UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 2)

 

 

PRELIMINARY PROXY MATERIALS
Dated March 6, 2007

TD BANKNORTH INC.
P.O. Box 9540
Two Portland Square
Portland, Maine 04112-9540
(207) 761-8500

Fellow TD Banknorth stockholders,

On behalf of the board of directors, I cordially invite you to attend a special meeting of stockholders of TD Banknorth Inc., which will be held at the Portland Marriott Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106, on               , 2007 at 10:30 a.m., Eastern Time. At the special meeting, you will be asked to consider and vote on a proposal to approve and adopt the Agreement and Plan of Merger, dated as of November 19, 2006, among TD Banknorth, The Toronto-Dominion Bank, our majority stockholder, and Bonn Merger Co., a newly-formed, wholly-owned subsidiary of The Toronto-Dominion Bank.

The merger agreement sets forth the terms and conditions under which Bonn Merger Co. will merge with and into TD Banknorth, which will result in us becoming a wholly-owned subsidiary of The Toronto-Dominion Bank. Upon completion of the merger, holders of our common stock (other than The Toronto-Dominion Bank and its subsidiaries and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $32.33 in cash, without interest, for each share of TD Banknorth common stock held immediately prior to completion of the merger.

This proxy statement gives you detailed information about the special meeting, the merger agreement and the merger, and a copy of the merger agreement is included as Annex A to this proxy statement. We encourage you to read the proxy statement and the merger agreement carefully.

Pursuant to a stockholders agreement entered into by TD Banknorth and The Toronto-Dominion Bank in connection with The Toronto-Dominion Bank’s acquisition of a majority interest in us on March 1, 2005, our board of directors formed a special committee of designated independent directors who are not officers or employees of TD Banknorth or affiliated with The Toronto-Dominion Bank to, among other things, evaluate and negotiate the terms of any future going-private transaction. The special committee unanimously recommended to our board of directors that the merger agreement be approved. In connection with its evaluation of the merger, the special committee engaged Sandler O’Neill & Partners, L.P. to act as its financial advisor. Sandler O’Neill has rendered its opinion to the special committee and the board of directors stating that, as of the date of the opinion and subject to the assumptions, qualifications and limitations set forth in the opinion, the merger consideration of $32.33 in cash per share of common stock is fair from a financial point of view to the holders of our common stock, other than The Toronto-Dominion Bank and its affiliates. The Sandler O’Neill opinion is not a recommendation as to how any stockholder should vote with respect to the merger agreement. The written opinion of Sandler O’Neill is attached as Annex B to this proxy statement, and you should read it carefully.

Our board of directors, after considering the unanimous recommendation of the special committee, unanimously approved the merger agreement and determined that it and the merger are fair to and in the best interests of TD Banknorth and its unaffiliated stockholders. Our board of directors therefore recommends that you vote “FOR” approval and adoption of the merger agreement.

The Toronto-Dominion Bank has agreed to vote all shares of TD Banknorth common stock directly or indirectly owned by it (other than any shares held in trust accounts, managed accounts and the like for the benefit of third parties), and to provide its consent as the holder of our outstanding share of Class B common stock, in favor of the proposal to approve and adopt the merger agreement, which will ensure that the merger agreement is adopted by the holders of a majority of the outstanding shares of TD Banknorth common stock and the holder of our outstanding share of Class B common stock, as required by Delaware law. In addition, pursuant to the merger agreement and the stockholders agreement, the affirmative vote of the holders of a majority of the outstanding TD Banknorth common stock not owned by The Toronto-

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Dominion Bank and its affiliates is necessary to approve the merger agreement. These shares amounted to     % of the outstanding TD Banknorth common stock as of the record date for the special meeting.

The Toronto-Dominion Bank has entered into a voting agreement with Private Capital Management, L.P., our largest stockholder after The Toronto-Dominion Bank, pursuant to which this stockholder has agreed to vote all shares of TD Banknorth common stock over which it exercises voting authority in favor of approval and adoption of the merger agreement. In addition, another of our large stockholders, Ariel Capital Management, LLC, advised The Toronto-Dominion Bank at the time of announcement of the merger agreement that its expectation at that time was to vote in favor of approval and adoption of the merger agreement but did not make any commitment to do so. Although these stockholders may not have voting authority over all of the shares which they from time to time hold or have investment discretion over (which, based on information that was publicly available as of March 1, 2007 (which relates to holdings as of December 31, 2006), in the aggregate amounted to approximately       % of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates as of the record date for the special meeting), The Toronto-Dominion Bank expects that the majority of the shares which such stockholders hold or have investment discretion over will be voted in favor of the proposal to approve and adopt the merger agreement.

YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend the special meeting, please complete and promptly mail your proxy card in the return envelope enclosed, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card. This will not prevent you from voting in person at the special meeting if you so desire. The failure to vote will have the same effect as a vote against the merger agreement.

Sincerely yours,

William J. Ryan
Chairman of the Board

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger, passed upon the merits or fairness of the merger, or passed upon the adequacy or accuracy of the disclosure in this document.  Any representation to the contrary is a criminal offense.

This proxy statement is dated               , 2007, and is first being mailed to stockholders of
TD Banknorth on or about             , 2007.

TD BANKNORTH INC.
P.O. Box 9540
Two Portland Square
Portland, Maine 04112-9540
(207) 761-8500

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

NOTICE IS HEREBY GIVEN that a special meeting of TD Banknorth stockholders will be held on          ,                   , 2007 at 10:30 a.m., Eastern Time, at the Portland Marriott Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106, for the following purposes:

1.                To consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of November 19, 2006, among TD Banknorth Inc., The Toronto-Dominion Bank and Bonn Merger Co.; and

2.                To transact such other business as may properly come before the special meeting or any adjournment or postponement of the special meeting.

Only TD Banknorth stockholders of record at the close of business on                     , 2007 are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement of the special meeting.

Under Delaware law, the merger agreement must be adopted by the affirmative vote of the holders of a majority of all outstanding shares of TD Banknorth common stock and the affirmative vote of The Toronto-Dominion Bank in its capacity as the holder of the outstanding share of our Class B common stock. In addition, under the terms of the merger agreement and a stockholders agreement between us and The Toronto-Dominion Bank, the merger agreement must be approved by the affirmative vote or consent of the holders of a majority of all outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates.

Under Delaware law, holders of TD Banknorth common stock who do not vote in favor of the merger agreement will have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery if the merger is completed, but only if they submit a written demand for such an appraisal prior to the vote on the merger agreement and comply with the other Delaware law procedures explained in the accompanying proxy statement.

YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend the special meeting, please complete and promptly mail your proxy card in the return envelope enclosed, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card. This will not prevent you from voting in person at the special meeting if you so desire. The failure to vote will have the same effect as a vote against the merger agreement.

By Order of the Board of Directors,

Carol L. Mitchell, Esq.
Senior Executive Vice President, General
   Counsel and Secretary

Portland, Maine
                     , 2007

TABLE OF CONTENTS

(i)

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(ii)

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ANNEXES:

 

(iii)

SUMMARY TERM SHEET

This summary highlights selected information from this document and may not contain all of the information that is important to you. To fully understand the merger agreement and the merger contemplated thereby, you should read carefully this entire document, including the merger agreement and the other annexes to this document, as well as the other documents to which we have referred you. See “Where You Can Find More Information” beginning on page 106. Page references are included in this summary to direct you to a more complete description of the topics.

Parties to the Proposed Transaction (page 15)

The parties to the proposed transaction are TD Banknorth Inc., a Delaware corporation, The Toronto-Dominion Bank, a Canadian bank and our majority stockholder, and Bonn Merger Co., a newly-formed, wholly-owned subsidiary of The Toronto-Dominion Bank.

What You Will Receive in the Merger (page 74)

Upon completion of the proposed merger of Bonn Merger Co. with and into TD Banknorth, holders of our common stock (other than The Toronto-Dominion Bank and its subsidiaries and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $32.33 in cash without interest for each share of TD Banknorth common stock held by them immediately prior to completion of the merger.

Effects of the Merger (page 74)

The merger is a “going-private” transaction which will result in us becoming a wholly-owned subsidiary of The Toronto-Dominion Bank. The merger will have the following effects when it is completed:

·       The Toronto-Dominion Bank will own all equity interests in TD Banknorth;

·       public stockholders will no longer participate financially in the potential risks or potential benefits associated with a common equity investment in TD Banknorth;

·       we will no longer be a public company and the TD Banknorth common stock will no longer be listed or traded on the New York Stock Exchange; and

·       we will no longer be required to file annual, quarterly and current reports with the Securities and Exchange Commission, or “SEC,” except to the extent required by outstanding TD Banknorth or affiliate debt securities.

Recommendations of the Special Committee and Our Board of Directors and Our Position as to the Fairness of the Merger (page 28)

A special committee of designated independent directors of TD Banknorth invited The Toronto-Dominion Bank to make a merger proposal under the terms of the existing stockholders agreement between us and The Toronto-Dominion Bank and considered and evaluated The Toronto-Dominion Bank’s merger proposal. The special committee consists of four of our directors who are not officers or employees of TD Banknorth or affiliated with The Toronto-Dominion Bank. The special committee, acting with the advice and assistance of its independent legal and financial advisors, evaluated and negotiated the merger, including the terms and conditions of the merger agreement, with The Toronto-Dominion Bank. The special committee unanimously resolved to:

·       approve the merger agreement and the merger,

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·       recommend to the board of directors that the board approve and adopt the merger agreement, and

·       recommend to the board of directors that the merger agreement be submitted to the stockholders of TD Banknorth for approval.

Based on the special committee’s recommendation and other factors, our board of directors unanimously determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of TD Banknorth and its unaffiliated stockholders and recommended that TD Banknorth’s stockholders vote to approve and adopt the merger agreement. The vote of the Class B Directors of TD Banknorth, who are elected by The Toronto-Dominion Bank in its capacity as the holder of our Class B common stock, was required to formally adopt the merger agreement and otherwise to take formal action in connection with the merger under our certificate of incorporation and the stockholders agreement, and the Class B directors accordingly voted to take such action solely on the basis of the recommendation of the special committee. The special committee and the board of directors believe that the merger agreement, the merger and the other transactions contemplated thereby are fair to and in the best interests of TD Banknorth’s unaffiliated stockholders. Our board of directors therefore unanimously recommends that you vote “FOR” approval and adoption of the merger agreement.

See “Special Factors—Recommendations of the Special Committee and the TD Banknorth Board of Directors and Our Position as to the Fairness of the Merger” beginning on page 28.

Opinion of Our Financial Advisor (page 33)

The special committee and the board of directors of TD Banknorth received an opinion, dated November 19, 2006, from Sandler O’Neill & Partners, L.P., to the effect that, as of such date, the merger consideration to be received by the holders of TD Banknorth common stock (other than The Toronto-Dominion Bank and its affiliates) is fair to such holders from a financial point of view. Sandler O’Neill’s opinion is subject to the assumptions, qualifications and limitations set forth in that opinion, which is attached to this proxy statement as Annex B. We encourage you to read Sandler O’Neill’s opinion in its entirety and the section titled “Special Factors—Opinion of Sandler O’Neill” beginning on page 33 for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. Sandler O’Neill’s opinion was directed to the special committee and TD Banknorth’s board of directors and is not a recommendation to any TD Banknorth stockholder as to how such stockholder should vote at the special meeting with respect to the merger agreement or any other matter.

The Position of The Toronto-Dominion Bank and Bonn Merger Co. as to the Fairness of the Merger (page 44)

Both The Toronto-Dominion Bank and Bonn Merger Co. believe that the merger is substantively and procedurally fair to TD Banknorth’s unaffiliated stockholders. The Toronto-Dominion Bank and Bonn Merger Co. believe that this conclusion is supported by their knowledge and analysis of available information about TD Banknorth and by the factors discussed under “Special Factors—The Position of The Toronto-Dominion Bank and Bonn Merger Co. as to the Fairness of the Merger” beginning on page 44.

Interests of Directors and Executive Officers of TD Banknorth in the Merger (page 56)

When considering the recommendations of the special committee and TD Banknorth’s board of directors, you should be aware that the executive officers and directors of TD Banknorth have interests in the merger that may be different from your interests. These interests include the following.

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Pursuant to the merger agreement, The Toronto-Dominion Bank agreed to honor, or cause to be honored, all of the employment and retention agreements we have with our executive officers and other officers, as well as all other employee benefit plans, agreements and other arrangements that we provide to our directors, officers and employees. In connection with the execution of the merger agreement, four senior executive officers of TD Banknorth—William J. Ryan, Peter J. Verrill, Stephen J. Boyle and Carol L. Mitchell—executed waiver letters in which they agreed that the transactions contemplated by the merger agreement, together with any changes in job duties, status or reporting responsibilities that are directly attributable to the merger, will not constitute either “good reason” or a “change in control” for purposes of their employment or retention agreements or any compensation plans in which they participate.

Pursuant to the merger agreement, we and The Toronto-Dominion Bank also agreed to the following:

·       to cash-out at the completion of the merger all options to purchase TD Banknorth common stock that expire no later than December 31, 2008 (all of which are currently exercisable by the optionees),

·       to convert at the completion of the merger all other options to purchase TD Banknorth common stock into options to purchase common shares of The Toronto-Dominion Bank, using an exchange ratio based on the merger consideration of $32.33 per share and the trading price of the common shares of The Toronto-Dominion Bank over a measurement period prior to the completion of the merger, which options will vest in accordance with their existing terms,

·       to convert all outstanding restricted stock units valued with respect to TD Banknorth common stock into restricted stock units valued with respect to common shares of The Toronto-Dominion Bank,

·       to work together in good faith to adjust or amend the performance criteria with respect to our outstanding performance-based restricted stock units for performance periods after 2006, with the new performance criteria to be similar to the relative total shareholder return measure used by The Toronto-Dominion Bank with respect to comparable plans currently offered by The Toronto-Dominion Bank,

·       to pay out the restricted stock units granted on March 1, 2005 to six of our executive officers at the target level of performance if such settlement is more favorable to the executive officers than a payment based on actual performance, with the estimated value of such additional payout in March 2008 based on performance to date being approximately $1.8 million in the aggregate for the six executive officers,

·       to permit us to grant in January 2007 the performance-based restricted stock units that we were planning to grant in the ordinary course of business absent the merger, as previously disclosed to The Toronto-Dominion Bank, with the restricted stock units to be granted to all executive officers as a group (10 persons) having an estimated value (based on the closing sales price of our common stock on March 1, 2007) of approximately $7.6 million assuming performance is achieved at the target level, and

·       to provide indemnification and directors’ and officers’ liability insurance to our directors and officers.

The special committee and our board of directors were aware of these interests and considered them, among other matters, in approving the merger agreement.

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The Special Meeting (page 16)

Date, Time and Place.   A special meeting of stockholders of TD Banknorth will be held on               ,                  , 2007, at the Portland Marriot Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106 at 10:30 a.m., Eastern Time. At the special meeting, TD Banknorth stockholders will be asked to approve and adopt the merger agreement and to act upon any other matters that may properly come before the special meeting.

Record Date; Outstanding Shares.   Holders of record of shares of our outstanding common stock and Class B common stock as of the close of business on                     , 2007 are entitled to vote at the special meeting. On that date there were             shares of TD Banknorth common stock and one share of Class B common stock outstanding and entitled to vote. Each share of TD Banknorth common stock entitles the holder to one vote at the special meeting on all matters properly presented at the special meeting. The share of Class B common stock entitles the holder, The Toronto-Dominion Bank, to one vote at the special meeting, or by written consent in lieu of voting at the special meeting, on the proposal to approve and adopt the merger agreement, voting as a separate class.

Required Votes.   Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of TD Banknorth common stock and the affirmative vote of The Toronto-Dominion Bank in its capacity as the holder of the outstanding share of our Class B common stock are necessary to approve and adopt the merger agreement on behalf of TD Banknorth. In addition, pursuant to the merger agreement and the stockholders agreement between TD Banknorth and The Toronto-Dominion Bank, the affirmative vote of the holders of a majority of the outstanding TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates is necessary to approve the merger agreement.  As of                        , 2007, the record date for the special meeting, there were            shares of TD Banknorth common stock outstanding other than shares owned by The Toronto-Dominion Bank and its affiliates, which represented      % of the outstanding TD Banknorth common stock on that date. This means that pursuant to the merger agreement and the stockholders agreement, approval and adoption of the merger agreement is conditioned on the affirmative vote of the holders of approximately                       or more of such shares.

Voting and Revocation of Proxies.   Stockholders of record may vote by mail, by telephone, via the Internet or by attending the special meeting and voting in person. If your shares are held in an account with a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted.

You will have the power to revoke your proxy at any time before it is exercised by:

·       delivering prior to the special meeting a written notice of revocation addressed to Carol L. Mitchell, Senior Executive Vice President, General Counsel  and Secretary, TD Banknorth Inc., P.O. Box 9540, Two Portland Square, Portland, Maine 04112;

·       delivering to TD Banknorth prior to the special meeting a properly executed proxy with a later date;

·       voting on a later date but prior to the special meeting by telephone or via the Internet (only your last telephone or Internet proxy will be counted); or

·       attending the special meeting and voting in person.

Each proxy returned to TD Banknorth (and not revoked) by a holder of TD Banknorth common stock will be voted in accordance with the instructions indicated thereon. If no instructions are indicated, the proxy will be voted “FOR” approval and adoption of the merger agreement and in the discretion of the proxies upon any other matters that may properly come before the special meeting.

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Voting Agreements and Understandings (pages 18 and  86)

The Toronto-Dominion Bank has agreed to vote all shares of TD Banknorth common stock directly or indirectly owned by it (other than any shares held in trust accounts, managed accounts and the like for the benefit of third parties), and to provide its consent as the holder of our outstanding share of Class B common stock, in favor of the proposal to approve and adopt the merger agreement, which will ensure that the merger agreement is adopted by the holders of a majority of the outstanding TD Banknorth common stock and the holder of our outstanding share of Class B common stock, as required by Delaware law.

The Toronto-Dominion Bank has entered into a voting agreement with Private Capital Management, L.P., our largest stockholder after The Toronto-Dominion Bank, pursuant to which this stockholder has agreed to vote all shares of TD Banknorth common stock over which it exercises voting authority in favor of approval and adoption of the merger agreement. In addition, another of our large stockholders, Ariel Capital Management, LLC, advised The Toronto-Dominion Bank at the time of announcement of the merger agreement that its expectation at that time was to vote in favor of approval and adoption of the merger agreement but did not make any commitment to do so. Based on information that was publicly available as of March 1, 2007 (which relates to holdings as of December 31, 2006), together these two stockholders held or had investment discretion over 23.6 million shares, which represent      % of the outstanding shares of TD Banknorth common stock and     % of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates as of the record date for the special meeting. Although these stockholders may not have voting authority over all of the shares which they from time to time hold or have investment discretion over, The Toronto-Dominion Bank expects that the majority of the shares which such stockholders hold or have investment discretion over will be voted in favor of the proposal to approve and adopt the merger agreement. Assuming these stockholders vote a majority of the shares of TD Banknorth common stock which they held or had investment discretion over as of December 31, 2006 in favor of the proposal to approve and adopt the merger agreement at the special meeting, we will need the affirmative vote of additional stockholders holding approximately             additional shares, or      % of the outstanding TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates, to obtain the required approval of the merger agreement by the holders of a majority of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates.

Conditions to the Merger (page 77)

Each party’s obligation to complete the merger is subject to the satisfaction of the following conditions:

·       the merger agreement must be adopted by the stockholders of TD Banknorth in the required manner;

·       we must obtain the approval of the Massachusetts Board of Bank Incorporation and this approval must be in full force and in effect; and

·       there must not be in effect any order or injunction prohibiting completion of the merger and completion of the merger must not be prohibited under any applicable law.

In addition, the respective obligations of The Toronto-Dominion Bank and TD Banknorth to complete the merger are subject to the satisfaction or waiver of the following conditions:

·       the other party’s representations and warranties must be true and correct as of the closing date, except representations and warranties that speak as of an earlier date, which must be true and correct as of that earlier date, subject to any exceptions that have not had and would not be reasonably likely to have a material adverse effect on such party; and

·       the other party must have performed in all material respects all obligations that it is required to perform under the merger agreement prior to the closing date for the merger.

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Termination of the Merger Agreement (page 85)

TD Banknorth and The Toronto-Dominion Bank can mutually agree at any time to terminate the merger agreement before completing the merger, even if stockholders of TD Banknorth have already voted to adopt it. Either party generally also can terminate the merger agreement by written notice to the other if:

·       any governmental entity of competent jurisdiction shall have issued a final nonappealable injunction prohibiting the merger or the Massachusetts Board of Bank Incorporation shall have denied approval of the merger and such denial shall have become final and nonappealable;

·       the merger has not been completed on or before June 30, 2007;

·       there is a material breach by the other party to the merger agreement of any of its covenants or representations and warranties under the merger agreement, which would prevent satisfaction of a closing condition and the breach is not reasonably capable of being cured or is not cured within 45 days after receipt of written notice of the breach; or

·       the stockholders of TD Banknorth do not adopt the merger agreement at the special meeting in the required manner.

Any termination of the merger agreement by TD Banknorth must be approved by the special committee.

In addition, The Toronto-Dominion Bank may terminate the merger agreement if:

·       the board of directors of TD Banknorth fails to recommend adoption of the merger agreement by the stockholders of TD Banknorth, or the board of directors of TD Banknorth or any committee thereof (including the special committee) withdraws, modifies or qualifies (or resolves to withdraw, modify or qualify) in any manner adverse to The Toronto-Dominion Bank such recommendation of the adoption of the merger agreement or makes any other public statement in connection with the special meeting at which TD Banknorth stockholders will consider and vote upon the merger agreement which is inconsistent with such recommendation (or shall have resolved to do so), whether or not permitted by the merger agreement, or

·       TD Banknorth materially breaches its obligations under the merger agreement by failing to call, give notice of, convene and hold a special meeting of stockholders to consider and vote upon the merger agreement.

Material U.S. Federal Income Tax Consequences (page 65)

The receipt of cash for shares of our common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and also may be a taxable transaction under applicable state, local, foreign and other tax laws. For U.S. federal income tax purposes, each U.S. holder of our common stock generally will recognize gain or loss as a result of the merger measured by the difference, if any, between the cash received in the merger and the U.S. holder’s adjusted tax basis in the shares of TD Banknorth common stock owned by the U.S. holder. For U.S. federal income tax purposes, each non-U.S. holder generally will not be subject to U.S. federal income tax on the merger consideration received by such non-U.S. holder unless the non-U.S. holder has certain connections to the United States. For additional information regarding material U.S. federal income tax consequences of the merger to our stockholders, see “Special Factors—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 65. Stockholders are urged to consult their own tax advisors as to the particular tax consequences to them of the merger.

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Material Canadian Federal Income Tax Consequences (page 67)

A Canadian holder will be considered to have disposed of the shares of TD Banknorth common stock on the merger for proceeds of disposition equal to the amount of cash received in exchange for such shares. A Canadian holder who disposes of shares of TD Banknorth common stock will realize a capital gain (capital loss) equal to the amount by which the proceeds of disposition of such shares exceed (are exceeded by) the aggregate of the adjusted cost base of such shares and any reasonable expenses associated with the disposition. Generally, one-half of any capital gain (a “taxable capital gain”) realized must be included in the Canadian holder’s income and one-half of any capital loss may be deducted against taxable capital gains realized by the Canadian holder in the year, in any of the three prior years or in any subsequent year in the circumstances and to the extent provided in the Income Tax Act (Canada). For additional information regarding material Canadian federal income tax consequences of the merger to a Canadian holder, see “Special Factors—Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 67. Stockholders are urged to consult their own tax advisors as to the particular tax consequences to them of the merger.

Appraisal Rights (page 69)

Stockholders who do not wish to accept the $32.33 per share cash consideration payable pursuant to the merger have the right under Delaware law to dissent from the merger and have their shares appraised by the Delaware Court of Chancery. This “right of appraisal” is subject to a number of restrictions and technical requirements. Generally, in order to exercise appraisal rights, among other things:

·       you must NOT vote in favor of approval and adoption of the merger agreement; and

·       you must make a written demand for appraisal in compliance with Delaware law BEFORE the vote on the merger agreement.

Merely voting against the merger agreement will not preserve your right of appraisal under Delaware law. Also, because a submitted proxy not marked “against” or “abstain” will be voted for the adoption of the merger agreement, the submission of a proxy not marked “against” or “abstain” will result in the waiver of appraisal rights. Annex C to this proxy statement contains the Delaware law relating to your right of appraisal. If you hold shares in the name of a broker or other nominee, you must instruct your nominee to take the steps necessary to enable you to assert appraisal rights. If you or your nominee fail to follow all of the steps required by this law, you will lose your right of appraisal.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:             What am I being asked to vote on?

A:             You are being asked to vote on the approval and adoption of the merger agreement entered into among TD Banknorth, The Toronto-Dominion Bank and Bonn Merger Co., a wholly-owned subsidiary of The Toronto-Dominion Bank. The merger agreement sets forth the terms and conditions under which Bonn Merger Co. will merge with and into TD Banknorth. See “The Special Meeting” and “The Merger Agreement” beginning on pages 16 and  74, respectively.

Q:             What will I receive in the merger?

A:             If the merger is completed we will become a wholly-owned subsidiary of The Toronto-Dominion Bank and our stockholders (other than The Toronto-Dominion Bank and its subsidiaries and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $32.33 in cash without interest for each share of TD Banknorth common stock outstanding immediately prior to completion of the merger. See “The Merger Agreement—The Merger” beginning on page 74.

Q:             What does the TD Banknorth board of directors recommend?

A:             Our board of directors, based on the unanimous recommendation of the special committee, unanimously approved the merger agreement and determined that it and the merger are fair to and in the best interests of TD Banknorth and its unaffiliated stockholders. Our board of directors therefore recommends that you vote “FOR” approval and adoption of the merger agreement. To review the background and reasons for the merger in greater detail, see “Special Factors—Background of the Merger” and “Special Factors—Recommendations of the Special Committee and the TD Banknorth Board of Directors; Fairness of the Merger” beginning on pages 19 and 28, respectively.

Q:             Why did the board of directors of TD Banknorth form the special committee?

A:             Pursuant to a stockholders agreement entered into by TD Banknorth and The Toronto-Dominion Bank in connection with The Toronto-Dominion Bank’s acquisition of a majority interest in us on March 1, 2005, our board of directors formed a special committee of designated independent directors who are not officers or employees of TD Banknorth or affiliated with The Toronto-Dominion Bank that was authorized to, among other things, evaluate and negotiate the terms of any future going-private transaction. These provisions of the stockholders agreement were intended to protect our public stockholders from potential conflicts of interest resulting from The Toronto-Dominion Bank’s acquisition of a majority interest in us and significant governance rights, including with respect to representation on and action by our board of directors.

Q:             When do you anticipate the merger will be completed?

A:             We will try to complete the merger as soon as possible. Before that happens, the merger agreement must be adopted by our stockholders in the required manner at the special meeting and we must obtain the required approval of the Massachusetts Board of Bank Incorporation. Assuming these and the other conditions to the merger are satisfied, we expect to complete the merger during the first quarter of 2007.

Q:             What is the date, time and place of the special meeting?

A:             The special meeting will be held on            ,                 , 2007, at the Portland Marriot Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106 at 10:30 a.m., Eastern Time.

Q:             Who is entitled to vote at the special meeting?

A:             Holders of record of shares of our outstanding common stock (and The

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Toronto-Dominion Bank, as the holder of the sole share of our Class B common stock) as of the close of business on                        , 2007 are entitled to vote at the special meeting. You will have one vote at the special meeting for each share of TD Banknorth common stock that you owned on that date. The share of Class B common stock entitles the holder, The Toronto-Dominion Bank, to one vote at the special meeting, or by written consent in lieu of voting at the special meeting, on the proposal to adopt the merger agreement, voting as a separate class.

Q:             What happens if I sell my shares of TD Banknorth common stock before the special meeting?

A:             The record date for the special meeting is earlier than the expected date of the merger. If you transfer your shares of TD Banknorth common stock after the record date but before the special meeting, you will, unless special arrangements are made, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares.

Q:             How can I vote if my shares are held in the TD Banknorth 401(k) Plan?

A.              If you hold shares of TD Banknorth common stock as part of the TD Banknorth 401(k) Plan, you may give voting instructions to Mellon Investor Services LLC, our transfer agent, by completing and returning a voting instruction ballot distributed to plan participants along with this proxy statement, or by telephone or via the Internet as described on your ballot. Our transfer agent will certify the totals for the plan to TD Banknorth, N.A., which acts as trustee for the plan, for the purpose of having those shares voted at the special meeting in accordance with your instructions.

Q:             Why is my vote important?

A:             Because the proposal to approve and adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates, and not a majority of those shares voting at the special meeting, a failure to vote or an abstention will have the same effect as a vote against the proposal to approve and adopt the merger agreement.

Q:             How do I vote?

A:             After carefully reading and considering the information contained in this proxy statement, please complete and promptly mail your proxy card in the return envelope enclosed, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free number or by using the Internet as described in the instructions included with your proxy card. Please do this as soon as possible so that your shares will be represented at the special meeting. See “The Special Meeting” beginning on page 16.

Q:             Can I change my vote after I have mailed in my proxy card or voted by phone or the Internet?

A:             Yes. You will have the power to revoke your proxy at any time before it is exercised by (1) delivering prior to the special meeting a written notice of revocation addressed to Carol L. Mitchell, Senior Executive Vice President, General Counsel and Secretary, TD Banknorth Inc., P.O. Box 9540, Two Portland Square, Portland, Maine 04112; (2) delivering to TD Banknorth prior to the special meeting a properly executed proxy with a later date; (3) voting on a later date but prior to the special meeting by telephone or via the Internet (only your last telephone or Internet proxy will be counted); or (4) attending the special meeting and voting in person. See “The Special Meeting” beginning on page 16.

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

A:             Your broker will vote your shares only if you provide instructions to your broker on how to vote. You should instruct your broker to vote your shares by following the directions

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provided to you by your broker. If you do not provide instructions to your broker, your shares will not be voted and this will have the same effect as a vote against the merger agreement and the merger.

Q:             Will my shares held in “street” name or another form of record ownership be combined for voting purposes with shares I hold of record?

A:             No. Because any shares you may hold in “street” name with a broker, bank or other nominee will be deemed to be held by a different stockholder than any shares you hold of record, any shares so held will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity, and shares held in an IRA must be voted under the rules governing the account.

Q:             Should I send in my stock certificates now?

A:             No. Promptly after completion of the merger, each stockholder of TD Banknorth entitled to receive his, her or its portion of the merger consideration will receive a transmittal letter and instructions specifying the procedures to be followed for surrendering stock certificates in exchange for payment of the merger consideration. Upon surrender of your stock certificate(s) with a duly executed letter of transmittal you will be paid the portion of the merger consideration to which you are entitled. You should not send your stock certificate(s) to us or anyone else until you receive written instructions following completion of the merger.

Q:             I do not know where my stock certificate is. How will I get my cash?

A:             The materials that will be sent to you after completion of the merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your certificate. We also may require that you provide a bond to cover any potential loss.

Q:             Where can I find more information?

A:             You may obtain more information from various sources as explained in the section “Where You Can Find More Information” beginning on page 106.

Q:             Who can answer further questions?

A:             If you have additional questions about the merger, you may call our proxy solicitor, Morrow & Co., toll-free at 1-800-270-3670 (banks and brokers may call collect at (203) 658-9400). If you would like additional copies of this proxy statement or a new proxy card, you may contact us in writing at TD Banknorth Inc., P.O. Box 9540, Two Portland Square, Portland, Maine 04112-9540 Attention: Jeffrey Nathanson, or by telephone at (207) 761-8517.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TD BANKNORTH
(Dollars in Thousands, Except Per Share Data)

The following information at and for the years ended December 31, 2006, 2005, 2004, 2003 and 2002 has been derived from TD Banknorth’s historical audited consolidated financial statements for those years.

The Toronto-Dominion Bank acquired a majority interest in TD Banknorth effective March 1, 2005 in a transaction which was accounted for by TD Banknorth under the purchase method of accounting. This resulted in a new basis of accounting reflecting the fair value of TD Banknorth’s assets and liabilities at March 1, 2005 and for the successor periods beginning on March 1, 2005. Information for all dates and “predecessor” periods prior to the acquisition on March 31, 2005 is presented by TD Banknorth using TD Banknorth’s historical basis of accounting. To assist in the comparability of TD Banknorth’s financial results and to make it easier to understand these results, the financial information of TD Banknorth presented herein combines the “predecessor period” in 2005 (January 1, 2005 to February 28, 2005) with the successor period in 2005 (March 1, 2005 to December 31, 2005) to present “combined” results for the year ended December 31, 2005.

The information set forth below is only a summary and should be read in conjunction with TD Banknorth’s consolidated financial statements and the related notes contained in TD Banknorth’s periodic reports filed with the SEC, that have been incorporated by reference into this document. See “Where You Can Find More Information” beginning on page 106.

 

(footnotes on following page)

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(1)             Includes securities held to maturity and securities purchased under agreements to resell.

(2)             Does not include loans held for sale.

(3)             Consists of merger charges, restructuring costs, charter consolidation costs, certain asset write-downs and branch closing costs where applicable.

(4)             Ratios are on a fully tax-equivalent basis.

(5)             The efficiency ratio represents noninterest expense as a percentage of net interest income and noninterest income.

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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
OF TD BANKNORTH

The following table sets forth our consolidated ratios of earnings to fixed charges for the periods shown. For purposes of computing the ratios, earnings represent income before income taxes and change in accounting principle, plus fixed charges. Fixed charges include all interest expense and the proportion deemed representative of the interest factor of rent expense. These ratios are presented both including and excluding interest on deposits.

(1)          Ratios for the year ended December 31, 2005 are based on the combined operations of our predecessor, Banknorth Group, Inc., for the period January 1, 2005 to February 28, 2005 and our operations as successor for the period March 1, 2005 to September 30, 2005 and for the period March 1, 2005 to December 31, 2005 following our application of the purchase method of accounting to account for the transaction which resulted in our becoming a majority-owned subsidiary of The Toronto-Dominion Bank.

RECENT DEVELOPMENTS

Cost-savings and Other Initiatives.   We are currently considering various expense reductions and operational initiatives which are intended to improve the future operating performance of TD Banknorth. These initiatives are being considered in light of our recent financial results, the intensely competitive environment for banking services, current economic conditions and the pending going-private transaction and are intended to reduce our annual operating expenses by 5%-8%. The initiatives include various strategies which are intended to build operational capacity, improve efficiency and reduce expense throughout the organization. The initiatives being considered include a reduction in force in selected divisions, consolidation or closing of certain branch offices, possible management changes, geographic consolidation of certain functions, write-downs of assets as a result of the consolidation of all or a portion of certain functions with those of The Toronto-Dominion Bank and other consolidations that may occur if the merger is completed. In addition, we are considering a potential contribution to the TD Banknorth foundation. Although we are still evaluating these initiatives and none have yet been approved by our board of directors, we anticipate that we will record a pre-tax charge of approximately $40 million to $100 million, pre-tax, or approximately $0.11 to $0.27 per share, after-tax, in the first or second quarter of 2007 to reflect the severance and other costs which are anticipated to be incurred in connection with these initiatives. The actual amount of the charge could be significantly greater or lesser than the estimated range depending on our analyses and determinations.

Litigation.   On or about February 16, 2007, the parties to the consolidated action In re TD Banknorth Shareholders Litigation, C.A. No. 2557-NC (Del. Ch., New Castle County) entered into a memorandum of understanding providing for the settlement of the six lawsuits comprising this consolidated action, without admission of any wrongdoing by any of the defendants. The memorandum of understanding provides for, among other things, the establishment by The Toronto-Dominion Bank of a settlement fund in an aggregate amount of approximately $2.95 million. If the proposed settlement is finalized and approved, this settlement fund amount would be paid on a pro rata basis to TD Banknorth stockholders who receive the merger consideration (an estimated $0.03 per share based upon the number of shares of TD Banknorth common stock outstanding on the record date). While TD Banknorth and The Toronto-Dominion Bank believe that these lawsuits are without merit, they sought a settlement in order to avoid the burdens and expense of further litigation. See “Litigation Related to the Merger” beginning on page 68.

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FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents which we incorporate by reference in this proxy statement, contain “forward-looking statements.”  Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “objective,” “goal” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, or the acquisition of us by The Toronto-Dominion Bank, identify forward-looking statements. Our forward-looking statements are based on management’s current view about future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following risks related to our business, among others, could cause or contribute to actual results differing materially from those described in the forward-looking statements:

·       global, national and local economic and market conditions, specifically with respect to changes in the United States economy and the state and local economies in our market areas;

·       the performance of financial markets and the level and volatility of interest rates;

·       government fiscal and monetary policies;

·       credit risks inherent in the lending process;

·       loan and deposit demand in the geographic regions where we conduct business;

·       the impact of intense competition in the rapidly evolving banking and financial services industry;

·       extensive U.S. federal and state regulation of our business and the effects of legislation or other changes in regulatory requirements;

·       whether we are successful in retaining and further developing loan, deposit, customer and employee relationships relating to our recent acquisitions of Hudson United Bancorp and Interchange Financial Services Corporation, and whether expected revenue enhancements and cost savings from these transactions will be realized within expected time frames;

·       matters relating to the integration of our business with that of past and future merger partners, including the impact of combining these businesses on revenues, expenses, deposit attrition, customer retention and financial performance;

·       our reliance on third parties to provide certain critical services, including data processing;

·       the proposal or adoption of changes in accounting standards by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board or other standard-setting bodies;

·       technological changes;

·       the ability to obtain the required approval of the merger agreement by our stockholders and whether the other conditions to completion of the merger set forth in the merger agreement will be satisfied;

·       war or political instability;

·       other factors impacting our operational plans; and

·       management’s ability to manage risks that result from these and other factors.

We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this proxy statement or the date of the documents incorporated by reference in this proxy statement.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the annual report on Form 10-K that we have filed

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with the SEC and incorporated by reference herein. See “Where You Can Find More Information” beginning on page 106.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

INTRODUCTION

This proxy statement and the accompanying form of proxy are being furnished to all record holders of TD Banknorth common stock in connection with the solicitation of proxies by the board of directors of TD Banknorth for use at the special meeting of stockholders of TD Banknorth to be held on                , 2007 and any adjournment or postponement of this meeting. The purpose of the special meeting is to consider and vote upon a proposal to adopt the merger agreement, dated as of November 19, 2006, among TD Banknorth, The Toronto-Dominion Bank and Bonn Merger Co., a wholly-owned subsidiary of The Toronto-Dominion Bank, which sets forth the terms and conditions under which Bonn Merger Co. will merge with and into TD Banknorth. If the proposed merger is completed, we will become a wholly-owned subsidiary of The Toronto-Dominion Bank and our stockholders (other than The Toronto-Dominion Bank and its subsidiaries and any stockholders who perfect their appraisal rights under Delaware law) will have the right to receive $32.33 in cash without interest for each share of TD Banknorth common stock outstanding immediately prior to completion of the merger.

THE PARTIES TO THE TRANSACTION

TD Banknorth

We are a Delaware corporation and a majority-owned subsidiary of The Toronto-Dominion Bank. We are a registered bank/financial holding company under the Bank Holding Company Act of 1956, as amended. Our principal asset is all of the capital stock of TD Banknorth, N.A., a national bank which was initially formed as a Maine-chartered savings bank in the mid-19th century. TD Banknorth, N.A. operates banking divisions in Maine, New Hampshire, Massachusetts, Connecticut, Vermont, Pennsylvania, New York and New Jersey and had 586 banking offices located in these states at December 31, 2006. Through TD Banknorth, NA and its subsidiaries, TD Banknorth offers a full range of banking services and products to individuals, businesses and governments throughout its market areas, including commercial, consumer, trust, investment advisory and insurance agency services. At December 31, 2006, we had  consolidated assets of $40.2 billion and consolidated stockholders’ equity of $8.3 billion. Based on total assets at that date, we are the 26th largest commercial banking organization in the United States.

The executive offices of TD Banknorth are located at Two Portland Square, Portland, Maine 04101, and our telephone number is (207) 761-8500.

The Toronto-Dominion Bank

The Toronto-Dominion Bank is a Canadian-chartered bank formed through the amalgamation of The Bank of Toronto (established 1855) and The Dominion Bank (established 1869). The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. In Canada and around the world, TD Bank Financial Group serves more than 14 million customers in four key businesses operating in a number of locations in key financial centers around the globe:  Canadian Personal and Commercial Banking, including TD Canada Trust; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; Wholesale Banking, including TD Securities; and U.S. Personal and Commercial Banking through TD Banknorth. TD Bank Financial Group also ranks among the world’s leading on-line financial services firms, with more than 4.5 million on-line customers. TD Bank Financial Group had CDN$393 billion (or approximately $340 billion in U.S. dollars) in assets at October 31, 2006, the end of its most recent fiscal year. The Toronto-Dominion Bank’s common shares trade on the Toronto and New York Stock Exchanges under the symbol “TD.”

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The executive offices of The Toronto-Dominion Bank are located at the Toronto-Dominion Centre, Toronto, Canada M5K 1A2, and its telephone number is (416) 982-8222.

Bonn Merger Co.

Bonn Merger Co. is a newly-formed Delaware corporation and a wholly-owned subsidiary of The Toronto-Dominion Bank. Bonn Merger Co. was formed solely for the purpose of entering into the merger agreement and consummating the merger and has not engaged in any business except in furtherance of the merger.

THE SPECIAL MEETING

Date, Place and Time

A special meeting of stockholders of TD Banknorth will be held at 10:30 a.m., Eastern Time, on          ,                 , 2007 at the Portland Marriott Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106.

Matters to be Considered

The purposes of the TD Banknorth special meeting are to consider and vote on a proposal to approve and adopt the merger agreement, dated as of November 19, 2006, among TD Banknorth, The Toronto-Dominion Bank and Bonn Merger Co., and to consider and vote on any other matters that may be properly submitted for a vote at the special meeting. At this time, the TD Banknorth board of directors is unaware of any matters, other than the proposal to approve and adopt the merger agreement, that may be presented for action at the special meeting.

Shares Outstanding and Entitled to Vote; Record Date

We have fixed the close of business on                , 2007 as the record date for the determination of holders of our common stock and Class B common stock entitled to notice of and to vote at the special meeting and any adjournment or postponement of the special meeting. At the close of business on the record date, there were           shares of TD Banknorth common stock and one share of Class B common stock outstanding and entitled to vote. Each share of TD Banknorth common stock entitles the holder to one vote at the special meeting on all matters properly presented at the special meeting. The share of Class B common stock entitles the holder, The Toronto-Dominion Bank, to one vote at the special meeting, or by written consent in lieu of voting at the special meeting, on the proposal to approve and adopt the merger agreement, voting as a separate class.

How to Vote Your Shares

Stockholders of record may vote by telephone, via the Internet, by mail or by attending the special meeting and voting in person.

·       Voting by Telephone:  You can vote your shares by telephone by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Our telephone voting procedures are designed to authenticate stockholders by using individual control numbers. If you vote by telephone, you do not need to return your proxy card.

·       Voting via the Internet:  You can vote via the Internet by accessing the web site at http://www.proxyvoting.com/bnk, entering the control number on your proxy card and following the instructions you will find on the web site. Internet voting is available 24 hours a day. As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you vote via the Internet, you do not need to return your proxy card.

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·       Voting by Mail:  If you choose to vote by mail, simply mark the enclosed proxy card, date and sign it, and return it in the postage paid envelope provided.

If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the special meeting, you must bring a letter from the broker, bank or other nominee confirming that you are the beneficial owner of the shares and granting you a proxy to vote those shares.

You will have the power to revoke your proxy at any time before it is exercised by:

·       delivering prior to the special meeting a written notice of revocation addressed to Carol L. Mitchell, Senior Executive Vice President, General Counsel and Secretary, TD Banknorth Inc., P.O. Box 9540, Two Portland Square, Portland, Maine 04112;

·       delivering to TD Banknorth prior to the special meeting a properly executed proxy with a later date;

·       voting on a later date but prior to the special meeting by telephone or via the Internet (only your last telephone or Internet proxy will be counted); or

·       attending the special meeting and voting in person.

Attendance at the special meeting will not, in and of itself, constitute revocation of a proxy.

If you provide specific voting instructions, your shares will be voted as instructed. If you hold shares in your name and sign and return a proxy card or vote by telephone or via the Internet without giving specific voting instructions, your shares will be voted “FOR” approval and adoption of the merger agreement and the transactions contemplated thereby.

At this time, the TD Banknorth board of directors is unaware of any matters, other than approval and adoption of the merger agreement and the transactions contemplated thereby, that may be presented for action at the special meeting. If other matters are properly presented, however, the persons named as proxies will vote in accordance with their judgment with respect to such matters.

Votes Required

Quorum.   A quorum, consisting of the holders of a majority of the issued and outstanding shares of TD Banknorth common stock and the holder of Class B common stock, must be present in person or by proxy before any action may be taken at the TD Banknorth special meeting. Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum but will not be counted in the voting on a proposal.

The Merger Agreement.   Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of TD Banknorth common stock and the affirmative vote or consent of The Toronto-Dominion Bank in its capacity as the holder of the outstanding share of our Class B common stock are necessary to approve and adopt the merger agreement on behalf of TD Banknorth. As discussed below, both of these votes are assured due to the commitment by The Toronto-Dominion Bank to vote in favor of the approval and adoption of the merger agreement. In addition, under the merger agreement and the stockholders agreement between TD Banknorth and The Toronto-Dominion Bank, the affirmative vote of the holders of a majority of all outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates is necessary to approve the merger agreement. As of                 , 2007, the record date for the special meeting, there were               shares of TD Banknorth common stock outstanding other than shares owned by The Toronto-Dominion Bank and its affiliates, which represented     % of the outstanding TD Banknorth common stock on that date. This means that pursuant to the merger agreement and the stockholders agreement, approval and adoption of the merger agreement is conditioned on the affirmative vote of approximately                 or more of such shares.

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Other Matters.   The affirmative vote of a majority of the voting power of the TD Banknorth common stock present in person or by proxy at the special meeting is required to approve any other matter properly submitted to stockholders for their consideration at the special meeting.

“Broker Non-Votes.”   Any “broker non-votes” submitted by brokers or nominees in connection with the special meeting will not be counted for purposes of determining the number of votes cast on a proposal but will be treated as present for quorum purposes. “Broker non-votes” are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Under these rules, the proposal to approve and adopt the merger agreement is not an item on which brokerage firms may vote in their discretion on behalf of their clients if such clients have not furnished voting instructions within ten days of the special meeting.

Effect of Abstentions, “Broker Non-Votes” and Failures to Vote.   Because the proposal to approve and adopt the merger agreement is required to be approved by the holders of a majority of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates, abstentions and “broker non-votes” will have the same effect as a vote against the proposal to approve and adopt the merger agreement at the special meeting. And for the same reason, the failure of any TD Banknorth stockholder to vote by proxy or in person at the special meeting will have the effect of a vote against this proposal.

Voting Agreements and Understandings

The Toronto-Dominion Bank has agreed to vote all shares of TD Banknorth common stock directly or indirectly owned by it (other than any shares held in trust accounts, managed accounts and the like for the benefit of third parties), and to provide its consent as the holder of our outstanding share of Class B common stock, in favor of approval and adoption of the merger agreement, which will ensure that the merger agreement is adopted by the holders of a majority of the outstanding shares of TD Banknorth common stock and the holder of our outstanding share of Class B common stock, as required by Delaware law.

The Toronto-Dominion Bank has entered into a voting agreement with Private Capital Management, L.P., our largest stockholder after The Toronto-Dominion Bank, pursuant to which this stockholder has agreed to vote all shares of TD Banknorth common stock over which it exercises voting authority in favor of approval and adoption of the merger agreement. See “The Voting Agreement” beginning on page 86 and “Beneficial Ownership of Capital Stock by Certain Beneficial Owners and Management” beginning on page 100. In addition, another of our large stockholders, Ariel Capital Management, LLC, advised The Toronto-Dominion Bank at the time of announcement of the merger agreement that its expectation at that time was to vote in favor of approval and adoption of the merger agreement but did not make any commitment to do so. Based on information that was publicly available as of March 1, 2007 (which relates to holdings as of December 31, 2006), together these two stockholders held or had investment discretion over 23.6 million shares, which represent     % of the outstanding shares of TD Banknorth common stock and     % of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates as of the record date for the special meeting. Although these stockholders may not have voting authority over all of the shares which they from time to time hold or have investment discretion over, The Toronto-Dominion Bank expects the majority of the shares which such stockholders hold or have investment discretion over will be voted in favor of the proposal to approve and adopt the merger agreement. Assuming these stockholders vote a majority of the shares of TD Banknorth common stock which they held or had investment discretion over as of December 31, 2006 in favor of the proposal to approve and adopt the merger agreement at the special meeting, we will need the affirmative vote of additional stockholders holding approximately          additional shares, or     % of the outstanding TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates, to obtain the

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required approval of the merger agreement by the holders of a majority of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates.

Shares Owned by Directors and Executive Officers of TD Banknorth

Exclusive of shares which may be acquired upon the exercise of presently exercisable stock options, the directors and executive officers of TD Banknorth and their respective affiliates collectively owned approximately          shares or       % of the outstanding shares of TD Banknorth common stock as of the record date for the special meeting (       shares or      % exclusive of the shares owned by William J. Ryan, Chairman of TD Banknorth and Vice Chairman of The Toronto-Dominion Bank, William E. Bennett and Wilbur J. Prezzano, directors of The Toronto-Dominion Bank, Peter J. Verrill, Vice Chairman and Chief Operating Officer, and Wendy Suehrstedt, Senior Executive Vice President and President and Chief Executive Officer, Mid-Atlantic Division, whom we are treating as affiliates of The Toronto-Dominion Bank for purposes of the requirement that the merger agreement be approved by the holders of a majority of all outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates). See “Beneficial Ownership of Capital Stock by Certain Beneficial Owners and Management” on page 100.

Solicitation of Proxies

We will pay for the costs incurred by us in connection with the solicitation of proxies from our stockholders on behalf of our board of directors, except that TD Banknorth and The Toronto-Dominion Bank will share equally the cost of printing and mailing this document to our stockholders and all filing and other fees paid to the SEC in connection with the merger. In addition to solicitation by mail, the directors, officers and employees of TD Banknorth, The Toronto-Dominion Bank and their respective subsidiaries may solicit proxies from stockholders of TD Banknorth in person or by telephone, telegram, facsimile or other electronic methods without any additional compensation other than reimbursement for their actual expenses.

Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and we will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith.

We have retained Morrow & Co., a professional proxy solicitation firm, to assist us in the solicitation of proxies. The fee payable to such firm in connection with the merger is $6,500, plus reimbursement for reasonable out-of-pocket expenses.

SPECIAL FACTORS

Background of the Merger

On March 1, 2005, The Toronto-Dominion Bank acquired a 51% interest in TD Banknorth pursuant to a merger involving our predecessor company, Banknorth Group Inc. In connection with the 2005 acquisition, The Toronto-Dominion Bank and TD Banknorth entered into a stockholders agreement that governs aspects of our relationship with The Toronto-Dominion Bank. The stockholders agreement is described below under the heading “—Transactions and Relationships Between TD Banknorth and The Toronto-Dominion Bank—The Stockholders Agreement” and “The Stockholders Agreement,” beginning on pages 62 and 88, respectively.

The stockholders agreement contains provisions that impose restrictions on the timing, manner and terms on which The Toronto-Dominion Bank, as TD Banknorth’s majority stockholder, can acquire or propose to acquire the remaining publicly held shares of TD Banknorth. Under the terms of the

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stockholders agreement, The Toronto-Dominion Bank agreed not to acquire voting securities of TD Banknorth to the extent that acquisition would result in The Toronto-Dominion Bank owning more than 662¤3% of the voting securities of TD Banknorth, subject to limited exceptions. The stockholders agreement also requires that specified transactions involving The Toronto-Dominion Bank be approved by a majority of the members of the designated independent directors committee of TD Banknorth, a group comprised of directors independent of The Toronto-Dominion Bank and established by the stockholders agreement. As described under “The Stockholders Agreement,” the designated independent directors committee was established to serve as a standing committee with several functions in addition to negotiating any future going-private transaction.

The Toronto-Dominion Bank also agreed to restrictions on its ability to conduct going-private transactions involving TD Banknorth—for example, transactions in which The Toronto-Dominion Bank would acquire enough of the remaining publicly-held shares of TD Banknorth such that TD Banknorth would no longer be a publicly-traded company or have SEC reporting obligations. The stockholders agreement contains the following requirements for going-private transactions:

·       the transaction must involve an offer to acquire 100% of the common stock of TD Banknorth not already owned by The Toronto-Dominion Bank and its affiliates;

·       prior to March 1, 2007, The Toronto-Dominion Bank may not propose a going-private transaction unless invited to do so by a majority of the designated independent directors committee;

·       between March 1, 2007 and March 1, 2010, The Toronto-Dominion Bank may initiate discussions regarding a going-private transaction with the designated independent directors committee on a confidential basis, and may announce a transaction if it is approved by a majority of the members of that committee; and

·       in any case, the transaction must be approved by the holders of a majority of the outstanding shares of TD Banknorth stock not owned by The Toronto-Dominion Bank and its affiliates.

One of TD Banknorth’s reasons for entering into the initial agreement with The Toronto-Dominion Bank pursuant to which The Toronto-Dominion Bank acquired 51% of TD Banknorth was our board’s belief that the transaction would, on balance, be helpful in enhancing TD Banknorth’s strategic goal of expanding its operations geographically through acquisitions, including by aligning TD Banknorth with a strong financial partner and providing a source of acquisition capital. Targeted acquisitions of financial institutions had for some time been a significant aspect of TD Banknorth’s growth strategy.

In keeping with this strategy, after the completion of the initial investment in TD Banknorth by The Toronto-Dominion Bank in March 2005, TD Banknorth in July 2005 agreed to acquire Hudson United Bancorp. That transaction was completed on January 31, 2006, and expanded TD Banknorth’s operations into New Jersey and Pennsylvania and expanded its existing operations in New York and Connecticut. The approximately $941.8 million cash portion of the consideration involved in the Hudson United acquisition was financed through The Toronto-Dominion Bank’s purchase of approximately 29.6 million shares of TD Banknorth common stock at a price of $31.79 per share. After giving effect to the completion of the Hudson United transaction and share repurchases by TD Banknorth on the following day, The Toronto-Dominion Bank’s ownership in TD Banknorth was about 54.7% of TD Banknorth’s common stock.

Shortly before the completion of the Hudson United acquisition, on January 24, 2006, members of the designated independent directors committee met, at the request of TD Banknorth’s Chief Operating Officer, Peter Verrill, with Mr. Verrill and representatives of Keefe, Bruyette & Woods, Inc. The participants discussed TD Banknorth’s acquisition strategy, the outlook and opportunities for continued strategic business combinations, potential options that could impact TD Banknorth’s ability to continue its strategy and a scenario in which The Toronto-Dominion Bank purchased the remaining publicly held shares of TD Banknorth, which was discussed because Mr. Verrill believed that all strategic options for

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enhancing stockholder value should be considered. There was a preliminary discussion of what a possible going-private transaction might look like and the process for such a transaction. As a result, the members of the designated independent directors committee were of the view that they should take further steps to educate themselves regarding what might be involved in a going-private transaction.

On February 2, 2006, P. Kevin Condron, the chairman of the designated independent directors committee, spoke with TD Banknorth’s regular outside counsel, Elias, Matz, Tiernan & Herrick, L.L.P., to obtain preliminary information about what might be involved in a possible going-private transaction. Representatives of Elias Matz reviewed various legal matters, including the applicable provisions of the stockholders agreement, and the desirability of the designated independent directors committee having advisors that could function independently of The Toronto-Dominion Bank and the management of TD Banknorth. Mr. Condron subsequently briefed the other members of the designated independent directors committee on this meeting, as well as advised William J. Ryan, TD Banknorth’s Chairman, then-President and Chief Executive Officer, and Carol L. Mitchell, Senior Executive Vice President, General Counsel and Secretary of TD Banknorth, of the occurrence of this meeting.

On April 13, 2006, TD Banknorth agreed to acquire Interchange Financial Services Corporation, a bank holding company with branches in northern New Jersey, for approximately $480.6 million in cash. The arrangements for the Interchange merger involved financing a substantial portion of the cash consideration through the purchase by The Toronto-Dominion Bank of 13 million shares of TD Banknorth common stock at a price of $31.79 per share. Upon completion of the acquisition of Interchange on January 1, 2007, The Toronto-Dominion Bank held 59.5% of the outstanding TD Banknorth’s common stock.

On April 15, 2006, Mr. Condron met with Mr. Ryan, at Mr. Ryan’s request, and discussed TD Banknorth’s strategic direction, including its ongoing acquisition strategy, and the possibility of pursuing a going-private transaction. Messrs. Condron and Ryan discussed the need for the designated independent directors committee to function independently in any such transaction, should it proceed.

On May 8, 2006, the designated independent directors committee met with Mr. Ryan. The focus of the discussion was TD Banknorth’s current business plan (including its acquisition strategy), financial performance and the performance of its common stock, as well as the prospects for TD Banknorth being able to continue to execute according to plan in the prevailing interest rate and economic environment. There was a consensus of those present that, at the current trading levels for the TD Banknorth common stock and those of likely or desirable acquisition targets, TD Banknorth would potentially encounter significant difficulty in continuing to execute its acquisition strategy, which had historically been TD Banknorth’s primary source of growth.  In this regard, the designated independent directors  committee considered potential limitations on TD Banknorth’s ability to make future acquisitions, including the restrictions in the stockholders agreement on acquisitions of TD Banknorth stock by The Toronto-Dominion Bank (including to provide capital for future acquisitions), the difficulty of offering stock of The Toronto-Dominion Bank on a tax-free basis to shareholders of potential acquisition candidates and the issue of whether the TD Banknorth common stock would serve as an attractive acquisition currency.  In evaluating the foregoing, the designated independent directors committee took into account that TD Banknorth had entered into agreements to acquire Hudson United Bancorp and Interchange Financial Services Corporation subsequent to The Toronto-Dominion Bank’s acquisition of a majority interest in TD Banknorth on March 1, 2005 and the possibility that TD Banknorth could continue to make smaller acquisitions which would not implicate the limitation in the stockholders agreement on the amount of TD Banknorth common stock which could be acquired by The Toronto-Dominion Bank apart from a going-private transaction. The designated independent directors committee also considered challenges to TD Banknorth’s organic growth, including the prevailing interest rate environment. Following this meeting, the designated independent directors committee decided to interview financial advisory and law firms that could potentially serve as advisors to the committee in connection with a possible going-private transaction.

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On May 9, 2006, at a meeting of the TD Banknorth board of directors, Mr. Ryan described to the board the discussions with the members of the designated independent directors committee of the previous day, including perceived challenges to further advancing the company’s acquisition strategy and the committee’s potential interest in considering the possibility of a going-private transaction. Mr. Ryan stated that if negotiations between TD Banknorth and The Toronto-Dominion Bank regarding a potential going-private transaction occurred, the designated independent directors committee would be responsible for the negotiations and that he would not be involved. In response, W. Edmund Clark, a Class B director and the President and Chief Executive Officer of The Toronto-Dominion Bank, who from time to time had had informal discussions with Mr. Ryan, Mr. Condron and other members of the TD Banknorth board and executive management about the company’s strategic alternatives, including a potential going-private transaction, indicated that he believed that The Toronto-Dominion Bank might be interested in pursuing exploratory discussions if invited to do so by the designated independent directors committee. During an executive session without the Class B directors. Mr. Ryan mentioned a possible price range of $36-$38 per share for a going-private transaction, although he noted that some discount to that range due to lower earnings estimates might be appropriate.  Subsequently, after Mr. Ryan left the meeting, Mr. Condron informed the remaining directors that the designated independent directors committee was taking steps to be prepared in the event there was a decision to move forward with exploratory discussions for a going-private transaction, including interviewing possible legal and financial advisors.

During late May and early June 2006, the committee of designated independent directors met with a number of potential legal and financial advisors to the committee. As a result of these meetings, the committee decided on June 16, 2006 that it would retain Wachtell, Lipton, Rosen & Katz as special counsel. The committee was aware that Wachtell, Lipton had previously served as special counsel to the Banknorth board of directors in connection with the 2005 acquisition by The Toronto-Dominion Bank of a 51% interest in TD Banknorth, but determined that Wachtell, Lipton was independent of The Toronto-Dominion Bank and TD Banknorth management. On June 22, 2006, the TD Banknorth board of directors met and discussed the possibility of a going-private transaction and the fact that The Toronto-Dominion Bank had indicated that it would not be interested in selling its interest in TD Banknorth to a third party. At this meeting, the board of directors adopted resolutions formally constituting the designated independent directors committee as a special committee of independent directors in connection with a possible going-private transaction, delegating to the special committee the authority, if it determined to invite The Toronto-Dominion Bank to make a going-private proposal, to negotiate that proposal with The Toronto-Dominion Bank and make a recommendation to the board of directors regarding the transaction. The board also formally ratified the authority of the special committee to retain its own advisors and to establish compensation for its members.

The special committee met on June 27, 2006 with representatives of Sandler O’Neill and Wachtell, Lipton in attendance. The representatives of Sandler O’Neill provided the committee with information regarding Sandler O’Neill’s experience and qualifications, its ability to act in an independent manner as financial advisor and its preliminary views regarding valuation considerations in a going-private transaction. The special committee considered this information as well as the other information regarding the financial advisory firms it had interviewed earlier and determined to retain Sandler O’Neill as its financial advisor, subject to execution of a mutually acceptable engagement letter. The special committee scheduled a follow-up meeting for July 18, 2006, at which time the committee would receive a presentation from Sandler O’Neill as well as discuss with Sandler O’Neill and Wachtell, Lipton whether to proceed to invite The Toronto-Dominion Bank to make a proposal. During the next several weeks, Sandler O’Neill and the special committee and Wachtell, Lipton negotiated the terms of, and executed, Sandler O’Neill’s engagement letter. During this period, Mr. Condron and Mr. Clark spoke on several occasions to discuss the process of the special committee and the feasibility of, and framework for conducting exploratory discussions regarding, a going-private transaction.

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The special committee met on July 18, 2006. In attendance were representatives of Sandler O’Neill and Wachtell, Lipton. Representatives of Sandler O’Neill reviewed the work they had performed in developing their financial analysis, including reviewing financial forecasts and other information received from senior management of TD Banknorth. The Sandler O’Neill representatives then discussed a number of financial analyses bearing on the valuation of TD Banknorth’s shares, including a discounted cash flow analysis, financial information regarding The Toronto-Dominion Bank and a pro forma analysis of the impact of a potential transaction on The Toronto-Dominion Bank. In particular, as part of its discussion of TD Banknorth’s projected financial performance over the coming years, Sandler O’Neill discussed with the special committee the bases on which TD Banknorth’s earnings should be assessed in valuing the company, and presented a reconciliation of TD Banknorth’s projected earnings per share under GAAP to its cash operating earnings per share. Among other things, this included an analysis and reconciliation of charges against GAAP earnings per share in the form of merger and restructuring costs and the amortization of intangible assets recorded on TD Banknorth’s balance sheet in connection with acquisitions by TD Banknorth, as well as the impact of the use of the purchase method of accounting, which was required to be used by TD Banknorth to account for the original acquisition by The Toronto-Dominion Bank of a majority interest in TD Banknorth. The use of the purchase method of accounting at the TD Banknorth level is sometimes referred to as “push-down” accounting. Sandler O’Neill’s valuation analyses took into account earnings per share as measured by GAAP net income per share, GAAP net income per share adding back the amortization expense related only to The Toronto-Dominion Bank’s original acquisition of a majority interest, and cash operating earnings per share, net of tax, which exclude amortization expense, merger and restructuring costs and non-core adjustments. The special committee and the representatives of Sandler O’Neill discussed the relevance of each of these analyses to a valuation of the TD Banknorth common stock. Sandler O’Neill’s presentation to the special committee, dated July 18, 2006, has been filed as Exhibit (c)(10) to the Schedule 13E-3 filed with the SEC by The Toronto-Dominion Bank, TD Banknorth and Bonn Merger Co. in connection with the merger. Representatives of Sandler O’Neill also discussed with the special committee the earnings projections on which it was basing certain of its analyses, including TD Banknorth’s internal forecast for 2006 cash operating earnings per share of $2.28 and target cash operating earnings per share of $2.46 for 2007.

Following the Sandler O’Neill presentation the special committee discussed the information presented as well as other matters relating to TD Banknorth’s operating performance and expected trends. The special committee also received advice from representatives of Wachtell, Lipton regarding the special committee’s legal duties in connection with considering a possible going-private transaction. Following these discussions, the special committee authorized Mr. Condron to discuss with Mr. Clark a possible going-private transaction. The special committee also, after receiving relevant information and legal advice, preliminarily determined the level of its fees in connection with a possible going-private transaction and determined that the fees would not be contingent upon the occurrence of a transaction or on any particular resolution or outcome to its work.

Mr. Condron met with Mr. Clark on July 21, 2006. Mr. Condron indicated that the special committee’s preliminary view, as a result of its work to date, was that a going-private transaction could potentially be beneficial to TD Banknorth’s stockholders other than The Toronto-Dominion Bank and its affiliates. Mr. Condron noted that the special committee was of the view that various factors, including the prevailing trading range for the TD Banknorth common stock, impeded TD Banknorth’s ability to fully execute on its strategic plan. Messrs. Condron and Clark discussed earnings projections and Mr. Clark made the point that, between August 2004 and July 2006, TD Banknorth’s per share cash operating earnings projections for 2006 had declined from $2.59 to $2.28 and for 2007, from $2.82 to $2.44. The revised projections were prepared in July 2006 by senior management of TD Banknorth and reflected recent lower earnings levels which were not deemed to be temporary in nature, slower rates of growth for loans and deposits and the current interest rate outlook and other economic conditions. Mr. Clark indicated that he would provide the special committee with an analysis by The Toronto-Dominion Bank’s

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financial advisor, Goldman, Sachs & Co. The special committee subsequently received this analysis, which was dated July 26, 2006. The analyses performed by Goldman Sachs used, for illustrative purposes, a per share price of $30.50 for a hypothetical going-private transaction, but did not contain any proposal from The Toronto-Dominion Bank regarding pricing or other terms of any possible transaction. In connection with providing this information, Mr. Clark stated that Goldman Sachs had prepared the materials based on the most recent earnings estimates from TD Banknorth’s management but noted that TD Banknorth had experienced challenges in meeting past forecasts. Mr. Clark also noted that TD Banknorth’s performance expectations had changed substantially since The Toronto-Dominion Bank acquired its original 51% ownership position, including significant changes in TD Banknorth’s performance over recent months and in the earnings estimates of senior management of TD Banknorth for 2006. Mr. Clark advised that these developments would be relevant in considering the price of any potential going-private transaction.

On July 25, 2006, at a meeting of the board of directors of TD Banknorth, Mr. Condron updated the board on the recent activities of the special committee.

The special committee met on July 31, 2006. There was a review of the discussions with Mr. Clark and of the valuation materials provided by The Toronto-Dominion Bank. Representatives of Sandler O’Neill reviewed Goldman Sachs’s financial analyses and the assumptions underlying these analyses. The sense of the special committee was that the financial analyses performed by Goldman Sachs were not consistent with the committee’s perspective on TD Banknorth’s position and valuation and should not be accepted as a basis for discussions of possible price ranges for any potential going-private transaction. The special committee determined that in view of the discussions to date it would be beneficial for Mr. Condron to provide Mr. Clark with guidance as to the special committee’s expectations regarding price and for the special committee to provide to The Toronto-Dominion Bank a copy of the Sandler O’Neill materials responding to the Goldman Sachs materials.

Messrs. Condron and Clark met again on August 2, 2006. At this meeting, Mr. Clark indicated that he thought that a price in the range of $32 to $34 per share might be an appropriate basis for further discussions. Mr. Condron indicated that, based on the financial analyses he had received from Sandler O’Neill, a price in the range of $35 to $38 per share would be necessary to continue discussions. While various price ranges were discussed, Mr. Clark and Mr. Condron did not agree on an appropriate price range for further discussions. Mr. Clark reiterated that he was concerned with the outlook for TD Banknorth’s earnings in 2007. After this meeting, Mr. Condron asked Sandler O’Neill to prepare information for the special committee addressing the extent to which the price in a transaction should be impacted by the trends in TD Banknorth’s earnings outlook.

On August 11, 2006, the special committee met again and discussed the earnings outlook for 2007 and how this might impact discussions with The Toronto-Dominion Bank regarding a going-private transaction.

On August 15, 2006, Mr. Clark contacted Mr. Condron to tell him that, in view of the uncertainty regarding the earnings outlook for 2007, he believed that a price range of $30 to $32 per share would be more appropriate than the ranges previously discussed, but that he did not feel further exploratory discussions regarding a going-private transaction would be worthwhile at that time. On August 21, 2006, the special committee met and discussed the possibility that hypothetical acquisition opportunities for TD Banknorth might require pro forma ownership by The Toronto-Dominion Bank in excess of the 66 2¤3% limit imposed by the stockholders agreement in order to fund the acquisitions, and the implications of The Toronto-Dominion Bank owning in excess of that amount. The special committee noted that ownership in excess of this threshold would under these circumstances require a waiver by the designated independent directors committee of the ownership limit contained in the stockholders agreement.

On August 24, 2006, the special committee held a telephonic meeting to update the situation. Also present were representatives of Sandler O’Neill and Wachtell, Lipton. In view of Mr. Clark’s statements

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regarding the impact of TD Banknorth’s earnings estimate revisions on pricing for any potential transaction, Sandler O’Neill discussed with the special committee changes in earnings estimates at peer banking institutions and corresponding changes in stock price. Sandler O’Neill also presented an analysis based on a hypothetical price range of $30 to $32 per share mentioned by The Toronto-Dominion Bank as a basis for further exploratory discussions and, based on precedent transaction multiples, Sandler O’Neill discussed the forward earnings per share implied by such a price range. Among other things, this analysis showed that, to be generally in line with precedent transaction premiums and the other assumptions used by Sandler O’Neill, a per share purchase price of $32 in a going-private transaction would imply 2007 earnings per share of approximately $2.04, which would be lower than TD Banknorth’s then-current estimate. The special committee also discussed the implications of The Toronto-Dominion Bank being permitted to exceed the ownership limits in the stockholders agreement in lieu of a going-private transaction.

In mid-September 2006, senior management of TD Banknorth further reduced its internal estimates of cash operating earnings per share for 2006 and for 2007 in light of TD Banknorth’s continued lower earnings, slow growth and current market and economic conditions. Messrs. Condron and Clark spoke again on September 14 and discussed the outlook for earnings. Mr. Condron stated that the special committee believed that a price in the range of $34 to $35 per share would be appropriate for a possible transaction. Mr. Clark indicated that while he might have considered the possibility of a $33 per share price based on projected 2007 EPS of $2.44, based on current information he would not expect to pursue further exploratory discussions regarding a possible going-private transaction at prices above $31 to $32 per share. Mr. Condron agreed to discuss their conversation with the special committee. On September 27, 2006, Mr. Condron spoke to Mr. Clark again and indicated that the special committee’s position had not changed and that, because it did not appear that any progress was being made, the special committee felt that it would not be in the best interests of the public stockholders to resume exploratory discussions with The Toronto-Dominion Bank.

On October 18, 2006, the board of directors of TD Banknorth approved, as part of ongoing succession planning, the appointment of Bharat Masrani, an executive of The Toronto-Dominion Bank and TD Banknorth who had served on the board of TD Banknorth since October 2005 and as President of TD Banknorth since September 2006, to become Chief Executive Officer of TD Banknorth effective March 1, 2007, succeeding Mr. Ryan (who is 63 years old) in that position, with Mr. Ryan to remain as Chairman of the Board of Directors of the company until 2010. TD Banknorth announced this decision on October 23, 2006. On October 30, 2006, Private Capital Management, L.P., the largest stockholder of TD Banknorth other than The Toronto-Dominion Bank, sent a letter to the board of directors of TD Banknorth stating its view that, in light of the appointment of Mr. Masrani as Chief Executive Officer, TD Banknorth and the designated independent directors should take steps to facilitate the making of a going-private proposal by The Toronto-Dominion Bank, specifically by amending the stockholders agreement to remove the requirement that the designated independent directors “pre-approve” a going-private proposal. In its letter, Private Capital Management alleged that the appointment of Mr. Masrani as Chief Executive Officer effectively ceded control of TD Banknorth to The Toronto-Dominion Bank and stated that in its view the independent directors of TD Banknorth should have insisted that The Toronto-Dominion Bank submit an appropriate going-private offer before approving Mr. Masrani’s appointment, which in its view undercut the rationale for requiring that such an offer be approved by the designated independent directors.

In late October 2006, in connection with its report of earnings for the third quarter of 2006, TD Banknorth again reduced its internal cash operating earnings estimates, to $2.12 for 2006 and $2.07 for 2007. The revised estimates were prepared by senior management of TD Banknorth in light of lower earnings and slow growth in loans and deposits in September and current market and economic conditions. The members of the special committee considered this information and also considered a number of other

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developments that were occurring at TD Banknorth, including the reduction in earnings guidance for the quarter completed September 30, 2006, the stability of the trading range of the TD Banknorth common stock despite increasingly difficult operating conditions and the repeated reduction in the outlook for earnings, including in consensus analyst estimates and trends in credit quality. The members of the special committee also considered an analysis prepared by Sandler O’Neill, dated November 3, 2006, that addressed a number of these considerations and the expected valuation of a going-private transaction given the revised 2006 and 2007 earnings estimates. Based on the relevant circumstances, including these considerations, the members of the special committee felt that it was worth again attempting to see if a mutually acceptable basis for exploring a going-private transaction could be found with The Toronto-Dominion Bank.

At a meeting on November 6, 2006, the special committee determined to re-start exploratory discussions with The Toronto-Dominion Bank regarding a going-private transaction, after considering, among other things, TD Banknorth’s ability to improve its performance in a timely manner if a going-private transaction were not to occur, anticipated management retirements, the continued deterioration in TD Banknorth’s earnings outlook, the expectation of continued difficult conditions in the banking industry and the views expressed by some significant stockholders of TD Banknorth expressing impatience with the company’s performance.  Mr. Condron communicated the special committee’s decision to Mr. Clark, and requested that Mr. Clark advise the special committee of the general terms on which The Toronto-Dominion Bank would consider making a proposal if it were formally invited to do so by the special committee as required by the stockholders agreement. At the meeting of the special committee on November 6, 2006 and at a meeting of the board of directors of TD Banknorth on the same day, the directors discussed the suggestion made by Private Capital Management, including in light of Mr. Condron’s request to Mr. Clark regarding restarting exploratory discussions with respect to a possible going-private transaction, and came to the view that the designated independent directors process remained an important safeguard for TD Banknorth’s public stockholders, that it was working appropriately and that any going-private transaction should continue to be considered within this framework.

In response to the request relayed by Mr. Condron on November 6, 2006, Mr. Clark outlined for Mr. Condron on November 9, 2006 indicative terms for a possible going-private transaction in the event that The Toronto-Dominion Bank and the special committee determined that further discussions regarding such a transaction were warranted. Mr. Clark noted that the information was being provided in order to determine whether a basis for continued exploratory discussions existed and indicated that if the special committee were to determine to invite The Toronto-Dominion Bank to make a proposal for a going-private transaction, The Toronto-Dominion Bank’s current thinking was that it would consider doing so on the basis of a per share price of $31 in an all-cash transaction, or $30.50 in a half-cash, half-stock transaction. Mr. Clark also noted that The Toronto-Dominion Bank would expect that in connection with any going-private transaction members of TD Banknorth’s senior management would waive rights to change of control and severance payments under their existing employment and retention agreements and that it would be able to negotiate acceptable voting commitments with other significant stockholders of TD Banknorth.

On November 10, 2006, the special committee met and discussed the information provided by The Toronto-Dominion Bank, as well as the prospects for TD Banknorth and the timing of a possible transaction, and considered a presentation of Sandler O’Neill updating its comparable transaction and discounted cash flow analyses to reflect current earnings expectations. Mr. Condron then called Mr. Clark to indicate that the special committee would not consider pursuing further discussions regarding a transaction on the terms outlined in the summary of terms provided by Mr. Clark, but that he thought that it might be productive for the two of them to meet again to explore the possibility of reaching mutually acceptable terms. Messrs. Condron and Clark agreed to meet again on November 15, 2006.

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The special committee met again on November 13, 2006. At this meeting, representatives of Sandler O’Neill discussed with the special committee the persistence of TD Banknorth’s share price range and declining earnings estimates and analyst perspectives on the TD Banknorth common stock. Sandler O’Neill also presented its analysis of comparable transactions and discounted cash flow based on updated earnings estimates and TD Banknorth’s October 2006 internal budget. The committee discussed a number of factors, including TD Banknorth’s declining earnings outlook; anticipated management retirements; the views of the special committee, management and Sandler O’Neill of TD Banknorth’s stock price; the multiples and premiums received by target companies in comparable precedent transactions; and the pro forma impact on The Toronto-Dominion Bank’s earnings of a going-private transaction at various consideration levels.

On November 15, 2006, Mr. Condron and Mr. Clark met, and Mr. Condron indicated that, despite the weakening earnings performance and outlook of TD Banknorth, he believed that other financial metrics and analyses continued to suggest that a price higher than $31 per share was appropriate, and that he felt that a good case could be made for a valuation of $34 per share. Mr. Clark indicated that The Toronto-Dominion Bank did not intend to pay more than $32 per share, and Mr. Condron indicated that at that price the special committee would not agree to proceed. Following further discussion, Mr. Condron and Mr. Clark agreed to recommend that The Toronto-Dominion Bank and TD Banknorth proceed with a going-private transaction at a price of $32.33 per share in cash notwithstanding that Mr. Condron preferred a higher price and believed it could be supported and Mr. Clark preferred a lower price and believed it could be supported. On the same day, the special committee met and authorized Wachtell, Lipton to provide a draft merger agreement to counsel for The Toronto-Dominion Bank and begin preliminary negotiations with respect to that agreement. Later on November 15, 2006, Wachtell, Lipton sent Simpson Thacher & Bartlett LLP, counsel to The Toronto-Dominion Bank, a draft merger agreement, and between November 16, 2006 and November 19, 2006, Wachtell, Lipton, Simpson Thacher and the parties negotiated the terms of the merger agreement.

The Toronto-Dominion Bank discussed on a confidential basis with TD Banknorth’s next two largest stockholders the possibility that these stockholders would agree to vote their shares in favor of a going-private transaction at a price of $32.33 per share.  The discussions centered on the merits of the transaction and the terms of a voting agreement proposed by The Toronto-Dominion Bank. As a result of these discussions and confirmation by The Toronto-Dominion Bank of the terms ultimately approved by the special committee and the board of directors of TD Banknorth on November 19, 2006, Private Capital Management agreed to execute a voting agreement with The Toronto-Dominion Bank supporting the transaction and Ariel Capital Management, LLC agreed that it would permit The Toronto-Dominion Bank to state publicly that Ariel supported the transaction. The voting agreement with Private Capital Management is described below under the heading “The Voting Agreement,” beginning on page 86.

In the morning of November 18, 2006, the special committee met to discuss the proposed transaction, and received a presentation from Sandler O’Neill including financial analyses of the proposed transaction. At this meeting, Sandler O’Neill also delivered its oral opinion, subsequently confirmed in writing, that the proposed consideration was fair, from a financial point of view, to the holders of TD Banknorth common stock other than The Toronto-Dominion Bank and its affiliates. The special committee also reviewed the terms of the proposed merger agreement and received advice on its legal duties from Wachtell, Lipton. After discussing the proposed price and the terms of the merger agreement, the special committee unanimously determined to formally issue an invitation to The Toronto-Dominion Bank to submit a proposal on the basis of a $32.33 per share cash price and to adopt a report of the special committee to the TD Banknorth board of directors recommending that the board of directors adopt and approve the proposed merger agreement. Following this meeting, Mr. Condron telephoned Mr. Clark and issued the invitation on behalf of the special committee to submit a formal proposal, and The Toronto-Dominion Bank subsequently submitted a proposal, on those terms. The Toronto-Dominion Bank noted in its

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proposal that it regarded its investment in TD Banknorth as part of its long term strategy and accordingly did not intend to consider a sale or reduction of its interest in TD Banknorth. In the afternoon of November 18, 2006, the board of directors of The Toronto-Dominion Bank met and approved the going-private transaction and authorized management to negotiate and execute definitive documentation relating to the merger.

In the afternoon of November 18, 2006, members of the special committee met with TD Banknorth’s Class A directors and representatives of Sandler O’Neill, Wachtell, Lipton and Elias Matz. At this meeting, Mr. Condron summarized the terms of the proposed transaction, reviewed in detail the background and chronology of the special committee process and of its discussions with Mr. Clark and communicated its recommendation to the other Class A directors. Representatives of Sandler O’Neill gave an overview of their financial analyses and views as to the fairness of the proposed transaction.

On November 19, 2006, the board of directors of TD Banknorth met with representatives of Sandler O’Neill, Wachtell, Lipton and Elias Matz. Initially attendance of the directors was limited to the Class A Directors. Sandler O’Neill discussed its financial analyses of the proposed transaction and delivered to the board of directors its opinion that the proposed consideration was fair, from a financial point of view, to the holders of TD Banknorth common stock other than The Toronto-Dominion Bank and its affiliates. Wachtell, Lipton reviewed with the board the terms of the proposed merger agreement and the special committee’s process for considering the transaction, and Elias Matz advised the board on its legal duties with respect to the going-private transaction. The members of the board of directors then reviewed with senior management of TD Banknorth compensation matters in connection with the proposed transaction, including the treatment of awards under various existing compensation plans and the proposed waivers by certain executive officers of change of control payments that would otherwise have been triggered by the transaction. After further discussion, questions and answers, the Class B directors joined the meeting and received a summary of the opinion provided by Sandler O’Neill and the recommendation of the special committee. The vote of the Class B directors was required to formally adopt the merger agreement and otherwise to take formal action in connection with the merger under the company’s certificate of incorporation, and the Class B directors accordingly voted to take such actions solely on the basis of the recommendation of the special committee. The board of directors unanimously approved resolutions providing for the adoption of the merger agreement and related matters. Later on November 19, 2006, the merger agreement was executed by The Toronto-Dominion Bank, TD Banknorth, and Bonn Merger Co. The parties announced the proposed transaction early in the morning on November 20, 2006.

Recommendations of the Special Committee and the TD Banknorth Board of Directors and Our Position as to the Fairness of the Merger

The Special Committee.   TD Banknorth used a special committee consisting solely of independent directors to negotiate the terms of the merger on behalf of its unaffiliated shareholders, with the assistance of independent legal and financial advisors, and did not retain an unaffiliated representative to act on behalf of unaffiliated security holders for purposes of negotiating the terms of the merger. The special committee, acting with the advice and assistance of its independent legal and financial advisors, evaluated and negotiated the going private transaction, including the terms and conditions of the merger agreement, with The Toronto-Dominion Bank. The special committee unanimously resolved (i) to approve the merger agreement and the merger, (ii) to recommend to the board of directors that the board approve and adopt the merger agreement and (iii) to recommend to the board of directors that the merger agreement be submitted to the stockholders of TD Banknorth for approval.

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In the course of reaching its determination, the special committee considered a number of factors, including the following:

·  the special committee’s understanding of TD Banknorth and its business, financial performance, results of operations and future prospects;

·  the special committee’s understanding of current trends in the financial services industry, including a trend toward consolidation of regional banks, increasing competition for loans and deposits and an increasingly difficult operating environment due to, among other things, pressure on net interest income due to an inverted yield curve in U.S. interest rates, a slowing housing sector and increasing concerns about adverse developments in credit quality;

·  the recent trends in the earnings outlook at TD Banknorth ,which indicated expected earnings that were lower than previous guidance, as well as earnings trends in the retail banking market generally;

·       the historical market price performance of TD Banknorth’s common stock, as discussed below in more detail;

·       the existing relationship with The Toronto-Dominion Bank, including its ownership position in TD Banknorth and the relevant governance arrangements, including the terms of TD Banknorth’s certificate of incorporation and bylaws and of the stockholders agreement, and the fact that The Toronto-Dominion Bank currently has the right to designate a majority of the board of directors and could control the outcome of most matters submitted to a vote of TD Banknorth’s stockholders;

·       the special committee’s understanding of TD Banknorth’s acquisition strategy and its ability to continue to execute that strategy given current and reasonably expected circumstances, including TD Banknorth’s share trading range, the availability and likely price of acquisition candidates, the likely financing of future acquisitions and restrictions on permitted ownership levels of The Toronto-Dominion Bank in TD Banknorth stock under the stockholders agreement;

·       the fact that the public stockholders of TD Banknorth after the merger is completed would no longer be equity holders in the company and therefore would no longer participate financially in the potential risks or potential benefits associated with TD Banknorth’s stock and TD Banknorth’s continued ability to execute on its business plans;

·       the financial analyses and information provided by the special committee’s financial advisor, Sandler O’Neill, which included analyses based on TD Banknorth’s GAAP earnings, GAAP earnings excluding amortization expense relating to the original acquisition by The Toronto-Dominion Bank of a majority interest in TD Banknorth and cash operating earnings, and the results of its due diligence investigations, including discussions with management of TD Banknorth regarding its financial performance and outlook;

·       the opinion of Sandler O’Neill that, as of November 18, 2006, the merger consideration was fair to the stockholders of TD Banknorth, other than The Toronto-Dominion Bank and its affiliates, from a financial point of view;

·       the proposed financial and other terms of the merger, including the terms and conditions of the proposed merger agreement, which contained conditions to completion of the merger that the special committee, after consulting with its legal counsel, considered to be reasonable, customary and reasonably likely to be satisfied in a timely manner;

·       the fact that the consideration to be paid to TD Banknorth stockholders is all cash and there is no financing contingency to the merger, and the likelihood that The Toronto-Dominion Bank has the financial and capital resources to complete the merger without undue delay;

·       the likelihood, considering the terms of the merger agreement, the financial and capital resources of The Toronto-Dominion Bank and The Toronto-Dominion Bank’s desire to complete the merger, that the merger would be completed, and completed in a prompt timeframe;

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·       the special committee’s understanding that The Toronto-Dominion Bank was not interested in selling its shares to a third party;

·       the fact that receipt of the merger consideration will be taxable to TD Banknorth stockholders for United States federal income tax purposes; and

·       the special committee’s understanding that certain members of TD Banknorth management would execute waiver letters in which they would agree that the transactions contemplated by the merger agreement and certain other changes attributable to the merger will not constitute either “good reason” or a “change in control” for purposes of their respective employment and retention agreements, as well as the other matters described under “—Interests of Directors and Executive Officers of TD Banknorth in the Merger” beginning on page 56.

The special committee also considered the following factors relating to the procedural safeguards that the special committee believes were and are present to ensure the fairness of the merger and to permit the special committee to represent TD Banknorth’s unaffiliated stockholders, which the special committee believes support its decision and provide assurance as to the procedural fairness of the merger to TD Banknorth’s stockholders other than The Toronto-Dominion Bank and its affiliates:

·       that the special committee consists solely of directors who are not officers, employees or controlling stockholders of The Toronto-Dominion Bank or TD Banknorth, are not otherwise affiliated with The Toronto-Dominion Bank and are all independent of TD Banknorth management;

·       that the members of the special committee will be adequately compensated for their services and that their compensation is in no way contingent on their inviting The Toronto-Dominion Bank to propose a going-private transaction or approving the merger agreement;

·       that the special committee received the advice of financial advisors and legal counsel who represented that they are, and whom the special committee determined to be, independent of The Toronto-Dominion Bank and TD Banknorth management;

·       the terms of the stockholders agreement and other governance documents of TD Banknorth, including the current requirement that any proposal for a going-private transaction can be made only at the invitation of the special committee and that any going-private transaction would need to be approved by the special committee as well as by the holders of a majority of all outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank and its affiliates;

·       that the special committee considered the possibility of a going-private transaction over an extended period of approximately six months, and had, together with its financial advisor, full access as needed to TD Banknorth’s management;

·       that the special committee and its independent advisors negotiated on an arm’s-length basis with The Toronto-Dominion Bank and its representatives;

·       the authority given to the special committee under the stockholders agreement and the resolutions establishing the committee, including the authority to determine whether or not to proceed with a going-private transaction, and that the members of the special committee were aware that they were under no obligation to recommend any transaction; and

·       that stockholders who do not vote in favor of the merger agreement and who comply with certain procedural requirements would be entitled, upon completion of the merger, to exercise statutory appraisal rights under Delaware law, which allows stockholders to have the fair value of their shares determined by the Delaware Chancery Court and paid to them in cash.

In analyzing the transaction relative to the going concern value of TD Banknorth, the special committee took into account the current stock price of the TD Banknorth common stock prior to the announcement of the merger, which was $30.35 per share on November 17, 2006, the last full trading day prior to the announcement of the merger, and which had traded within the range of $27.95 to $31.40

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during calendar year 2006. The special committee considered the relative stability of TD Banknorth’s stock price during calendar year 2006, despite multiple reductions in earnings estimates. The special committee also considered the analyses and methodologies used by Sandler O’Neill to evaluate the value of TD Banknorth, which included an analysis of TD Banknorth’s historical stock price and a comparable companies analysis, a comparable transactions analysis and a discounted cash flow analysis based on projected cash operating earnings. See “—Opinion of Sandler O’Neill” beginning on page 33. The special committee considered the historical market prices of TD Banknorth common stock, which had not closed above $32.35 per share since March 1, 2005, the date on which The Toronto-Dominion Bank completed its acquisition of a 51% interest in TD Banknorth, and considered in particular the fact that, based on analyst consensus estimates of 2007 cash operating earnings per share of $2.14, the TD Banknorth common stock was trading at a 14.2x multiple, which was the highest that such multiple had been during the preceding three years. The special committee considered that the current and historical stock prices of TD Banknorth and the analyses performed by Sandler O’Neill likely provided a reasonable approximation of TD Banknorth’s going-concern value because these were analyses that are inherently relevant to a continuously operating business rather than a sale of assets or a liquidation. The special committee adopted the analyses and opinion of Sandler O’Neill in reaching its determination as to the fairness of the transactions contemplated by the merger agreement.

In the course of reaching its decision to recommend to TD Banknorth’s board of directors that the board approve and adopt the merger agreement and that the merger agreement be submitted to the stockholders of TD Banknorth for approval, the special committee did not consider the liquidation value of TD Banknorth’s assets because it considered TD Banknorth to be a viable going concern business and because it believed that a liquidation of the assets of TD Banknorth would be highly unlikely to deliver comparable value to TD Banknorth stockholders, among other things because it would not capture the value of TD Banknorth’s customer relationships, market position and other franchises. Sandler O’Neill’s analysis also did not include an independent analysis of the liquidation value of TD Banknorth. The special committee did consider the tangible book value of TD Banknorth, which is an accounting concept often used by banks. The special committee considered the relationship between the $32.33 per share cash consideration to be paid in the merger and the reported per share tangible book value of TD Banknorth of approximately $7.84 per share as of September 30, 2006. The special committee noted that the merger consideration represented a ratio of merger consideration to tangible book value of approximately 412%, which compared favorably to the median ratio of merger consideration to tangible book value of selected precedent transactions since January 1, 2004 of 378%. The special committee considered the net book value of TD Banknorth, which was $36.21 per share as of September 30, 2006, to be of limited relevance to its determination as to fairness, in part because the purchase accounting treatment of The Toronto-Dominion Bank’s 2005 acquisition of a majority of TD Banknorth’s common stock led to a large increase in the amount of goodwill on TD Banknorth’s balance sheet that the special committee did not believe to be meaningful in the context of considering the value offered in the merger proposal. In considering what weight to assign to TD Banknorth’s net book value including the goodwill caused by the acquisition of a majority interest in TD Banknorth by The Toronto-Dominion Bank, the special committee considered the analyses and advice of its financial advisor, the fact that TD Banknorth management reports and forecasts, and a number of analysts estimates, analyzed TD Banknorth’s earnings on a cash operating basis excluding the effect of this goodwill, and its perception, after considering the analyses of its financial advisor, that investors appear to value TD Banknorth’s common stock using financial measures that exclude the impact of this goodwill.

The special committee was not aware of any offers received during the past two years to acquire all or a substantial part of TD Banknorth by merger, asset sale, acquisition of a controlling block of securities or otherwise, other than The Toronto-Dominion Bank’s initial acquisition of a majority interest in TD Banknorth on March 1, 2005. The special committee considered the price paid by The Toronto-Dominion Bank in its initial acquisition of a majority interest in TD Banknorth common stock, and the prices paid by The Toronto-Dominion Bank for shares of common stock following that acquisition, and also considered the different circumstances in which those transactions were completed. As described in more detail below under “Transactions in TD Banknorth Common Stock by Certain Persons—The Toronto-Dominion Bank

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and Bonn Merger Co.,” following its acquisition of a 51% interest in TD Banknorth, The Toronto-Dominion Bank (1) purchased shares of the TD Banknorth common stock in open market transactions, (2) purchased shares in a negotiated transaction in connection with TD Banknorth’s acquisition of Hudson United Bancorp at a price of $31.79 per share and (3) agreed on April 13, 2006 to purchase shares in a negotiated transaction in connection with TD Banknorth’s acquisition of Interchange Financial Services Corporation, at a price of $31.17 per share, which shares were purchased at the closing of that transaction on January 1, 2007. The special committee considered that the prices paid by The Toronto-Dominion Bank in connection with the Hudson United and Interchange transactions were based on negotiated premiums to the market prices at the time of those transactions, and noted that the proposed consideration to be paid in the merger was greater than the prices paid in those transactions. Because of the control premium associated with The Toronto-Dominion Bank’s initial acquisition of a 51% interest in TD Banknorth, and the negative developments with respect to TD Banknorth’s operating performance and earnings estimates since the completion of that transaction, the special committee did not consider that the consideration paid in that initial acquisition was relevant to the fairness of the proposed merger.

The foregoing discussion addresses the material information and factors considered by the special committee in its consideration of the merger. In view of the number and variety of factors, the amount of information considered and the complexity of these matters, the special committee did not find it practicable to, and did not attempt to, rank, quantify, or make specific assessments of the specific factors considered in reaching its determination. The special committee considered these factors together as a group in reaching its determination as to the fairness of the merger, and did not attempt to assign any relative weight to any particular factor. In addition, individual members of the special committee may have given different weights to different factors. The special committee conducted extensive discussions of, among other things, the factors described above, including asking questions of TD Banknorth’s management and the special committee’s financial and legal advisors. The special committee considered the factors described above as a whole, and overall considered them to be favorable to, and to support, its determination that the merger is fair to and in the best interests of TD Banknorth and its unaffiliated stockholders.

The Board of Directors.   TD Banknorth’s board of directors consists of eighteen directors, fourteen of whom are Class A directors elected by all holders of common stock of TD Banknorth (including The Toronto-Dominion Bank) and four of whom are Class B directors elected by The Toronto-Dominion Bank as the holder of the share of TD Banknorth’s Class B common stock. On November 18 and 19, the Class A directors met to consider the report and recommendation of the special committee, and on November 19, 2006, the entire board of directors met to consider that report and recommendation and to determine whether or not to adopt the merger agreement. On the basis of the special committee’s recommendation and the other factors described below, the board of directors unanimously determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of TD Banknorth and its unaffiliated stockholders and recommended that TD Banknorth’s stockholders vote to approve and adopt the merger agreement.

In determining that the merger agreement is fair to and in the best interests of TD Banknorth and its unaffiliated stockholders, the Class A directors considered a number of factors, including the following factors:

·       the report of the special committee, including the unanimous recommendation of the special committee in favor of the merger agreement;

·       the opinion of Sandler O’Neill that, as of November 19, 2006, the merger consideration was fair to the stockholders of TD Banknorth, other than The Toronto-Dominion Bank and its affiliates, from a financial point of view;

·       the financial presentation of Sandler O’Neill in connection with its opinion, which was delivered to the board of directors at the request of the special committee;

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·       the fact that the merger consideration and other terms of the merger agreement resulted from negotiations between the special committee and The Toronto-Dominion Bank; and

·       the factors considered by the special committee, including the potential benefits of the merger agreement, the potential risks of the merger agreement, the process undertaken by the special committee, the requirement that the merger be approved by the special committee and a majority of the unaffiliated stockholders, the current and historical market prices of TD Banknorth common stock, the tangible book value of TD Banknorth and the board’s belief that the members of the special committee and their financial and legal advisors were independent from The Toronto-Dominion Bank and TD Banknorth management.

In considering the foregoing factors, which constitute all of the material factors considered by the Class A directors, the Class A directors adopted the conclusion and analyses of the special committee that the proposed merger was substantively fair from a financial point of view and also adopted the analyses and opinion of Sandler O’Neill in reaching its determination as to the fairness of the transactions contemplated by the merger agreement. The Class A directors also expressly determined that the proposed merger was fair to TD Banknorth’s unaffiliated stockholders from a procedural point of view because:

·  all aspects of this transaction, including the negotiation of its terms, were handled by the special committee, which is comprised of four directors of TD Banknorth who are not affiliated with The Toronto-Dominion Bank or officers or employees of TD Banknorth; and

·  the merger is conditioned on the approval of a majority of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank or its affiliates.

The vote of the Class B directors was required to formally adopt the merger agreement and otherwise to take formal action in connection with the merger under our certificate of incorporation and the stockholders agreement, and the Class B directors accordingly voted to take such action solely on the basis of the recommendation of the special committee.

The foregoing discussion addresses the material information and factors considered by the board of directors of TD Banknorth in its consideration of the merger. In view of the number and variety of factors, the amount of information considered and the complexity of these matters, the board of directors did not find it practicable to, and did not attempt to, rank, quantify, make specific assessments of or otherwise assign relative weights to the specific factors considered in reaching its determination. In addition, individual members of the board of directors may have given different weights to different factors. The board of directors considered the factors described above as a whole, and overall considered them to be favorable to, and to support, its determination that the merger was fair to and in the best interests of TD Banknorth and its unaffiliated stockholders.

Our board of directors unanimously recommends that you vote “FOR” approval and adoption of the merger agreement.

Opinion of Sandler O’Neill

By letter dated July 18, 2006, the special committee of designated independent directors of the board of directors of TD Banknorth retained Sandler O’Neill to act as its financial advisor in connection with a potential going-private transaction. Sandler O’Neill is a nationally-recognized investment banking firm whose principal business specialty is advising financial institutions. In the ordinary course of its investment banking business, Sandler O’Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. After interviewing several potential financial advisors, the special committee selected Sandler O’Neill based on Sandler O’Neill’s experience, reputation and familiarity with the valuation of financial institutions, as well as the special committee’s belief that Sandler O’Neill is independent of The Toronto-Dominion Bank and TD Banknorth’s management.

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Sandler O’Neill acted as financial advisor to the special committee in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the merger agreement. At the November 18, 2006 meeting at which the special committee determined to invite The Toronto-Dominion Bank to make a formal proposal with respect to a going-private transaction, and to recommend that the board of directors approve the proposed merger agreement, Sandler O’Neill delivered to the special committee its oral opinion, subsequently confirmed in writing, that, as of such date, the merger consideration to be received by the holders of TD Banknorth common stock other than The Toronto-Dominion Bank and its affiliates is fair to such holders from a financial point of view. At the request of the special committee, Sandler O’Neill also delivered its opinion to TD Banknorth’s board of directors at the November 19, 2006 meeting at which the board of directors considered and approved the merger agreement. The full text of Sandler O’Neill’s opinion is attached as Annex B to this proxy statement. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the opinion. TD Banknorth stockholders are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to the special committee and TD Banknorth’s board of directors and is directed only to the fairness of the merger consideration to be received by the holders of TD Banknorth common stock, other than The Toronto-Dominion Bank and its affiliates, from a financial point of view. It does not address the underlying business decision of TD Banknorth to engage in the merger or any other aspect of the merger and is not a recommendation to any TD Banknorth stockholder as to how such stockholder should vote at the special meeting with respect to the merger or any other matter. Sandler O’Neill did not determine or recommend the consideration of $32.33 per share of TD Banknorth common stock to be paid in the merger, which was determined by negotiation between The Toronto-Dominion Bank and the special committee.

In connection with rendering its opinion, Sandler O’Neill reviewed and considered, among other things:

·       the merger agreement;

·       the amended and restated stockholders agreement, dated as of August 25, 2004, between us (as successor to Banknorth Group, Inc.) and The Toronto-Dominion Bank;

·       certain publicly available financial statements and other historical financial information of TD Banknorth that Sandler O’Neill deemed relevant;

·       certain publicly available financial statements and other historical financial information of The Toronto-Dominion Bank that Sandler O’Neill deemed relevant in determining The Toronto-Dominion Bank’s financial capacity to undertake the merger;

·       internal financial projections for TD Banknorth for the years ending December 31, 2006 and 2007 furnished by and reviewed with senior management of TD Banknorth and an estimated range of growth rates for the years thereafter as discussed with senior management of TD Banknorth;

·       to the extent publicly available, the financial terms of certain recent business combinations in the commercial banking industry;

·  the current market environment generally and the banking environment in particular; and

·       such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler O’Neill considered relevant.

Sandler O’Neill also discussed with certain members of senior management of TD Banknorth the business, financial condition, results of operations and prospects of TD Banknorth. Sandler O’Neill also had discussions with The Toronto-Dominion Bank regarding capital and proposed financing of the transaction.

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In performing its review, Sandler O’Neill relied upon the accuracy and completeness of all the financial information, projections, estimates and other information that was available to Sandler O’Neill from public sources, that was provided to Sandler O’Neill by TD Banknorth and The Toronto-Dominion Bank or their respective representatives or that was otherwise reviewed by Sandler O’Neill, and it has assumed such accuracy and completeness for purposes of rendering its opinion. Sandler O’Neill further relied on the assurances of the senior management of each of TD Banknorth and The Toronto-Dominion Bank that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. Sandler O’Neill was not asked to and did not independently verify such information and did not assume any responsibility, liability or express any opinion for the accuracy or completeness of any of such information. With respect to the financial projections for TD Banknorth used by Sandler O’Neill in its analyses, the senior management of TD Banknorth confirmed to Sandler O’Neill that those projections and estimates (including any assumptions related to such projections and estimates) reflected the best currently available estimates and judgments regarding the future financial performance of TD Banknorth. Sandler O’Neill did not make an independent evaluation or appraisal of the specific assets, the collateral securing assets or the liabilities, contingent or otherwise, of TD Banknorth, The Toronto-Dominion Bank or any of their subsidiaries, or the collectibility of any such assets, nor was it furnished with any such evaluations or appraisals. Sandler O’Neill is not an expert in the evaluation of allowances for loan losses and it did not make an independent evaluation of the adequacy of the allowance for loan losses of TD Banknorth or The Toronto-Dominion Bank, nor did it review any individual credit files relating to TD Banknorth or The Toronto-Dominion Bank. With TD Banknorth’s consent, Sandler O’Neill assumed that the allowance for loan losses for TD Banknorth and The Toronto-Dominion Bank was adequate to cover such losses.

Sandler O’Neill’s opinion was necessarily based upon financial, market, economic and other conditions as they existed on, and could be evaluated as of, the date of its opinion. Sandler O’Neill assumed that each party to the merger agreement will perform all of the covenants required to be performed by such party under the merger agreement and that the conditions precedent in the merger agreement will not be waived. Sandler O’Neill also assumed that there has been no material change in TD Banknorth’s and The Toronto-Dominion Bank’s assets, financial condition, results of operations, business or prospects since the date of the last financial statements made available to it and that TD Banknorth and The Toronto-Dominion Bank would remain as going concerns for all periods relevant to its analyses. Sandler O’Neill expresses no opinion as to any of the legal, accounting and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Events occurring after the date of the opinion could materially affect the opinion. Sandler O’Neill has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date hereof. Sandler O’Neill is expressing no opinion herein as to the prices at which the common stock of TD Banknorth and the common shares of The Toronto-Dominion Bank may trade at any time.

A copy of Sandler O’Neill’s written presentation to the special committee and board of directors on November 18 and 19, 2006 has been filed as Exhibit (c)(2) to the Schedule 13E-3 filed with the SEC by The Toronto-Dominion Bank, TD Banknorth and Bonn Merger Co. in connection with the merger.  In addition, as described above in “—Background of the Merger,” beginning on page 19, Sandler O’Neill prepared several other presentations for the special committee.  These presentations have been filed as Exhibits (c)(3) through (c)(11) and (c)(14) to the Schedule 13E-3.  See “Where You Can Find More Information,” beginning on page 106.

In rendering its opinion, Sandler O’Neill performed a variety of financial analyses. The following is a summary of the material analyses performed by Sandler O’Neill but is not a complete description of all the analyses underlying Sandler O’Neill’s opinion. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O’Neill believes that its analyses must be considered as a whole and that

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selecting portions of the factors and analyses considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O’Neill’s comparative analyses described below is identical to TD Banknorth or The Toronto-Dominion Bank and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of TD Banknorth or The Toronto-Dominion Bank and the companies to which they are being compared.

The earnings projections used and relied upon by Sandler O’Neill in its analyses were internal management estimates for TD Banknorth for the years ending December 31, 2006 and 2007 and an estimated range of growth rates for the years thereafter, which were furnished by and discussed with management of TD Banknorth. These earnings estimates were adjusted to include a full year of operations for Hudson United, which was acquired on January 1, 2006, and reflected the anticipated contributions of Interchange in 2007. These earnings estimates were reviewed with the senior management of TD Banknorth. Sandler O’Neill expressed no opinion as to such financial projections or the assumptions on which they were based. These projections, as well as the other estimates used by Sandler O’Neill in its analyses, were based on numerous variables and assumptions which are inherently uncertain and, accordingly, actual results could vary materially from those set forth in such projections. See “—Financial Forecasts of TD Banknorth” beginning on page 53.

In performing its analyses, Sandler O’Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of TD Banknorth, The Toronto-Dominion Bank and Sandler O’Neill. The analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. Sandler O’Neill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to the special committee on November 18, 2006 and the special committee and the board of TD Banknorth on November 19, 2006. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Sandler O’Neill’s analyses do not necessarily reflect the value of the TD Banknorth common stock or The Toronto-Dominion Bank common shares or the prices at which these securities may be sold at any time.

Summary of Proposal.   Sandler O’Neill reviewed the financial terms of the proposed transaction. Based upon the closing price of the TD Banknorth common stock on November 17, 2006 of $30.35 per share and the exchange of all of TD Banknorth’s shares not held by The Toronto-Dominion Bank and its affiliates for a cash value of $32.33 per share, Sandler O’Neill calculated several ratios based upon the transaction value and TD Banknorth’s historical and estimated earnings per share, as well as its tangible book value per share and core deposits.

In calculating these ratios, Sandler O’Neill considered three measures of TD Banknorth’s earnings per share. First, Sandler O’Neill considered TD Banknorth’s earnings per share calculated under GAAP. Sandler O’Neill also considered GAAP earnings per share excluding the impact of amortization expense directly related to the application of the purchase method of accounting in connection with The Toronto-Dominion Bank’s 2005 acquisition of control of TD Banknorth. Finally, Sandler O’Neill considered cash operating earnings per share, as reported by TD Banknorth, which excludes the amortization of transaction-related intangibles, including those related to the purchase method of accounting for the 2005 merger, as well as merger and restructuring costs and other non-core adjustments, all net of tax benefits. Sandler O’Neill also considered two measures of TD Banknorth’s tangible book value, one (as reported by TD Banknorth) calculated as total equity less goodwill and intangibles plus deferred tax liability on intangibles, the other (as commonly reported by other U.S. banks) calculated as total equity less goodwill and intangibles. Sandler O’Neill also assumed that TD Banknorth had core deposits of $24.7 billion as of September 30, 2006.

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Sandler O’Neill calculated the following ratios:

Transaction Ratios

 

The aggregate offer value was approximately $3.232 billion, based upon 98,229,172 shares of TD Banknorth common stock outstanding and held by stockholders other than The Toronto-Dominion Bank and its affiliates and including the intrinsic value of options to purchase an aggregate of 9,824,541 shares with a weighted average strike price of $26.65 per share. Sandler O’Neill noted that the transaction value represented a 6.5% premium over the November 17, 2006 closing price of the TD Banknorth common stock.

Stock Trading History.   Sandler O’Neill reviewed the history of the reported trading prices and volume of TD Banknorth’s common stock for the three-year period ended November 17, 2006. Sandler O’Neill then compared the relationship between the movements in the prices of the TD Banknorth common stock to movements in the prices of the NASDAQ Bank Index, the S&P Bank Index and a comparable group composite made up of the thirteen publicly-traded banking institutions described below under “—Comparable Company Analysis.” At the end of the three-year period ended November 17, 2006, TD Banknorth had underperformed each of the indices to which it was compared.

TD Banknorth’s Comparative Stock Performance

 

Price to Forward Earnings Per Share History.   Sandler O’Neill reviewed the history of the price to forward earnings per share multiple of TD Banknorth for the three-year period ended November 17, 2006, and calculated the ratio of the trading price of a share of TD Banknorth common stock to the median analysts’ estimates of cash operating earnings per share for the current year provided by the Institutional Brokerage Estimates Service, or IBES (a data service that compiles estimates issued by securities analysts). As described below, Sandler O’Neill then compared the movements in the price to forward earnings per share multiple of the TD Banknorth common stock to the movements in the price to forward earnings per

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share multiple of a comparable group composite made up of the thirteen publicly-traded banking institutions described below under “—Comparable Company Analysis.”

Price to Forward Earnings Per Share Comparison

 

Sandler O’Neill noted that, during this period, TD Banknorth’s price to forward earnings per share reached a maximum of 14.2x on November 17, 2006 and a minimum of 9.8x in August 2004, with a median value of 11.4x.

Comparable Company Analysis.   Sandler O’Neill used publicly available information to compare selected financial and market trading information for TD Banknorth with groups of financial institutions selected by Sandler O’Neill for TD Banknorth. Based on its experience with companies in the banking industry, Sandler O’Neill selected a peer group for TD Banknorth consisting of the following publicly-traded banking institutions having an asset size greater than $40 billion and less than $100 billion as of September 30, 2006:

Comparable Group:

 

The analysis compared publicly available financial information for TD Banknorth as of and for the twelve months ended September 30, 2006 with that of TD Banknorth’s peer group as of and for the twelve month period ended September 30, 2006. The table below sets forth the data for TD Banknorth and the median data for the TD Banknorth peer group, with pricing data as of November 17, 2006.

(1)          Based on TD Banknorth’s cash operating earnings

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(2)          Based on IBES consensus estimates of $2.13 per share for 2006

(3)          Based on IBES consensus estimates of $2.14 per share for 2007

Analysis of Selected Merger Transactions.   Sandler O’Neill reviewed 17 merger transactions announced nationwide from January 1, 2004 through November 17, 2006 involving the acquisitions of banking institutions with announced transaction values greater than $1 billion. The transactions included in this analysis are set forth below.

 

Sandler O’Neill reviewed the multiples of transaction price at announcement to last twelve months’ earnings, transaction price to this year’s estimated earnings, transaction price to next year’s estimated earnings, transaction price to tangible book value, tangible book premium to core deposits and premium to market value. The median multiples from this nationwide group were compared to the proposed transaction ratios. As described above under “—Summary of Proposal,” Sandler O’Neill considered three measures of TD Banknorth’s earnings per share (GAAP earnings per share, GAAP earnings per share excluding the impact of the purchase method of accounting for the 2005 acquisition by The Toronto-Dominion Bank and cash operating earnings per share as reported by TD Banknorth) and two measures of tangible book value (as reported by TD Banknorth, and excluding deferred tax liability). These figures were compared against GAAP earnings per share, and tangible book value excluding deferred tax liability, in the selected comparable transactions.

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Comparable Transaction Metrics

 

Sandler O’Neill noted that the ratios of the merger consideration to GAAP earnings per share for the latest twelve months, and to estimated GAAP earnings per share for 2006 and 2007, were in all cases higher than the relevant median ratios of consideration to earnings per share for the selected comparable transactions, and that the ratios of merger consideration to earnings per share excluding the effects of purchase method accounting and to cash operating earnings per share were within the range of the relevant ratios in the selected comparable transactions. Sandler O’Neill also noted that the ratio of the merger consideration to tangible book value was higher than the median ratio of consideration to tangible book value in the selected comparable transactions.

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Sandler O’Neill also reviewed 30 precedent “buy-in” transactions in the U.S. since January 1, 2000 with a deal value between $500 million and $10 billion, in which a major stockholder of the target company acquired 15-80% of the outstanding shares of the target company and in which the resultant ownership by the acquiror was 90-100% of the outstanding shares of the target company. The transactions included in this analysis are set forth below.

                                                                                                                                                       

Sandler O’Neill reviewed the premium to market value of these transactions, as set forth in the table below.

Comparable Buy-In Transaction Premiums

                                                                                                                                                                                                              

Discounted Cash Flow Analysis.   Sandler O’Neill performed an analysis that estimated the future stream of after-tax cash flows of TD Banknorth through December 31, 2011 under various circumstances, assuming that TD Banknorth would perform in accordance with the earnings and growth projections prepared by and reviewed with management of TD Banknorth and that its dividend payout ratio would be 50.0%. To approximate the terminal value of the TD Banknorth common stock at December 31, 2011, Sandler O’Neill applied price to cash operating earnings multiples ranging from 11x to 15x. The dividend

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income streams and terminal values were then discounted to present values using different discount rates ranging from 9.0% to 13.0% chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of TD Banknorth common stock. In addition, Sandler O’Neill performed a sensitivity analysis for a range of earnings growth rates applied to the projected net income of TD Banknorth, assuming a terminal value of the TD Banknorth common stock at December 31, 2011 calculated using a 13.3x price to last twelve months’ earnings multiple. The earnings growth rate applied to the projected cash operating net income ranged from 5.0% to 9.0%, using a range of discount rates from 9.0% to 13.0% for the tabular analysis. As illustrated in the following tables, this analysis indicated an imputed range of values per share for TD Banknorth’s common stock of $21.13 to $31.32 when applying the price to earnings multiples to the management projections and $24.57 to $32.49 when applying the discount rates and a 13.3x price to earnings multiple to the varying earnings growth rates. Sandler O’Neill noted that the proposed merger consideration of $32.33 per share was above the range of values implied by its discounted cash flow analysis based on projected cash operating earnings, and within the range of values implied by its sensitivity analysis based on varying earnings growth rates.

Discounted Cash Flow Analysis Using Projected Cash Operating Earnings:

 

Sensitivity Analysis (13.3x Terminal Multiple):

                                                                                                                                                                                       

In connection with its analyses, Sandler O’Neill considered and discussed with the special committee and TD Banknorth’s board of directors how the present value analyses would be affected by changes in the underlying assumptions, including variations with respect to net income. Sandler O’Neill noted that the discounted cash flow and terminal value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Sandler O’Neill Relationship.   TD Banknorth has agreed to pay Sandler O’Neill a transaction fee in connection with the merger of approximately $6.5 million, of which $1.0 million was due when the designated independent directors committee signed an engagement letter with Sandler O’Neill on July 18, 2006, $2.5 million was due when Sandler O’Neill rendered its opinion to the special committee (which fee would have been due had Sandler O’Neill finally informed the special committee that it was unable to render the requested fairness opinion), $700,000 was due upon the signing of the merger agreement, $700,000 was due when TD Banknorth first mailed this proxy statement to its stockholders and the balance of which is contingent, and payable, upon the completion of the merger. As described above under “Special Factors—Recommendation of the Special Committee and the TD Banknorth Board of Directors and Our Position as to the Fairness of the Merger,” the receipt of an affirmative fairness opinion from the special committee’s financial advisors was a material factor in the special committee’s decision to recommend that the TD Banknorth board of directors approve the merger and submit it to TD Banknorth

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stockholders for their approval, which recommendation was a prerequisite to the execution of the merger agreement, the mailing of this proxy statement to stockholders and the completion of the merger. The portion of the transaction fee already paid includes a fee of $2.5 million paid to Sandler O’Neill for rendering its opinion. TD Banknorth also has agreed to reimburse certain of Sandler O’Neill’s reasonable out-of-pocket expenses incurred in connection with its engagement, including the reasonable fees and disbursements of its legal counsel, and to indemnify Sandler O’Neill and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons against certain expenses and liabilities, including liabilities under securities laws.

Pursuant to the engagement letter dated July 18, 2006, the opinion of Sandler O’Neill is directed to the special committee in connection with its consideration of the merger. At the request of the special committee, Sandler O’Neill’s opinion also was provided to the board of directors of TD Banknorth in connection with its consideration of the merger.

Sandler O’Neill has in the past served as financial advisor to four companies acquired by TD Banknorth or its predecessors (including serving as financial advisor to Banknorth Group Inc. of Vermont when it was acquired by Peoples Heritage Bank, which became Banknorth Group in 2000), participated in an underwriting syndicate for one public offering of common stock by an affiliate of The Toronto-Dominion Bank and served as co-manager for one public offering of preferred stock by TD Banknorth. Sandler O’Neill received customary fees for each of these services, none of which occurred within the last two years. In the ordinary course of its business as a broker-dealer, Sandler O’Neill may purchase securities from and sell securities to TD Banknorth and The Toronto-Dominion Bank and their affiliates, and has done so within the past two years. Sandler O’Neill may also actively trade the debt or equity securities of TD Banknorth and/or The Toronto-Dominion Bank or their affiliates for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

The Toronto-Dominion Bank’s Purpose and Reasons for the Merger

The Toronto-Dominion Bank’s purpose for engaging in the merger is to increase its ownership of TD Banknorth common stock from its current position of approximately 59.5% of the outstanding shares to 100%. Upon completion of the merger, TD Banknorth would become a wholly-owned subsidiary of The Toronto-Dominion Bank.

The Toronto-Dominion Bank views the proposed acquisition of 100% of TD Banknorth as part of and consistent with its long-term U.S. growth strategy and contemplated it as a possibility at the time of its initial acquisition of a majority interest in TD Banknorth in March 2005. Due to the challenging operating environment in the U.S. banking sector and its possible continuing adverse impact on TD Banknorth’s earnings, The Toronto-Dominion Bank believes that a stronger focus on TD Banknorth’s organic growth will be required, which The Toronto-Dominion Bank believes will be easier to achieve with 100% ownership. The Toronto-Dominion Bank believes that a 100% ownership structure will provide greater operating flexibility and eliminate the constraints, including some regulatory requirements and other considerations of a public company, as well as certain costs associated with the operation of The Toronto-Dominion Bank and TD Banknorth as separate companies with independent stockholder bases. The Toronto-Dominion Bank also believes that the availability of TD Banknorth common stock for use as consideration in future add-on acquisitions, which was a rationale of the structure of the initial acquisition, is no longer as important given the challenging operating environment in the United States and the competition for appealing acquisition targets, as well as the relative trading values of the TD Banknorth common stock compared to The Toronto-Dominion Bank’s publicly-traded common shares. Finally, the acquisition of the remaining interests in TD Banknorth will eliminate the need for The Toronto-Dominion Bank to hold excess capital in anticipation of the possibility of a going-private transaction.

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The Toronto-Dominion Bank decided to pursue the merger in November 2006 rather than at another time because the transaction received the support of both TD Banknorth’s independent directors and the two largest public stockholders of TD Banknorth at that time. Under the terms of the stockholders agreement, The Toronto-Dominion Bank was only permitted to make a proposal regarding a going-private transaction if invited to do so by the designated independent directors committee of TD Banknorth. During November 2006, The Toronto-Dominion Bank and the special committee, on the basis of preliminary exploratory discussions, reached acceptable financial and other terms for a going-private transaction and, accordingly, the special committee issued a formal invitation to The Toronto-Dominion Bank to submit a proposal for such a transaction.

The Position of The Toronto-Dominion Bank and Bonn Merger Co. as to the Fairness of the Merger

Under the rules of the SEC, The Toronto-Dominion Bank and Bonn Merger Co. are required to express their belief as to the substantive and procedural fairness of the proposed merger to the unaffiliated stockholders of TD Banknorth. The Toronto-Dominion Bank and Bonn Merger Co. did not undertake a formal evaluation of the fairness of the proposed merger and are making the statements included in this section solely for purposes of complying with such requirements. The views of The Toronto-Dominion Bank and Bonn Merger Co. with respect to the fairness of the merger are not, and should not be construed as, a recommendation to any stockholder as to how that stockholder should vote on the proposal to approve and adopt the merger agreement.

The Toronto-Dominion Bank and Bonn Merger Co. believe that the merger is substantively fair to TD Banknorth’s unaffiliated stockholders based on, among other things, the following factors:

·       The special committee of TD Banknorth’s board of directors, which is comprised of four directors who are not affiliated with The Toronto-Dominion Bank or officers or employees of TD Banknorth, unanimously concluded that the merger is fair to and in the best interests of the unaffiliated stockholders of TD Banknorth, approved the merger agreement and the merger and recommended to the board of directors of TD Banknorth that the board of directors of TD Banknorth approve and adopt the merger agreement and that the merger agreement be submitted to the stockholders of TD Banknorth for approval.

·       The special committee and the board of directors of TD Banknorth received an opinion from their independent financial advisor, Sandler O’Neill, to the effect that, as of the date of the opinion and subject to the assumptions, qualifications and limitations set forth therein, the merger consideration was fair to the unaffiliated holders of TD Banknorth common stock from a financial point of view.

·       The merger is conditioned on the approval of the holders of a majority of the outstanding shares of TD Banknorth common stock not owned by The Toronto-Dominion Bank or its affiliates.

·       The consideration to be paid in the merger represents a 6.5% premium over the closing sale price of the TD Banknorth common stock on the New York Stock Exchange on November 17, 2006, the last trading day prior to the date on which the merger was announced, and an 8.9% premium to the average closing price of the TD Banknorth common stock for the 30 trading days ending on November 17, 2006. In this regard, The Toronto-Dominion Bank also considered the relative stability of TD Banknorth’s trading price despite the decline in earnings estimates of TD Banknorth’s management over the past year.

·       The consideration to be paid in the merger represents a multiple of 4.12 times TD Banknorth’s tangible book value per share of approximately $7.84 as of September 30, 2006.

·       The consideration to be paid in the merger represents a multiple of 22 times TD Banknorth’s GAAP earnings per share for the twelve months ended September 30, 2006 and a multiple of 15.8 times TD Banknorth’s estimated cash operating earnings per share for 2007 (based on the low end

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of guidance given by a member of TD Banknorth’s management at a recent investor conference of $2.05 per share).

·  The Toronto-Dominion Bank’s consideration of the decline in the earnings estimates of TD Banknorth’s management between July and October 2006 (during which period the cash operating earnings estimates were reduced from $2.28 to $2.12 for 2006 and from $2.46 to $2.07 for 2007) and the results of the discounted dividend method analysis performed by Goldman, Sachs & Co. (which yielded a reference range for the implied present value per share of TD Banknorth common stock of $23.79 to $31.69 based on IBES estimates and a range of $21.38 to $28.43 based on estimates provided by TD Banknorth’s management), as further described under “—Summary of Financial Analyses of Goldman, Sachs & Co.” The Toronto-Dominion Bank believes that these factors support its expectation of continuing challenges in TD Banknorth’s operating environment, including the interest rate environment and other market and economic conditions.

·       The consideration to be paid in the merger is all cash and is not subject to any financing condition, which provides certainty of value for TD Banknorth stockholders.

·       Stockholders who do not vote in favor of the merger agreement and who comply with certain procedural requirements will be entitled, upon completion of the merger, to exercise statutory appraisal rights under Delaware law, which allows stockholders to have the fair value of their shares determined by the Delaware Chancery Court and paid to them in cash.

·       The largest stockholder of TD Banknorth (as of the date of announcement of the merger agreement) other than The Toronto-Dominion Bank agreed to vote the shares of TD Banknorth common stock over which it exercises voting authority in favor of approval and adoption of the merger agreement, and another large stockholder of TD Banknorth indicated at the time of announcement of the merger agreement its intention to vote in favor of the merger agreement, although it did not make any commitment to do so.

·       The merger will provide liquidity, without the brokerage and other costs typically associated with market sales, for TD Banknorth’s public stockholders whose ability to sell their shares of TD Banknorth common stock is adversely affected by the limited trading volume and low public float of the shares.

The Toronto-Dominion Bank and Bonn Merger Co. also believe that the proposed merger is procedurally fair to TD Banknorth’s unaffiliated stockholders based on, among other things, the following factors:

·       Pursuant to the terms of the stockholders agreement, The Toronto-Dominion Bank was prohibited from making an offer for a going-private transaction, except at the invitation, and with the approval, of the special committee. The special committee, together with its independent legal counsel and independent financial advisor, negotiated all financial and other terms and conditions of the merger agreement on an arm’s-length basis with The Toronto-Dominion Bank and its advisors. The Toronto-Dominion Bank did not participate in the deliberations of the special committee.

·       The special committee unanimously concluded that the merger is fair to and in the best interests of the unaffiliated stockholders of TD Banknorth, approved the merger agreement and the merger and recommended to the board of directors of TD Banknorth that the board of directors of TD Banknorth approve and adopt the merger agreement and that the merger agreement be submitted to the stockholders of TD Banknorth for approval.

·       The merger is conditioned on the approval of the holders of a majority of the outstanding shares of common stock of TD Banknorth not owned by The Toronto-Dominion Bank or its affiliates.

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·       Under the terms of the merger agreement, in certain circumstances prior to obtaining stockholder approval of the merger agreement, TD Banknorth is permitted to furnish information to and participate in discussions or negotiations with persons making acquisition proposals for TD Banknorth and the board of directors of TD Banknorth is permitted to withdraw or modify its recommendation of the merger agreement.

·       Stockholders who do not vote in favor of the merger agreement and who comply with certain procedural requirements would be entitled, upon completion of the merger, to exercise statutory appraisal rights under Delaware law, which allows stockholders to have the fair value of their shares determined by the Delaware Chancery Court and paid to them in cash.

Although Goldman, Sachs & Co. generally assisted The Toronto-Dominion Bank in connection with the merger and, in particular, performed certain financial analyses relating to the proposed transaction as described under “—Summary of Financial Analyses of Goldman, Sachs & Co.,” Goldman, Sachs & Co. was not requested to, and did not, deliver any opinion to The Toronto-Dominion Bank as to the fairness of the merger consideration.

Although The Toronto-Dominion Bank did not calculate a specific going concern value per share, The Toronto-Dominion Bank believes that the merger consideration is fair in relation to TD Banknorth’s going concern value per share based on its knowledge of TD Banknorth’s business and prospects, including the current challenges of TD Banknorth’s operating environment, the projections contained in this proxy statement, including the assumptions contained therein, TD Banknorth’s historical results of operations, and The Toronto-Dominion Bank’s knowledge of the banking industry.

The Toronto-Dominion Bank considered the $32.33 value of the merger consideration in comparison to the volume weighted average price of $31.57 paid by The Toronto-Dominion Bank for additional shares of common stock of TD Banknorth following its initial acquisition of 51% of the outstanding common stock of TD Banknorth (excluding shares acquired pursuant to TD Banknorth’s dividend reinvestment plan, which were effected by the independent administrator of this plan). However, The Toronto-Dominion Bank did not place significant weight on this comparison as almost all of such purchases were made directly from TD Banknorth and were effected in connection with the acquisitions by TD Banknorth of Hudson United Bancorp and Interchange Financial Services Corporation. These purchases involved newly-issued shares that were purchased by The Toronto-Dominion Bank at a negotiated premium to market prices, in excess of the market-based price contemplated by the terms of the stockholders agreement. See “Transactions in TD Banknorth Common Stock by Certain Persons—The Toronto-Dominion Bank and Bonn Merger Co.” beginning on page 103 and “Special Factors—Transactions and Relationships between TD Banknorth and The Toronto-Dominion Bank—Purchases of TD Banknorth Common Stock” on page 62. The Toronto-Dominion Bank did not consider the value of the merger consideration in comparison to the price paid in its initial acquisition of 51% of the outstanding common stock of TD Banknorth because of the control premium associated with that acquisition and the negative developments with respect to TD Banknorth’s operating performance and earnings estimates since the completion of that transaction.

The Toronto-Dominion Bank did not consider the potential for alternative transactions involving TD Banknorth because The Toronto-Dominion Bank, as the controlling stockholder of TD Banknorth, determined that TD Banknorth was an integral component of its long-term growth strategy and accordingly did not intend to consider or participate in any alternative transaction involving a sale of or reduction of its investment in TD Banknorth. As a result, The Toronto-Dominion Bank did not evaluate the prices potentially attainable in an alternative transaction. Similarly, due to TD Banknorth’s strategic importance to The Toronto-Dominion Bank, The Toronto-Dominion Bank did not consider the liquidation of TD Banknorth to be a viable option and consequently did not believe that liquidation value would be a relevant measure. Even if liquidation of TD Banknorth were a viable option, The Toronto-

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Dominion Bank expects that selling TD Banknorth’s business as an ongoing operation would in all likelihood realize greater value for TD Banknorth’s unaffiliated stockholders that is more certain and more immediate than the value that would be realized in an orderly liquidation of TD Banknorth’s business, and accordingly that liquidation value is not a useful methodology under the circumstances. The Toronto-Dominion Bank is not aware of any offer during the last two years for TD Banknorth and accordingly no comparison to any such offer was made. The Toronto-Dominion Bank considered the value of the merger consideration in light of TD Banknorth’s tangible book value per share, as described above, but considered net book value per share, which was $36.21 per share as of September 30, 2006, to be of limited relevance in part because the purchase method accounting treatment of The Toronto-Dominion Bank’s 2005 acquisition of a majority of TD Banknorth’s common stock led to a large increase in the amount of goodwill on TD Banknorth’s balance sheet.

The foregoing discussion of the information and factors considered and given weight by The Toronto-Dominion Bank and Bonn Merger Co. in connection with the fairness of the merger agreement and the merger is not intended to be exhaustive but is believed to include all material factors considered by The Toronto-Dominion Bank and Bonn Merger Co. The Toronto-Dominion Bank and Bonn Merger Co. did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching their conclusion as to the fairness of the proposed merger. Rather, the determination of The Toronto-Dominion Bank and Bonn Merger Co. as to fairness was made after consideration of all of the foregoing factors as a whole. None of the material factors considered by The Toronto-Dominion Bank or Bonn Merger Co. failed to support their belief in the fairness of the merger.

Summary of Financial Analyses of Goldman, Sachs & Co.

The Toronto-Dominion Bank retained Goldman Sachs as its financial advisor in connection with the merger. In this capacity, Goldman Sachs prepared and delivered the Goldman Sachs presentations, as described below, to the senior management and board of directors of The Toronto-Dominion Bank. Goldman Sachs relied upon the accuracy and completeness of all of the financial, legal, accounting, tax and other information discussed with or reviewed by it and assumed the accuracy and completeness of this information for purposes of preparing the Goldman Sachs presentations. Accordingly, Goldman Sachs did not attempt to verify the accuracy or completeness of the information supplied by The Toronto-Dominion Bank or TD Banknorth or obtained through other sources.  In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheets assets and liabilities) of The Toronto-Dominion Bank or TD Banknorth or any of their respective subsidiaries, and Goldman Sachs was not furnished with any such evaluation or appraisal. The Goldman Sachs presentations were provided solely for the information and assistance of the senior management and board of directors of The Toronto-Dominion Bank in connection with their consideration of the merger. Goldman Sachs did not determine or recommend the consideration of $32.33 per share of TD Banknorth common stock to be paid in the merger, which was determined by negotiation between The Toronto-Dominion Bank and the special committee.

On July 26, 2006, Goldman Sachs provided financial information and analyses regarding TD Banknorth to the senior management of The Toronto-Dominion Bank, which we refer to as the “July 26, 2006 presentation,” and on November 18, 2006, Goldman Sachs provided financial information and analyses regarding TD Banknorth to the board of directors of The Toronto-Dominion Bank, which we refer to as the “November 18, 2006 presentation.” The July 26, 2006 presentation and the November 18, 2006 presentation have been filed as Exhibits (c)(13) and (c)(12), respectively, to Item 16 to the Schedule 13E-3 filed with the SEC by The Toronto-Dominion Bank, TD Banknorth and Bonn Merger Co. in connection with the merger. See “Where You Can Find More Information,” beginning on page 106.

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In connection with preparing the November 18, 2006 presentation, Goldman Sachs reviewed, among other things:

·      the merger agreement;

·      annual reports to stockholders and annual reports on Form 10-K of TD Banknorth  (and its predecessor entities) for the five fiscal years ended December 31, 2005;

·      interim reports to stockholders and quarterly reports on Form 10-Q of TD Banknorth;

·      other communications from TD Banknorth to its stockholders;

·      internal financial analyses and forecasts for TD Banknorth prepared by the management of TD Banknorth, as reviewed and approved by the management of The Toronto-Dominion Bank for use by Goldman Sachs in connection with the November 18, 2006 presentation; and

·      internal financial analyses and forecasts for The Toronto-Dominion Bank prepared by the management of The Toronto-Dominion Bank.

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

The following is a summary of the material financial analyses delivered by Goldman Sachs to The Toronto-Dominion Bank’s board of directors in connection with the November 18, 2006 presentation and is qualified by reference to Exhibit (c)(12) to Item 16 of the Schedule 13E-3. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before November 16, 2006, and is not necessarily indicative of current market conditions.

The November 18, 2006 presentation contains a number of financial analyses, including:

Transaction Multiples Analysis.   Goldman Sachs calculated for the board of directors of The Toronto Dominion Bank various multiples and premiums resulting from the contemplated merger. These calculations were based on certain financial analyses and forecasts for TD Banknorth prepared by the management of TD Banknorth and estimates from Institutional Brokerage Estimate Systems, or IBES.

Using the $32.33 price per share of TD Banknorth common stock to be paid in the merger, Goldman Sachs calculated the following multiples and premiums:

·      price as a multiple of TD Banknorth’s estimated 2006 and 2007 cash earnings per share, or cash EPS;

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·      price as a multiple of TD Banknorth’s book value and tangible book value, as of September 30, 2006, as if TD Banknorth’s pending acquisition of Interchange Financial Services Corporation had occurred on that date;

·      the premiums to TD Banknorth’s core deposits as of September 30, 2006, as if TD Banknorth’s then-pending acquisition of Interchange Financial Services Corporation had occurred on that date. This premium was calculated as the excess of the implied aggregate transaction value over TD Banknorth’s tangible book value divided by TD Banknorth’s core deposits, respectively.

The results of these analyses are summarized as follows:

 

Historical Stock Trading Analysis.   Goldman Sachs reviewed the historical trading prices for the TD Banknorth common stock for a one-year period ended November 16, 2006. In addition, Goldman Sachs analyzed the consideration to be received by stockholders pursuant to the merger agreement in relation to certain historical prices of the TD Banknorth common stock. This analysis indicated that the price per share of common stock to be paid to TD Banknorth’s stockholders pursuant to the merger represented:

·       a premium of 6.5% based on the closing share price on November 16, 2006 of $30.37 per share;

·       a premium of 8.9% based on the latest 30-day average market price as of November 16, 2006 of $29.68 per share; and

·       a premium of 3.0% based on the latest 52-week high market price as of November 16, 2006 of $31.40 per share.

Selected Minority Buyout Transaction Analysis.   Goldman Sachs analyzed certain publicly available financial information relating to selected minority buyout transactions since January 2000 with values greater than $1 billion, where the acquiror originally owned greater than 50% but less than 85% of the target company. These transactions included:

 

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For each of the selected transactions included in the above table, Goldman Sachs calculated the premiums paid by the acquiror by comparing the per share purchase price in each transaction to (i) the market price of the acquired company’s equity one day prior to the date of the public announcement of the transaction and (ii) the highest market price of the acquired company’s equity during the 52-week period prior to the date of the public announcement of the transaction, as summarized in the following table:

                                                                                                                         

Selected Companies Analysis.   Goldman Sachs reviewed and compared certain financial information for TD Banknorth to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the banking industry:

TD Banknorth’s Peers:

·       Sovereign Bancorp Inc.

·       Comerica Inc.

·       Zions Bancorporation

·       UnionBanCal Corp.

·       Compass Bancshares Inc.

·       Commerce Bancorp Inc.

·       Huntington Bancshares Inc.

·       First Horizon National Corp.

·       New York Community Bancorp Inc.

·       Associated Banc-Corp.

Although none of the selected companies is directly comparable to TD Banknorth, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of TD Banknorth.

Goldman Sachs calculated and compared various financial multiples and ratios for the selected companies and TD Banknorth.  The multiples and ratios of the selected companies were based on market data as of November 16, 2006, financial data as of September 30, 2006, information obtained from SEC filings and estimates from IBES and SNL DataSource.  For TD Banknorth, the multiples and ratios were based on market data as of November 16, 2006, financial data as of September 30, 2006, information from SEC filings and estimates from TD Banknorth management and IBES.

With respect to the selected companies and TD Banknorth, Goldman Sachs calculated:

·       the closing share price as a percentage of the 52-week high share price;

·       the closing share price as a multiple of estimated cash EPS for 2006 and 2007 (referred to as the cash P/E);

·       the closing share price as a multiple of estimated EPS calculated in accordance with GAAP for 2006 and 2007 (referred to as the GAAP P/E);

·       the closing share price as a multiple of the stated book value divided by the number of fully diluted shares of TD Banknorth  common stock (referred to as stated P/B);

·       the closing share price as a multiple of the tangible book value divided by the number of fully diluted shares of TD Banknorth common stock (referred to as tangible P/B);

·       the core deposit premium;

·       the dividend yield;

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·       the long term growth rate, or LTG; and

·       the 2007E/2006E EPS annual growth rate (referred to as ’07E/06E EPS growth).

The results of these analyses are summarized as follows:

                                                                                                                                                                                                            

Dividend Discount Model Analysis.   Goldman Sachs performed a dividend discount analysis with respect to the future dividend streams of the TD Banknorth common stock based on IBES estimates.  Goldman Sachs added the illustrative present value indications based on the estimated future dividend streams for TD Banknorth over the five-year period from 2007 through 2011 and the present values of the terminal values of the TD Banknorth common stock at the end of the year 2011 that resulted from this analysis.

Goldman Sachs employed the following assumptions in this analysis:

·       the dividend streams and terminal values were discounted using a discount rate of 11%;

·       the terminal value of the TD Banknorth common stock was determined by applying a 12 x multiple to the year 2012 projected earnings;

·       an estimated excess capital of TD Banknorth based on an adjusted tangible common equity to risk weighted assets target ratio of 7.5%;

·       an estimated growth rate of risk weighted assets of 5.0% per year;

·       an estimated 6.0% pre-tax cost of excess equity distributions, and

·       IBES median cash EPS estimates for 2006 and 2007 of $2.13 and $2.15, respectively, and long-term EPS growth rate of 10.0% thereafter.

This analysis resulted in a reference range for the implied present value per share of TD Banknorth common stock of $23.79 to $31.69.

Goldman Sachs also performed a dividend discount model analysis with respect to the future dividend streams of the TD Banknorth common stock based on estimates provided by TD Banknorth’s management.  Goldman Sachs added the illustrative present value indications based on the estimated future dividend streams for TD Banknorth over the five-year period from 2007 through 2011 and the present values of the terminal values of the TD Banknorth common stock at the end of the year 2011 that resulted from this analysis.

Goldman Sachs employed the following assumptions in this analysis:

·       the dividend streams and terminal values were discounted using a discount rate of 11%;

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·       the terminal value of the TD Banknorth common stock was determined by applying a 12 x multiple to the year 2012 projected earnings;

·       an estimated excess capital of TD Banknorth based on an adjusted tangible common equity to risk weighted assets target ratio of 7.5%;

·       an estimated growth rate of risk weighted assets of 3.0% per year;

·       an estimated 6.0% pre-tax cost of excess equity distributions; and

·       TD Banknorth’s management cash EPS estimates for 2006 and 2007 of $2.12 and $2.07, respectively, and a long-term net income growth rate of 5.0% thereafter.

This analysis resulted in a reference range for the implied present value per share of TD Banknorth common stock of $21.38 to $28.43.

Pro Forma Merger Analysis.   Goldman Sachs analyzed the pro forma impact of the merger on The Toronto-Dominion Bank using estimates for The Toronto-Dominion Bank and TD Banknorth from IBES.  Based on the estimates from IBES, this analysis indicated that the merger would be accretive by 1.5% in The Toronto-Dominion Bank’s 2007 fiscal year and by 3.2% in its 2008 fiscal year on a cash EPS basis, accretive by 6.2% in the 2007 fiscal year and by 6.7% in the 2008 fiscal year on a return on invested capital basis, and accretive by 9.7% with respect to The Toronto-Dominion Bank’s internal rate of return basis.  This analysis assumed a 100% cash funded transaction.

Goldman Sachs also performed the same analysis based on the estimates for TD Banknorth from its management and for The Toronto-Dominion Bank from its management.  This analysis indicated that the merger would be accretive by 1.4% in The Toronto-Dominion Bank’s 2007 fiscal year and by 2.9% in its 2008 fiscal year on a cash EPS basis, accretive by 6.1% in the 2007 fiscal year and by 6.4% in the 2008 fiscal year on a return on invested capital basis, and accretive by 6.9% with respect to The Toronto-Dominion Bank’s internal rate of return basis.  This analysis assumed a 100% cash funded transaction.

The preparation of the Goldman Sachs presentations was a complex process and is not necessarily suitable for summary description.  Selecting portions of the Goldman Sachs presentations or of the summary set forth above, without considering the Goldman Sachs presentations as a whole, could create an incomplete view of the Goldman Sachs presentations.  No company or transaction used in the above analyses as a comparison is directly comparable to TD Banknorth or the contemplated transaction.  The analyses were prepared solely for the purpose of Goldman Sachs providing the Goldman Sachs presentations to the senior management and the board of directors of The Toronto-Dominion Bank.

These analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold.  Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by the analyses.  Because the analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of The Toronto-Dominion Bank, TD Banknorth, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecasts.

Goldman Sachs and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes.  Goldman Sachs has acted as financial advisor to The Toronto-Dominion Bank in connection with, and participated in certain of the negotiations leading to, the merger.  In addition, Goldman Sachs has provided certain investment banking services to The Toronto-Dominion Bank and TD Banknorth from time to time.  Goldman Sachs also may provide investment banking services to The Toronto-Dominion

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Bank and TD Banknorth in the future.  In connection with the above-described investment banking services Goldman Sachs has received, and may receive in the future, compensation.

Goldman, Sachs & Co. is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, risk management, hedging, financing and brokerage activities for both companies and individuals.  In the ordinary course of these activities, Goldman, Sachs & Co. and its affiliates may provide such services to The Toronto-Dominion Bank, TD Banknorth and their respective affiliates, may actively trade the debt and equity securities of The Toronto-Dominion Bank and TD Banknorth for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities.

The board of directors of The Toronto-Dominion Bank selected Goldman Sachs as its financial advisor because it is an internationally-recognized investment banking firm that has substantial experience in transactions similar to the merger.  Pursuant to a letter agreement, dated November 17, 2006, The Toronto-Dominion Bank engaged Goldman Sachs to act as its financial advisor in connection with the merger.  Pursuant to the terms of this engagement letter, The Toronto-Dominion Bank agreed to pay Goldman Sachs a transaction fee of $8.5 million, all of which is payable upon completion of the transaction. In addition, The Toronto-Dominion Bank agreed to reimburse Goldman Sachs for its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under federal securities laws.

Financial Forecasts of TD Banknorth

We do not, as a matter of course, publicly disclose forecasts as to future revenues or earnings. However, we did prepare forecasts which we provided to Sandler O’Neill in connection with its fairness opinion analyses, as well as to The Toronto-Dominion Bank and our board of directors at a meeting held on October 18, 2006. We include the forecasts in this proxy statement only because we provided that information to Sandler O’Neill and Sandler O’Neill used the data in connection with its fairness opinion and related presentation to the special committee. See “—Opinion of Sandler O’Neill” beginning on page 33.

Our forecasts were not prepared with a view to public disclosure. We did not prepare the forecasts with a view to complying with the published guidelines of the SEC regarding forecasts, and we did not prepare the forecasts in accordance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts. The projected financial information set forth below was prepared by us in October 2006 in the ordinary course of our ongoing operational planning process and is the responsibility of our management. Neither our independent auditors nor any other independent accountants have compiled, examined or performed any procedures with respect to the prospective financial information contained in the projections, nor have they expressed any opinion or given any form of assurance on the projections or their achievability. Sandler O’Neill and our management may have varied some of the assumptions underlying the projections for purposes of their analyses. Furthermore, the projections:

·  necessarily make numerous assumptions, many of which are beyond our control and may not prove to have been, or may no longer be, accurate;

·  do not necessarily reflect revised prospects for TD Banknorth’s business, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the projections were prepared;

·  are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than as set forth below; and

·  should not be regarded as a representation that they will be achieved.

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