregoing, Parent shall cause (A) each
Transferred Employee to be immediately eligible to participate,
without any waiting time, in any and all New Plans to the extent
coverage under such New Plan is comparable to a Plan in which
such Transferred Employee participated immediately before the
Effective Time (such plans, collectively, the Old
Plans) and (B) for purposes of each New Plan
providing medical, dental, pharmaceutical
and/or
vision benefits to any Transferred Employee, (i) Parent
shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for
such employee and his or her covered dependents, unless such
conditions would not have been waived under the comparable Plans
in which such employee participated immediately prior to the
Effective Time, and (ii) Parent shall cause any eligible
expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan
ending on the date such employees participation in the
corresponding New Plan begins (to the extent credited under an
Old Plan) to be taken into account under such New Plan for
purposes of satisfying any applicable deductible, coinsurance
and maximum
out-of-pocket
requirements applicable to such employee and his or her covered
dependents for the applicable plan year as if such amounts had
been paid in accordance with such New Plan.
(c) Notwithstanding anything in this Agreement to the
contrary, for a period of one year following the Effective Time,
Parent shall provide (A) severance benefits that are no
less favorable to Company Employees (other than Company
Employees who otherwise are parties to an individual severance
agreement with the Company or any Subsidiary or a letter
agreement with Parent) than the severance benefits provided to
such Company Employees under the Companys Severance Pay
Plan as in effect on the date hereof (as set forth in
Section 4.11(a) of the Company Disclosure Schedule and
(B) paid time-off benefits that are no less favorable to
Company Employees than the paid time-off programs provided to
such Company Employees under the Companys paid time-off
programs as in effect on the date hereof (as set forth in
Section 4.11(a) of the Company Disclosure Schedule).
(d) The Company and Parent acknowledge and agree that all
provisions, whether express or implied, contained in this
Section 7.6 and Section 2.4 with respect
to employees, officers, directors, consultants and independent
contractors are included for the sole benefit of the Company and
Parent and shall not create any right (i) in any other
person, including Plans or any beneficiary thereof or
(ii) to continued employment with Parent or any of its
Affiliates or any continued compensation, employee benefits or
other right. Nothing contained herein, whether express or
implied, shall be treated as an amendment or other modification
of any employee benefit plan, program, arrangement or agreement.
7.7. Indemnification; Directors and
Officers Insurance.
(a) Parent and Merger Sub agree that all rights to
exculpation, indemnification and advancement of expenses now
existing in favor of the current or former directors, officers
or employees of the Company or its Subsidiaries (collectively,
the Indemnified Parties), as provided in any
applicable certificate of incorporation, by-law or other
organizational document of the Company or any such Subsidiary or
in any indemnification or similar agreement listed in
Section 7.7(a) of the Company Disclosure Schedule,
shall survive the Merger and shall continue in full force and
effect, and Parent agrees that neither it nor any of its
Subsidiaries (including the Surviving Company) shall amend,
repeal or otherwise modify any such provisions in any manner
that would adversely affect the rights thereunder of any
Indemnified Party as in effect as of the Effective Time. From
and after the Effective Time, Parent
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shall cause the Surviving Company and its Subsidiaries to
honor, in accordance with their respective terms, each of the
covenants contained in this Section 7.7.
(b) From and after the Effective Time, Parent shall cause
the Surviving Company to indemnify and hold harmless, to the
fullest extent provided in the articles of incorporation and
bylaws of the Company and permitted under applicable Law (and
advance expenses as incurred to the fullest extent provided in
the articles of incorporation and bylaws of the Company and
permitted under applicable Law upon, if required by applicable
Law, receipt of an undertaking from such Indemnified Party to
repay such advanced expenses if it is determined by a final and
nonappealable judgment of a court of competent jurisdiction that
such Indemnified Party was not entitled to indemnification
hereunder), each of the Indemnified Parties against any costs or
expenses (including attorneys fees and appellate bonds),
judgments, pre- or post-judgment interest, fines, losses,
claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, regulatory, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or
prior to the Effective Time based in whole or in part on, or
arising in whole or in part out of, or pertaining to
(i) the fact that he or she is or was a director or officer
of the Company, any of its Subsidiaries or any of their
respective predecessors or was prior to the Effective Time
serving at the request of any such party as a director, officer,
employee, trustee or partner of another corporation,
partnership, trust, joint venture, employee benefit plan or
other entity or (ii) the transactions contemplated by this
Agreement and the Related Agreements, in each case in his or her
capacity as a director or officer of the Company or any of its
Subsidiaries.
(c) For a period of six (6) years following the
Effective Time, Parent will provide directors and
officers liability insurance that serves to reimburse the
current and former officers and directors of the Company or any
of its Subsidiaries (determined as of the Effective Time)
(providing only for Side A coverage for Indemnified Parties
where the existing policies also include Side B or Side C
coverage for the Company and providing for fiduciary liability
coverage or any other similar coverages in existence as of the
execution of this Agreement) with respect to claims against such
directors and officers arising from facts or events occurring
before the Effective Time (including the transactions
contemplated by this Agreement and the Share Purchase Agreement)
which insurance will contain at least the same coverage and
amounts and contain terms and conditions as are not less
advantageous, in the aggregate, to the Indemnified Party as that
coverage currently provided by the Company, and be purchased
from insurers with ratings equivalent to or better than the
insurers providing coverage currently. Notwithstanding the
foregoing, in no event will Parent be required to expend, on an
annual basis, an amount in excess of 200% of the annual premiums
currently paid by the Company for such insurance (the
Insurance Amount), which current premiums are
set forth in Section 7.7(c) of the Company
Disclosure Schedule, and if Parent is unable to maintain or
obtain the insurance called for by this
Section 7.7(c) for an amount per year equal to or
less than the Insurance Amount, Parent shall obtain as much
comparable insurance as may be available for the Insurance
Amount. With the prior written consent of Parent (not to be
unreasonably withheld), prior to the Effective Time and in lieu
of the foregoing, the Company may purchase tail policies for
directors and officers liability insurance on the
terms described in the prior sentence and fully pay for such
policies prior to the Closing.
(d) In the event Parent, the Surviving Company or any of
their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person,
then, and in either such case, to the extent not otherwise
occurring by operation of Law, proper provision shall be made so
that the successors and assigns of Parent or the Surviving
Company, as the case may be, shall assume the obligations set
forth in this Section 7.7.
(e) The agreements and covenants contained herein shall not
be deemed to be exclusive of any other rights to which any
Indemnified Party is entitled, whether pursuant to Law, contract
or otherwise. The provisions of this Section 7.7 are
intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party and his or her heirs and representatives,
and shall survive consummation of the Merger.
7.8. Advice of
Changes. Parent and the Company shall
promptly advise the other of any change or event which,
individually or in the aggregate with other such changes or
events, has or would reasonably be expected to have a Material
Adverse Effect on it or which it believes would or would be
reasonably likely to cause or constitute a material breach of
any of its representations, warranties or covenants contained
herein; provided, however, that any
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noncompliance with the foregoing shall not constitute the
failure to be satisfied of a condition set forth in
Article VIII or give rise to any right of
termination under Article IX unless the underlying
breach shall independently constitute such a failure or give
rise to such a right.
7.9. Financial Statements and Other Current
Information. As soon as reasonably
practicable after they become available, but in no event more
than 30 days after the end of each calendar month ending
after the date of this Agreement, the Company shall furnish to
Parent (a) consolidated and consolidating financial
statements (including balance sheets, statements of operations
and shareholders equity) of the Company and each of its
Subsidiaries as of and for such month then ended,
(b) internal management financial control reports showing
actual financial performance against plan and previous period
and (c) to the extent permitted by applicable Law, any
reports provided to the board of directors of the Company or any
committee thereof relating to the financial performance and risk
management of the Company. In addition, the Company shall, if
permitted by applicable Law, furnish Parent with a copy of each
report filed by the Company or any of its Subsidiaries with a
Governmental Entity within three (3) Business Days
following the filing thereof. All information furnished by the
Company to Parent pursuant to this Section 7.9 shall
be held in confidence to the same extent of Parents
obligations under Section 7.2(b).
7.10. Stock Exchange
Listing. Parent shall use its reasonable best
efforts to cause the Parent Common Shares to be issued in the
Merger and to be reserved for issuance upon exercise of the
Parent Options issued in substitution for Company Options
pursuant to Section 2.4 to be issued in the Merger
to be approved for listing on the Toronto Stock Exchange and the
New York Stock Exchange, subject to official notice of issuance,
as promptly as practicable, and in any event prior to the
Effective Time.
7.11. Takeover Laws. The
parties hereto and their respective boards of directors shall
(i) use reasonable best efforts to ensure that no state
takeover Law or similar Law is or becomes applicable to this
Agreement, the Merger or any of the other transactions
contemplated by this Agreement, including the transactions
contemplated by the Related Agreements and (ii) if any
state takeover Law or similar Law becomes applicable to this
Agreement, the Merger or any of the other transactions
contemplated by this Agreement, including the transactions
contemplated by the Related Agreements, use reasonable best
efforts to ensure that the Merger and the other transactions
contemplated by this Agreement, including the transactions
contemplated by the Related Agreements, may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on
this Agreement, the Merger and the other transactions
contemplated by this Agreement, including the transactions
contemplated by the Related Agreements.
7.12. Exemption from Liability Under
Section 16(b). Prior to the Effective
Time, the Company shall take all such steps as may be necessary
or appropriate to cause any disposition of shares of Company
Common Stock or conversion of any derivative securities in
respect of such shares of Company Common Stock in connection
with the consummation of the transactions contemplated by this
Agreement to be exempt under
Rule 16b-3
promulgated under the Exchange Act, including any such actions
specified in the applicable SEC No-Action Letter dated
January 12, 1999.
7.13. Shareholder
Litigation. The Company shall give Parent the
opportunity to participate at its own expense in the defense or
settlement of any shareholder litigation against the Company
and/or its
directors relating to the transactions contemplated by this
Agreement and the Related Agreements, and no such settlement
shall be agreed to without Parents prior written consent
(such consent not to be unreasonably withheld).
7.14. Transition
Committee. As promptly as practicable
following the execution of this Agreement, Parent and the
Company shall establish a transition committee, consisting of an
equal number of representatives designated by each of Parent and
the Company (the Transition Committee).
During the period from the date of this Agreement to the
Effective Time, the Transition Committee will (i) confer on
a regular and continued basis regarding the general status of
the ongoing operations of the Company and its Subsidiaries and
(ii) communicate and consult with its members with respect
to (x) the manner in which the business of the Company and
its Subsidiaries are conducted, (y) audit and accounting
procedures and policies, and (z) the Companys
investment securities portfolio and interest rate and other risk
management policies and practices, in each case to the extent
consistent with applicable Laws, including Laws regarding the
exchange of information and other Laws regarding competition.
Nothing contained in this Section 7.14 shall be
deemed to require the Company to modify or change
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its loan, accrual, reserve, tax, litigation, accounting, audit,
investment or real estate valuation policies and practices prior
to the Effective Time without the Companys consent.
ARTICLE VIII
CONDITIONS
PRECEDENT
8.1. Conditions to Each Partys Obligation
to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject
to the satisfaction (or waiver by all parties) at or prior to
the Effective Time of the following conditions:
(a) Shareholder Approval. The
Company shall have obtained the requisite affirmative vote of
the shareholders of the Company entitled to vote thereon.
(b) Stock Exchange Listing. The
Parent Common Shares to be issued to the holders of Company
Common Stock upon consummation of the Merger and to be reserved
for issuance upon exercise of Parent Options issued in
substitution for Company Options pursuant to
Section 2.4 shall have been authorized for listing
on the Toronto Stock Exchange and the New York Stock Exchange,
subject to official notice of issuance.
(c) Form F-4
Effectiveness. The
Form F-4
shall have become effective under the Securities Act, 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.
(d) Regulatory Approvals. The
regulatory approvals from the Federal Reserve Board, the Board
of Financial Institutions of the State of South Carolina and the
Superintendent of Financial Institutions (Canada)) and any other
material regulatory approvals required to consummate the Merger
shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof
shall have expired or been terminated (all such approvals and
the expiration or termination of all such waiting periods being
referred to herein as the Requisite Regulatory
Approvals).
(e) No Injunctions or Restraints;
Illegality. No order, injunction or decree
issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an
Injunction) preventing the consummation of
the Merger shall be in effect. No Law shall have been enacted,
entered, promulgated or enforced by any Governmental Entity
which prohibits or makes illegal the consummation of the Merger.
8.2. Conditions to Obligations of
Parent. The obligation of Parent and Merger
Sub to effect the Merger is also subject to the satisfaction or
waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and
Warranties. The representations and
warranties of the Company set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date
(except to the extent they speak as of an earlier date, in which
case they shall be true and correct as though made on and as of
such earlier date); provided, however, that for
purposes of determining the satisfaction of this condition, no
effect shall be given to any exception or qualification in such
representations and warranties (other than the representation
and warranty set forth in clause (i) of
Section 4.8) relating to materiality or Material
Adverse Effect, and provided, further, that, for
purposes of this condition, such representations and warranties
(other than those set forth in Section 4.2(a), which
shall be true and correct in all material respects, and
clause (i) of Section 4.8 which shall be true
and correct in all respects) shall be deemed to be true and
correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct,
individually or in the aggregate, results or would reasonably be
expected to result in a Material Adverse Effect on the Company.
Parent shall have received a certificate signed on behalf of the
Company by each of the Chief Executive Officer and the Chief
Financial Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the
Company. The Company shall have performed in
all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time,
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and Parent shall have received a certificate signed on behalf of
the Company by each of the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(c) Burdensome Condition. There
shall not be any action taken, or any Law enacted, entered,
enforced or deemed applicable to the transactions contemplated
by this Agreement, by any Governmental Entity, in connection
with the grant of a Requisite Regulatory Approval or otherwise,
which imposes any restriction or condition that would reasonably
be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent (assuming, for this purpose,
that Parent were an entity the size of the Company in terms of
financial metrics) or the Surviving Company.
(d) Completion of TARP Securities
Purchase. Parent shall have purchased from
the United States Department of the Treasury, and shall
beneficially own all right, title and interest in, all of the
issued and outstanding shares of
Series 2008-T
Preferred Stock and the Warrant for an aggregate cash purchase
price of $130,579,218.75 and otherwise on terms and conditions
reasonably acceptable to Parent.
(e) No REIT Exchange Event. There
shall not have occurred (i) an Exchange Event
(as such term is defined in Exhibit E to the REIT
Trust Declaration) with respect to the Series 2000A
Cumulative Fixed Rate Preferred Shares of Carolina First
Mortgage Loan Trust or (ii) an Exchange Event
(as such term is defined in Exhibit G to the REIT
Trust Declaration) with respect to the Series 2002C
Cumulative Floating Rate Preferred Shares of Carolina First
Mortgage Loan Trust.
8.3. Conditions to Obligations of the
Company. The obligation of the Company to
effect the Merger is also subject to the satisfaction or waiver
by the Company at or prior to the Effective Time of the
following conditions:
(a) Representations and
Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true
and correct in all respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing
Date (except to the extent they speak as of an earlier date, in
which case they shall be true and correct as though made on and
as of such earlier date); provided, however, that
for purposes of determining the satisfaction of this condition,
no effect shall be given to any exception or qualification in
such representations and warranties (other than the
representation and warranty set forth in
Section 5.8) relating to materiality or Material
Adverse Effect, and provided, further, that, for
purposes of this condition, such representations and warranties
(other than those set forth in Section 5.2, which
shall be true and correct in all material respects, and
Section 5.8) shall be deemed to be true and correct
in all respects unless the failure or failures of such
representations and warranties to be so true and correct,
individually or in the aggregate, results or would reasonably be
expected to result in a Material Adverse Effect on Parent. The
Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial
Officer of Parent to the foregoing effect.
(b) Performance of Obligations of
Parent. Parent shall have performed in all
material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and the
Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial
Officer of Parent to such effect.
ARTICLE IX
TERMINATION
9.1. Termination. This
Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time:
(a) by mutual consent of Parent and the Company in a
written instrument;
(b) by either Parent or the Company if (x) any
Governmental Entity which must grant a Requisite Regulatory
Approval has denied approval of the Merger and such denial has
become final and nonappealable or (y) any Governmental
Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the
consummation of the Merger;
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(c) by either Parent or the Company if the Effective Time
shall not have occurred on or before February 17, 2011 (the
End Date), unless the failure of the
Effective Time to occur by such date shall be due to the failure
of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth
herein;
(d) by either Parent or the Company (provided, that
the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if the other party shall have breached (i) any of
the covenants or agreements made by such other party herein or
(ii) any of the representations or warranties made by such
other party herein, and in either case, such breach (x) is
not cured within 45 days following written notice to the
party committing such breach or which breach, by its nature,
cannot be cured prior to the Closing and (y) would entitle
the non-breaching party not to consummate the transactions
contemplated hereby under Article VIII hereof;
(e) by either Parent or the Company if the approval of the
Companys shareholders required by Section 8.1(a)
shall not have been obtained at the Company Shareholders Meeting
or at any adjournment or postponement thereof;
(f) by Parent if (i) the board of directors of the
Company shall have failed to recommend the Merger and the
approval of this Agreement by the shareholders of the Company,
or shall have effected a Change in Company Recommendation (or
shall have resolved to take any of the foregoing actions),
whether or not permitted under this Agreement, (ii) the
Company shall have materially breached the terms of
Section 7.4 in any respect adverse to the Parent or
(iii) the Company shall have materially breached its
obligations under Section 7.3 by failing to call,
give notice of, convene and hold the Company Shareholders
Meeting in accordance with Section 7.3;
(g) by Parent if a tender offer or exchange offer for 15%
or more of the outstanding shares of Company Common Stock is
commenced (other than by Parent or a Subsidiary thereof), and
the board of directors of the Company recommends that the
shareholders of the Company tender their shares in such tender
or exchange offer or otherwise fails to recommend that such
shareholders reject such tender offer or exchange offer within
the ten (10) Business Day period specified in
Rule 14e-2(a)
under the Exchange Act; or
(h) by Parent if the Company has not received, within
21 days after the date of this Agreement, written approval
by The NASDAQ Stock Market LLC of the Companys use of the
exception provided in Listing Rule 5635(f) (Financial
Viability Exception) to permit the issuance of the New Company
Preferred Stock by the Company to Parent as contemplated by the
Share Purchase Agreement without a vote of the Companys
shareholders.
9.2. Effect of Termination.
(a) In the event of termination of this Agreement by either
Parent or the Company as provided in Section 9.1,
this Agreement shall forthwith become void and have no effect,
and none of Parent, Merger Sub, the Company, any of their
respective Subsidiaries or any of the officers or directors of
any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated
hereby, except that (i) Sections 7.2(b) and this
9.2, and Article X, shall survive any
termination of this Agreement and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither
Parent, Merger Sub, nor the Company shall be relieved or
released from any liabilities or damages arising out of its
willful and material breach of any provision of this Agreement;
provided, that in no event shall any party hereto be
liable for any punitive damages. For purposes of this Agreement,
willful and material breach shall mean a
material breach that is a consequence of an act undertaken by
the breaching party with the knowledge (actual or constructive)
that the taking of such act would, or would be reasonably
expected to, cause a breach of this Agreement.
(b) The Company shall pay Parent (as consideration for
termination of Parents rights under this Agreement), by
wire transfer of immediately available funds, $7,620,000.00 (the
Termination Payment) if this Agreement is
terminated as follows:
(i) if this Agreement is terminated by Parent pursuant to
Section 9.1(f) or 9.1(g), then the Company
shall pay to Parent the Termination Payment on the second
Business Day following such termination; and
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(ii) if this Agreement is terminated by (A) Parent
pursuant to Section 9.1(d) as a result of a willful
and material breach by the Company, (B) by either Parent or
the Company pursuant to Section 9.1(e) or
(C) by either Parent or the Company pursuant to
Section 9.1(c) without a vote of the shareholders of
the Company contemplated by this Agreement at the Company
Shareholders Meeting having occurred, and in any such case an
Acquisition Proposal with respect to the Company shall have been
publicly announced or otherwise communicated or made known to
the senior management or board of directors of the Company (such
communications having been made public or otherwise known to the
Companys shareholders in the case of clause (B)) (or any
person shall have publicly announced, communicated or made known
to the senior management or board of directors of the Company
(such communications having been made public or otherwise known
to the Companys shareholders in the case of clause (B)) an
intention, whether or not conditional, to make an Acquisition
Proposal) at any time after the date of this Agreement and prior
to the Company Shareholders Meeting, in the case of clause (B),
or the date of termination, in the case of clauses (A) or
(C), then, if within 12 months after such termination the
Company or any of its Subsidiaries enters into any letter of
intent, agreement in principle, acquisition agreement or other
similar agreement with respect to, or consummates a transaction
contemplated by, any Qualified Acquisition Proposal, the Company
shall pay to Parent the Termination Payment on the date of such
execution or consummation. For purposes of this clause (ii)
of Section 9.2(b), Qualified Acquisition
Proposal means any inquiry, proposal or offer from any
person (other than Parent or any of its Subsidiaries), or
multiple persons in a single transaction or series of related
transactions, relating to any direct or indirect
(i) acquisition, purchase or sale of a business, deposits
or assets that constitute more than 35% of the consolidated
business, revenues, net income, assets (including stock of the
Companys Subsidiaries) or deposits of the Company and its
Subsidiaries, (ii) merger, reorganization, share exchange,
consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, as a result of which the
holders of the Company Common Stock immediately prior thereto
own less than 65% of the voting stock of the surviving or
resulting person or its ultimate parent entity immediately
thereafter, or (iii) purchase (whether of outstanding or
newly-issued shares) or sale of, or tender or exchange offer
(including a self-tender offer) for, securities of the Company
or any of its Subsidiaries that, if consummated, would result in
any person, or multiple persons in a single transaction or
series of related transactions (or the shareholders of such
person or persons), beneficially owning securities representing
(including upon conversion, exchange or exercise thereof) more
than 35% of the equity or total voting power of the Company, any
of its Subsidiaries or the surviving parent entity in such
transaction.
(c) The Company and Parent agree that the agreements
contained in Section 9.2(b) are integral parts of
the transactions contemplated by this Agreement, and that the
payments provided for therein do not constitute a penalty. If
the Company fails to pay Parent the amounts due under such
Section 9.2(b) within the time periods specified in
such section, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) incurred by
Parent in connection with any action, including the filing of
any lawsuit, taken to collect payment of such amounts, together
with interest on the amount of any such unpaid amounts at the
prime lending rate prevailing during such period as published in
The Wall Street Journal, calculated on a daily basis from
the date such amounts were required to be paid until the date of
actual payment.
ARTICLE X
GENERAL
PROVISIONS
10.1. Nonsurvival of Representations,
Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by
their terms apply or are to be performed in whole or in part
after the Effective Time.
10.2. Amendment. Subject to
compliance with applicable Law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their
respective boards of directors, at any time before or after
approval of the matters presented in connection with the Merger
by the shareholders of the Company; provided,
however, that after any such approval, no amendment shall
be made which by Law requires further approval by such
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shareholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
10.3. Extension; Waiver. At
any time prior to the Effective Time, the parties hereto may, to
the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
10.4. Expenses. Except as
provided in Section 9.2 hereof, all costs and
expenses incurred in connection with this Agreement, the Merger
and the other transactions contemplated hereby shall be paid by
the party incurring such expense whether or not the Merger is
consummated, except that expenses incurred in connection with
printing and mailing of the
Form F-4
and the Proxy Statement/Prospectus and in connection with
notices or other filings with any Governmental Entities under
any Laws shall be shared equally by Parent and the Company.
10.5. Notices. All notices
and other communications hereunder shall be in writing and shall
be deemed given if delivered personally, telecopied (upon
telephonic confirmation of receipt), on the first Business Day
following the date of dispatch if delivered by a recognized next
day courier service, or on the third Business Day following the
date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to
receive such notice.
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(a)
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if to Parent or Merger Sub, to:
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The Toronto-Dominion Bank
Toronto Dominion Tower
66 Wellington Street West,
4th Floor
Toronto, Ontario M5K 1A2, Canada
Facsimile:
(416) 308-1943
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Attention:
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Christopher A. Montague
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Executive Vice President and General Counsel
with copies to (which shall not constitute notice):
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Facsimile:
(212) 455-2502
Ellen Patterson
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(b)
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if to the Company, to:
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The South Financial Group, Inc.
102 South Main Street
Greenville, South Carolina 29601
Facsimile:
(864) 239-6423
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Attention:
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William P. Crawford, Jr.
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Executive Vice President and General Counsel
A-43
with a copy to (which shall not constitute notice):
Wachtell, Lipton, Rosen & Katz
51 West
52nd
Street
New York, New York 10019
Facsimile:
(212) 403-2000
Attention: Nicholas G. Demmo
10.6. Interpretation. The
words hereof, herein and
hereunder and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, and Section
references are to this Agreement unless otherwise specified.
Whenever the words include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation. The term person as
used in this Agreement shall mean any individual, corporation,
limited liability company, limited or general partnership, joint
venture, government or any agency or political subdivision
thereof, or any other entity or any group (as defined in
Section 13(d)(3) of the Exchange Act) comprised of two or
more of the foregoing. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement. In this Agreement, all references to
dollars or $ are to United States
dollars. The term knowledge, when used in this
Agreement, means (i) with respect to Parent, the actual
knowledge, after due inquiry, of the individuals set forth in
Section 10.6 of the Parent Disclosure Schedule, and
(ii) with respect to the Company, the actual knowledge,
after due inquiry, of the individuals set forth in
Section 10.6 of the Company Disclosure Schedule.
10.7. Counterparts. This
Agreement may be executed by facsimile or other electronic means
and in counterparts, all of which shall be considered an
original and one and the same agreement and shall become
effective when counterparts have been signed by each of the
parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
10.8. Entire Agreement. This
Agreement (together with the documents, agreements and
instruments referred to herein, including the Share Purchase
Agreement) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement, which shall survive
the execution and delivery of this Agreement solely to the
extent provided in Section 7.2(b). For the avoidance
of doubt and without limiting the generality of the prior
sentence, the provisions of Section 7 of the
Confidentiality Agreement are hereby terminated.
10.9. Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial. This Agreement shall be
governed and construed in accordance with the Laws of the State
of New York (except to the extent that mandatory provisions of
federal Law or the SCBCA are applicable).
(a) Each of Parent, Merger Sub and the Company hereby
irrevocably and unconditionally consents to submit to the
exclusive jurisdiction and venue of the United States District
Court for the Southern District of New York and in the courts
hearing appeals therefrom unless no basis for federal
jurisdiction exists, in which event each party hereto
irrevocably consents to the exclusive jurisdiction and venue of
the Supreme Court of the State of New York, New York County, and
the courts hearing appeals therefrom, for any action, suit or
proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby. Each of Parent, Merger Sub and
the Company hereby irrevocably and unconditionally waives, and
agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any such action, suit or
proceeding, any claim that it is not personally subject to the
jurisdiction of the aforesaid courts for any reason, other than
the failure to serve process in accordance with this
Section 10.9, that it or its property is exempt or
immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and
to the fullest extent permitted by applicable Law, that the
action, suit or proceeding in any such court is brought in an
inconvenient forum, that the venue of such action, suit or
proceeding is improper, or that this Agreement, or the subject
matter hereof, may not be enforced in or by such courts and
further irrevocably waives, to the fullest extent permitted by
applicable Law, the benefit of any defense that would hinder,
fetter or delay the levy, execution or collection of any amount
to which the party is entitled pursuant to the final judgment of
any court having jurisdiction. Each of Parent, Merger Sub and
the Company irrevocably and unconditionally waives, to the
fullest extent permitted by applicable Law, any and all
A-44
rights to trial by jury in connection with any action, suit or
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
(b) Parent hereby irrevocably designates its New York
Branch, located at 31 West 52nd Street, New York, NY
10019 (in such capacity, the Parent Process
Agent) its designee, appointee and agent to receive,
for and on its behalf, service of process in such jurisdiction
in any action, suit or proceeding arising out of or relating to
this Agreement and such service shall be deemed complete upon
delivery thereof to the Parent Process Agent; provided,
that in the case of any such service upon the Parent Process
Agent, the party effecting such service shall also deliver a
copy thereof to Parent in the manner provided in
Section 10.5. Each of Parent, Merger Sub and the
Company further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action, suit
or proceeding by the mailing of copies thereof by registered
mail, postage prepaid, to such party at its address specified
pursuant to Section 10.5, such service of process to
be effective upon acknowledgment of receipt of such registered
mail.
(c) Each of Parent, Merger Sub and the Company expressly
acknowledges that the foregoing waivers are intended to be
irrevocable under the laws of the State of New York and of the
United States of America; provided, that consent by
Parent and the Company to jurisdiction and service contained in
this Section 10.9 is solely for the purpose referred
to in this Section 10.9 and shall not be deemed to
be a general submission to said courts or in the State of New
York other than for such purpose.
10.10. Specific
Performance. Each of Parent, Merger Sub and
the Company agree that irreparable damage would occur if any of
the provisions of this Agreement were not performed in
accordance with their specific terms on a timely basis or were
otherwise breached. It is accordingly agreed that Parent, Merger
Sub and the Company shall be entitled to injunctive or other
equitable relief to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement
in any court identified in Section 10.9 above, this
being in addition to any other remedy to which they are entitled
at law or in equity.
10.11. Severability. Any
term or provision of this Agreement which is determined by a
court of competent jurisdiction to be invalid, illegal or
unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid, illegal or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity, legality or enforceability
of any of the terms or provisions of this Agreement in any other
jurisdiction, and if any provision of this Agreement is
determined to be so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable, in
all cases so long as neither the economic nor legal substance of
the transactions contemplated hereby is affected in any manner
materially adverse to any party or its shareholders. Upon any
such determination, the parties shall negotiate in good faith in
an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
10.12. Publicity. Parent and
the Company shall consult with each other before issuing any
press release or making any public statement with respect to
this Agreement or the Related Agreements or the transactions
contemplated hereby and thereby and shall not issue any such
press release or make any such public statement without the
prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a
party may, without the prior consent of the other party (but
after prior consultation, to the extent practicable in the
circumstances) issue such press release or make such public
statement as may be required by Law or the rules and regulations
of the New York Stock Exchange, the Nasdaq Stock Market or, in
the case of Parent, the Toronto Stock Exchange. Without limiting
the reach of the preceding sentence, Parent and the Company
shall cooperate to develop all public announcement materials and
make appropriate management available at presentations related
to the transactions contemplated by this Agreement as reasonably
requested by the other party. In addition, the Company and its
Subsidiaries shall (i) consult with Parent regarding
communications with customers, shareholders, prospective
investors and employees related to the transactions contemplated
hereby, (ii) provide Parent with shareholder lists of the
Company from time to time as requested by Parent and
(iii) allow and facilitate Parent contact with shareholders
of the Company for purposes of seeking Company shareholder
approval of this Agreement or as the Company may otherwise
reasonably agree.
10.13. Assignment; Third Party
Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations of any party hereunder
shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent
of the other party, except that each of Parent and Merger Sub
may
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assign all or any of its rights and obligations hereunder to any
wholly-owned subsidiary of Parent or Merger Sub;
provided, that no such assignment shall change the amount
or nature of the Merger Consideration, relieve the assigning
party of its obligations hereunder if such assignee does not
perform such obligations or materially impede or delay the
consummation of the Merger. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors
and permitted assigns. Except as otherwise specifically provided
in Section 7.7 hereof, this Agreement (including the
documents and instruments referred to herein) is not intended to
confer upon any person other than the parties hereto any rights
or remedies hereunder.
10.14. Construction. This
Agreement and any documents or instruments delivered pursuant
hereto or in connection herewith shall be construed without
regard to the identity of the person who drafted the various
provisions of the same. Each and every provision of this
Agreement and such other documents and instruments shall be
construed as though all of the parties participated equally in
the drafting of the same. Consequently, the parties acknowledge
and agree that any rule of construction that a document is to be
construed against the drafting party shall not be applicable
either to this Agreement or such other documents and instruments.
[Remainder
of page intentionally left blank]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed by their respective
officers hereunto duly authorized as of the date first above
written.
THE TORONTO-DOMINION BANK
Name: Riaz Ahmed
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Title:
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Executive Vice President
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HUNT MERGER SUB, INC.
Name: John R. Opperman
THE SOUTH FINANCIAL GROUP, INC.
Name: H. Lynn Harton
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Title:
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President and Chief Executive Officer
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A-47
Appendix B
May 17,
2010
Board of Directors
The South Financial Group, Inc.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, SC 29601
Members of the Board:
We understand that The South Financial Group, Inc. (the
Company), The Toronto-Dominion Bank (the
Buyer) and Hunt Merger Sub, Inc., a wholly owned
subsidiary of the Buyer (Merger Sub), have entered
into an Agreement and Plan of Merger, dated as of May 16,
2010 (the Merger Agreement), which provides, among
other things, for the merger (the Merger) of Merger
Sub with and into the Company. Upon completion of the Merger,
the Company will become a wholly owned subsidiary of the Buyer,
and each outstanding share of common stock, par value $1.00 per
share, of the Company (the Company Common Stock),
other than shares held in treasury and shares owned by the Buyer
or any subsidiary of the Company or the Buyer, will be converted
into the right to receive, at the election of the holder
thereof, 0.004 shares of common stock, no par value, of the
Buyer (the Buyer Common Stock) or $0.28 in cash (the
Consideration). We further understand that, in
connection with the Merger, the Buyer will (i) acquire from
the Company shares of Preferred Stock, Series M with voting
power equal to 39.9% of the aggregate pro forma voting rights of
the Company capital stock (the Share Purchase) and
(ii) purchase from the United States Department of the
Treasury all of the outstanding shares of Fixed Rate Cumulative
Perpetual Preferred Stock,
Series 2008-T
of the Company and the Warrant to Purchase Common Stock issued
by the Company (the TARP Preferred Stock Purchase
and together with the Merger and the Share Purchase, the
Transaction). The terms and conditions of the
Transaction are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Consideration
to be received by the holders of shares of the Company Common
Stock (the Common Holders) pursuant to the Merger
Agreement is fair from a financial point of view to such holders.
You have advised us that the Company has considerable exposure
to risks related to the deteriorating credit performance and
declining values of a significant portion of the loan portfolio
and related assets of the Company and its subsidiaries, and that
the business and prospects of the Company have been severely and
negatively affected as a result thereof, as well as due to the
currently prevailing economic, financial and regulatory
environment and the deteriorating financial condition of the
Company.
In particular, you have informed us that:
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The Board of Directors of the Companys bank subsidiary,
Carolina First Bank (the Bank), has entered into a
Consent Order with the Federal Deposit Insurance Corporation
(the FDIC) and the South Carolina State Board of
Financial Institutions (the Consent Order),
effective April 30, 2010, that, among other things,
includes the following:
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A requirement that the Bank have a tier 1 leverage ratio of
not less than 8% and a total risk-based capital ratio of not
less than 12% within 120 days of the date of the Consent
Order;
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Prohibitions on the Banks ability to accept or renew
brokered deposits without prior approval from the FDIC, which
may put severe pressure on the Banks short and long term
liquidity needs; and
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Limitations on the Bank with respect to the rates it can pay on
certain customer deposits.
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The Company has also entered into a Written Agreement (the
Written Agreement) with the Federal Reserve Bank of
Richmond (the FRB), effective May 4, 2010,
that, among other things, requires the Company to submit to the
FRB within 60 days of such agreement an acceptable written
plan to maintain sufficient capital at the Company on a
consolidated basis; and
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B-1
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The Company expects that absent a transaction such as the
Transaction or a significant infusion of new capital, the
Companys capital position would become severely strained
and as a result the Company and the Bank would face additional
regulatory actions, including intervention by the United States
federal banking regulators,
and/or the
Company would be required to seek protection under applicable
bankruptcy laws.
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As part of our engagement, we have assisted the management of
the Company in connection with their evaluation of a range of
strategic alternatives, including, but not limited to, a sale of
the Company and capital raising and recapitalization
alternatives. As part of this process, the Company had
discussions with a significant number of potential strategic
acquirors and investors. In arriving at our view expressed
herein, we have taken into account the foregoing.
You have advised us that, as a result of the foregoing, the
Company and its Board of Directors are faced with a narrow set
of alternatives, which at this time are limited to a significant
strategic transaction such as the Transaction or intervention by
United States banking regulators and eventual liquidation of the
Company, and that at this point, there are no executable
transactions other than the Transaction. We have considered
recent instances where concerns regarding the liquidity of a
bank or financial institution triggered a rapid deterioration of
the institutions financial condition, necessitating
government intervention or bankruptcy protection, and as a
result of which the common equity holders of the institution
received substantially diminished value, if any at all, for
their equity. In light of the facts and circumstances, we have
assumed that if the Bank were taken over by the United States
federal banking regulators and the Companys non-banking
assets were liquidated under applicable bankruptcy laws, the
Common Holders would likely receive no value for their shares.
For purposes of the opinion set forth herein, we have:
1) Reviewed certain publicly available financial statements
and other business and financial information of the Company and
the Buyer, respectively;
2) Reviewed certain internal financial statements and other
financial and operating data concerning the Company;
3) Reviewed certain financial projections prepared by
management of the Company;
4) Reviewed the Consent Order and the Written Agreement;
5) Discussed the past and current operations and financial
condition and the prospects of the Company with senior
executives of the Company;
6) Reviewed the reported prices and trading activity for
the Company Common Stock and the Buyer Common Stock;
7) Compared the financial performance of the Company and
the Buyer and the prices and trading activity of the Company
Common Stock and the Buyer Common Stock with that of certain
other publicly-traded companies comparable with the Company and
the Buyer, respectively, and their securities;
8) Reviewed the financial terms, to the extent publicly
available, of certain recent recapitalization transactions
involving certain companies comparable with the Company;
9) Participated in discussions and negotiations among
representatives of the Company and the Buyer and their financial
and legal advisors;
10) Reviewed the Merger Agreement and certain related
documents; and
11) Performed such other analyses, reviewed such other
information and considered such other factors as we have deemed
appropriate.
We have assumed and relied upon, without independent
verification, the accuracy and completeness of the information
that was publicly available or supplied or otherwise made
available to us by the Company, and formed a substantial basis
for this opinion. With respect to the financial projections, we
have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments
of the management of the Company of the future financial
performance of the Company. We note that we did not perform
certain analyses
B-2
that we would customarily prepare in connection with a financial
opinion letter because such analyses are not meaningful as a
result of the extraordinary circumstances of the Company
described herein. In addition, we have assumed that the
Transaction will be consummated in accordance with the terms set
forth in the Merger Agreement without any waiver, amendment or
delay of any terms or conditions. Morgan Stanley has assumed
that in connection with the receipt of all the necessary
governmental, regulatory or other approvals and consents
required for the proposed Transaction, no delays, limitations,
conditions or restrictions will be imposed that would have a
material adverse effect on the contemplated benefits expected to
be derived in the proposed Transaction. We are not legal, tax,
accounting, or regulatory advisors. We are financial advisors
only and have relied upon, without independent verification, the
assessment of the Company and its legal, tax, accounting, or
regulatory advisors with respect to legal, tax, accounting, or
regulatory matters. This opinion is not a solvency opinion and
does not in any way address the solvency or financial condition
of the Company or whether other strategic alternatives exist for
the Company or are available. We express no opinion with respect
to the fairness of the amount or nature of the compensation to
any of the Companys officers, directors or employees, or
any class of such persons, relative to the Consideration to be
received by the Common Holders in the Transaction. We have not
made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any
such appraisals. We are not experts in the evaluation of
allowances for loan losses, and we have neither made an
independent evaluation of the adequacy of the allowance for loan
losses at the Company, nor have we examined any individual loan
credit files of the Company or been requested to conduct such a
review. Accordingly, we have relied upon, without independent
verification, the assessment by the management of the Company
that the aggregate allowance for the estimated loan losses of
the Company is adequate. In particular, we do not express any
opinion as to the value of any asset of the Company, whether at
current market prices or in the future. We note, however, that,
under the ownership of a company with adequate liquidity and
capital, such as the Buyer, the value of the Company could
substantially improve, resulting in significant returns to the
Buyer if the Transaction is consummated. Our opinion is
necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available
to us as of, the date hereof. Events occurring after the date
hereof may affect this opinion and the assumptions used in
preparing it, and we do not assume any obligation to update,
revise or reaffirm this opinion.
We have acted as financial advisor to the Board of Directors of
the Company in connection with this Transaction and will receive
a fee for our services, a significant portion of which is
contingent upon the closing of the Transaction. In the two years
prior to the date hereof, we have provided financial advisory
and financing services for each of the Company and the Buyer and
have received fees in connection with such services. Morgan
Stanley may also seek to provide such services to the Buyer in
the future and expects to receive fees for the rendering of
these services.
Please note that Morgan Stanley is a global financial services
firm engaged in the securities, investment management and
individual wealth management businesses. Our securities business
is engaged in securities underwriting, trading and brokerage
activities, foreign exchange, commodities and derivatives
trading, prime brokerage, as well as providing investment
banking, financing and financial advisory services. Morgan
Stanley, its affiliates, directors and officers may at any time
invest on a principal basis or manage funds that invest, hold
long or short positions, finance positions, and may trade or
otherwise structure and effect transactions, for their own
account or the accounts of its customers, in debt or equity
securities or loans of the Company, the Buyer or any other
company, or any currency or commodity, that may be involved in
this Transaction, or any related derivative instrument.
This opinion has been approved by a committee of Morgan Stanley
investment banking and other professionals in accordance with
our customary practice. This opinion is for the information of
the Board of Directors and may not be used for any other purpose
without our prior written consent, except that a copy of this
opinion may be included in its entirety in any filing the
Company is required to make with the Securities and Exchange
Commission in connection with this Transaction if such inclusion
is required by applicable law. In addition, this opinion does
not in any manner address the prices at which the Buyer Common
Stock will trade following consummation of the Transaction and
Morgan Stanley expresses no opinion or recommendation as to how
the shareholders of the Company should vote at the
shareholders meeting to be held in connection with the
Transaction. Our opinion does not address the underlying
business decision of the Company to engage in the Transaction,
or the relative merits of the Transaction as compared to any
other alternative business transaction, or other alternatives,
or whether or not
B-3
such alternatives could be achieved or are available. This
opinion addresses only the fairness from a financial point of
view to the Common Holders, as of the date hereof, of the
Consideration pursuant to the Merger Agreement. We do not
express any view on, and our opinion does not address, any other
term or aspect of the fairness of the Transaction to, or any
consideration received in connection therewith by, the holders
of any class of securities, creditors, or other constituencies
of the Company other than the Common Holders. We express no view
or opinion as to any terms or other aspects of the Transaction,
including, without limitation, the Share Purchase and the TARP
Preferred Stock Purchase to be effected by the Buyer in
connection with the Transaction.
Based on and subject to the foregoing, we are of the opinion on
the date hereof that the Consideration to be received by the
Common Holders pursuant to the Merger Agreement is fair from a
financial point of view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
Jonathan Pruzan
Managing Director
B-4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
TD. Under the Bank Act of Canada, a bank may not, by contract, resolution or by-law, limit the
liability of its directors for breaches of the Act, including their fiduciary duties imposed under
the Act. However, a bank may indemnify a director or officer, a former director or officer or a
person who acts or acted, at the banks request, as a director or officer of or in a similar
capacity for another entity, and his or her heirs and personal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him or her because of any civil, criminal, administrative, investigative or
other proceeding in which he or she is involved because of that association and may advance funds
to him or her for the costs, charges or expenses of such a proceeding, provided however, that a
bank may not indemnify such a person unless:
(1) that person acted honestly and in good faith with a view to the best interests of, as
the case may be, the bank or the other entity for which they acted at the banks request as
a director or officer or in a similar capacity; and
(2) in the case of a criminal or administrative action or proceeding that is enforced by a
monetary penalty, that person had reasonable grounds for believing that his or her impugned
conduct was lawful.
Under the Bank Act of Canada, these individuals are entitled to be indemnified by the bank in
respect of all costs, charges and expenses reasonably incurred by them in connection with the
defence of any civil, criminal, administrative, investigative or other proceeding in which he or
she is involved because of an association referred to above with the bank or other entity if the
person was not judged by the courts or other competent authority to have committed any fault or
omitted to do anything that they ought to have done and fulfilled the conditions set out in (1) and
(2) above. A bank may, with the approval of a court, also indemnify these individuals in respect
of, or advance amounts to him or her for the costs, charges and expenses of, a proceeding referred
to above, in respect of an action by or on behalf of the bank or other entity to procure a judgment
in its favor, to which the person is made a party because of an association referred to above with
the bank or other entity, if he or she fulfills the conditions set out in (1) and (2) above.
TDs by-laws provide that subject to the limitations contained in the Bank Act of Canada, but
without limit to the right of TD to indemnify or advance funds to any person under the Bank Act of
Canada or otherwise, TD will indemnify a director or officer or a former director or officer, or a
person who acts or acted at TDs request as a director or officer of or in a similar capacity for
another entity, and such persons heirs and legal representatives, against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by
such person in respect of any civil, criminal, administrative, investigative or other proceeding to
which such person is involved because of that association with TD or other entity. However, TDs
bylaws further provide that TD shall not indemnify any such person unless: (i) such person acted
honestly and in good faith with a view to the best interests of TD or the other entity for which
they acted at TDs request as a director or officer or in a similar capacity; and (ii) in the case
of a criminal or administrative action or proceeding that is enforced by a monetary penalty, such
person had reasonable grounds for believing that such persons conduct was lawful. These
indemnification provisions could be construed to permit or require indemnification for certain
liabilities arising out of U.S. federal securities laws. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling TD
pursuant to the foregoing provisions, TD has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable in the United States.
TD maintains directors and officers liability insurance policies providing for the insurance
on behalf of any person who is or was a director or officer of TD and subsidiary companies against
any liability incurred by him or her in any such capacity or arising out of his or her status as
such.
TD also maintains liability insurance policies providing for the insurance on behalf of any
person who is or was an employee of TD while acting as a director, officer, trustee, governor or
executive director of any
II-1
organization where such service is with the knowledge and consent of TDs Board of Directors
against any liability incurred by him or her in any such capacity or arising out of his or her
status, provided that such insurance shall not apply to the extent that any such person is entitled
to be indemnified by such organization or to the extent that such organization maintains separate
insurance of behalf of the person against such liability.
II-2
Item 21. Exhibits and Financial Statement Schedules
(a) The following documents are exhibits to the registration statement.
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Exhibit |
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Number |
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Description of Document |
2.1
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Agreement and Plan of Merger, dated as of May 16, 2010, among The Toronto-Dominion Bank,
Hunt Merger Sub, Inc. and The South Financial Group, Inc. (included as Appendix A to the
proxy statement/ prospectus included in this Registration Statement) |
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3.1
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By-laws of The Toronto-Dominion Bank (incorporated by reference to the Current Report on
Form 6-K filed by The Toronto-Dominion Bank with the SEC on
April 17, 2007) |
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5.1
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Opinion of McCarthy Tétrault LLP as to the validity of the common shares of The
Toronto-Dominion Bank being registered |
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21.1
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Subsidiaries of registrant (incorporated by reference to Appendix A to Exhibit 99.1 to
Form 40-F for the fiscal year ended October 31, 2009) |
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23.1
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Consent of McCarthy Tétrault LLP, Canadian counsel to The Toronto-Dominion Bank (included
as part of its opinion filed as Exhibit 5.1 hereto) |
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23.2
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Consent of Ernst & Young LLP |
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23.3
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Consent of PricewaterhouseCoopers LLP |
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24.1
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Powers of Attorney of certain
directors and officers of The Toronto-Dominion Bank* |
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99.1
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Form of proxy materials for The
South Financial Group, Inc. special meeting of shareholders* |
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99.2
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Cash Election Form |
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99.3
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Consent of Morgan Stanley &
Co. Incorporated |
II-3
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of Registration Fee table in the effective
registration statement; and
(iii) to include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in
the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrants annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plans annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c)(1) The undersigned registrant undertakes as follows: that prior to any public reoffering
of the securities registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus shall contain the
information called for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the other items of the
application form.
(2) The registrant undertakes that every prospectus (i) that is filed pursuant to the
paragraph immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3)
of the Securities Act and is used in connection with an offering of securities subject to Rule 415,
shall be filed as a part of an amendment to the registration statement and shall not be used until
such amendment is effective, and that, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes: (i) to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the incorporated documents by
first class mail or other equally prompt means and (ii) to arrange or provide for a facility in the
United States for the purpose of responding to such requests.
II-4
The undertaking in clause (i) above includes information contained in documents filed
subsequent to the effective date of the registration statement through the date of responding to
the request.
(e) The undersigned registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration statement when it became
effective.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act, The Toronto-Dominion Bank has duly caused
this Registration Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toronto, Province of Ontario, Canada, on
August 24, 2010.
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THE TORONTO-DOMINION BANK
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By: |
/s/ RIAZ
AHMED |
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Name: |
Riaz Ahmed |
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Title: |
Group Head, Corporate Development, Enterprise
Strategy and Treasury |
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Pursuant to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities indicated on August 24, 2010.
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Signature |
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Title |
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* |
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William E. Bennett
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Director |
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* |
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Hugh J. Bolton
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Director |
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* |
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John L. Bragg
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Director |
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* |
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W. Edmund Clark
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Director, President and Chief Executive Officer |
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(principal executive officer) |
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* |
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Wendy K. Dobson
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Director |
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* |
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Henry H. Ketcham
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Director |
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* |
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Pierre H. Lessard
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Director |
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* |
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Brian M. Levitt
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Director |
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* |
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Harold H. MacKay
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Director |
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* |
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Irene R. Miller
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Director |
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* |
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Nadir H. Mohamed
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Director |
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* |
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Wilbur J. Prezzano
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Director |
II-6
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Signature |
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Title |
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* |
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Helen K. Sinclair
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Director |
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* |
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Carole S. Taylor
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Director |
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* |
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John M. Thompson
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Director and Chairman |
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/s/ KELVIN TRAN
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Senior Vice President and Chief Accountant (principal |
Kelvin Tran
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accounting officer) |
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/s/ COLLEEN M. JOHNSTON
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Group Head, Finance and Chief Financial Officer |
Colleen M. Johnston
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(principal financial officer) |
*By: /s/
RIAZ AHMED
Attorney-in-Fact
Authorized Representative in the United States:
By: /s/ BRENDAN OHALLORAN
Name: Brendan OHalloran
Title: Senior Vice President
II-7
EXHIBIT INDEX
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Exhibit |
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Number |
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Description of Document |
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2.1
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Agreement and Plan of Merger, dated as of May 16, 2010, among The Toronto-Dominion Bank,
Hunt Merger Sub, Inc. and The South Financial Group, Inc. (included as Appendix A to the
proxy statement/ prospectus included in this Registration Statement) |
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3.1
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By-laws of The Toronto-Dominion Bank (incorporated by reference to the Current Report on
Form 6-K filed by The Toronto-Dominion Bank with the SEC on
April 17, 2007) |
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5.1
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Opinion of McCarthy Tétrault LLP as to the validity of the common shares of The
Toronto-Dominion Bank being registered |
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21.1
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Subsidiaries of registrant (incorporated by reference to Appendix A to Exhibit 99.1 to
Form 40-F for the fiscal year ended October 31, 2009) |
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23.1
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Consent of McCarthy Tétrault LLP, Canadian counsel to The Toronto-Dominion Bank (included
as part of its opinion filed as Exhibit 5.1 hereto) |
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23.2
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Consent of Ernst & Young LLP |
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23.3
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Consent of PricewaterhouseCoopers LLP |
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24.1
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Powers of Attorney of certain
directors and officers of The Toronto-Dominion Bank* |
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99.1
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Form of proxy materials for The
South Financial Group, Inc. special meeting of shareholders* |
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99.2
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Cash Election Form |
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99.3
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Consent of Morgan Stanley &
Co. Incorporated |
II-8