Document:

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                                                                    EXHIBIT 10.5

                           THE TORONTO-DOMINION BANK

                             LONG TERM CAPITAL PLAN

                                NOVEMBER 1, 1998

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                                   1998 PLAN
                                    SUMMARY
                                    -------

     THE FOLLOWING SUMMARY IS PROVIDED FOR INFORMATION PURPOSES ONLY AND IS
QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION CONTAINED IN THE
BODY OF THE PLAN DOCUMENT. CAPITALIZED TERMS ARE DEFINED IN THE GLOSSARY.

     The LONG TERM CAPITAL PLAN is designed to reward individuals in the
Investment Banking and Corporate Banking Groups by offering a notional "equity"
participation in the businesses. Under the Plan, employees will be eligible to
receive the return on the Partnership Equity granted to them. The return will
be based on a percentage of Eligible Earnings in excess of a charge for equity
attributed to the businesses. This return is referred to as the Partnership
Earnings.

     There is no cost or funding obligation to employees. The Partnership
Equity will be an amount of up to 15% of the notional equity capitalization of
the eligible business units, with the exception of the corporate lending
portfolio. Eligible employees may be granted Equity Partnership Awards
("Awards"), such Awards to be effective as of November 1, 1998 or as otherwise
determined by Senior Management (the "Effective Date"). On the Vesting Date,
holders of Equity Partnership Awards (except U.K. Participants as set forth
below) will be entitled to a PRO RATA share (an "Equity Partnership Allocation"
or an "Allocation") in the Partnership Earnings, which will be declared after
the Bank's audited financial statements for the immediately preceding fiscal
year have been approved by the board of directors of the Bank, in the same
proportion that the dollar value of each holder's Award is to the aggregate
dollar amount of all Awards. In order to provide a longer term focus and
payback for having contributed to the building of value in the businesses,
Equity Partnership Allocations will be declared from Partnership Earnings in
the fiscal year immediately preceding the Vesting Date. Any employee who
resigns or is terminated prior to the vesting of an Award will forfeit the
Award and, in the case of U.K. Participants, will not be recommended for a
Discretionary Allocation.

     Allocations will be based on a percentage of Eligible Earnings in excess
of a charge for equity attributed to the eligible businesses (the "Plan
Hurdle"), which charge will take into account the amount, if any, of the
Shortfall for the fiscal year ended October 31, 1999. To reflect the Bank's
integrated investment banking and corporate banking approach, any earnings from
corporate lending (adjusted to reflect a constant level of provisioning for
credit losses) in excess of the Plan Hurdle will be included in the calculation
of Eligible Earnings and, accordingly, the capital employed in lending
activities will not be included in the Partnership Equity. Therefore, corporate
loan losses will impact Partnership Earnings only to the extent of the constant
level of provisioning.

     In the case of Canadian Participants resident in Canada, under Canadian
income tax rules, the value of the Equity Partnership Allocations will be
treated as employment income. The Plan will withhold and remit the full income
tax amount owing on behalf of each Canadian Participant and will deduct such
amount from the value of the Allocation prior to the Allocation being invested
as provided in the Plan. The balance of the value of the Allocation will be
invested in the name of the holder of an Equity Partnership Award as to 50% in
TD common shares to be acquired on the open market, with the remaining 50% to
be invested in a combination of Green Line Funds and/or additional TD common
shares, as selected by the Participants.

     In the case of United States Participants, under U.S. income tax rules,
the value of the Equity Partnership Allocations will be treated as ordinary
income at the time that the Allocation or any portion thereof is distributed.
Accordingly, Allocations will be distributed, less U.S. Income Tax Withholdings
(which is the amount that the Bank is legally required to withhold). U.S.
Participants may have additional tax liability in connection with such
distribution. The initial value of Allocations (less U.S. Payroll Tax) will be
deemed to be invested as to 50% in TD common shares and as to 50% in U.S.
Mutual Fund Investments through bookkeeping accounts established by the Bank
for each U.S. Participant. Such bookkeeping accounts will mirror the
appreciation (or depreciation) of an investment in TD common shares and U.S.
Mutual Fund Investments. The specific mutual funds comprising the U.S. Mutual
Fund Investments in which 50% of each Allocation will be deemed to be invested
shall be determined in the sole discretion of the Investment Committee.

                                      (i)
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     In the case of United Kingdom Participants, in place of Allocations under
the Plan, the Bank intends to contribute an amount to the trustees of The
Toronto-Dominion Bank [Europe Limited] Employees Incentive Trust (the "EI
Trust"). The trustees of the EI Trust have absolute discretion over form, value
and timing of benefit which may be provided to any of the EI Trust's
beneficiaries. The Bank will request that the trustees make Discretionary
Allocations in respect of each U.K. Participant, separate and apart from any
amounts which may be held otherwise for the future potential benefit of such
Participants, in an amount which is not less than would be the case had the
Bank paid such Participant an Equity Partnership Allocation at the Declaration
Date. Accordingly, as the trustees have full discretion over such decisions,
taxes will not be paid over by the Bank on behalf of U.K. Participants and such
Participants will be responsible for dealing with any income tax liability
arising later. The Bank will request the trustees of the EI Trust to treat such
contribution in a fashion similar to the manner in which Allocations are
treated under the Plan for Canadian Participants, including matters such as
investment and distribution. The contribution will be an amount equal to the
total dollar value of Allocations that would have been declared in favour of
U.K. Participants if the Bank were to make such Allocations and will be
supplemented by a sum equivalent to any corporate social security liability
that could have been incurred had such Allocations been paid out at the
Declaration Date. Benefits paid to a participating employee by the EI Trust may
attract liability to social security obligations and, in such event, the EI
Trust will bear the cost of both employee and corporate contributions. The
trustees of the EI Trust will also account for any tax withholding that might
be due when a benefit is provided.

     Following declaration, Equity Partnership Allocations (Discretionary
Allocations for U.K. Participants) will be distributed on the following basis:

     o   In the case of Canadian Participants, Allocations shall be distributed
         on the basis of one-third (1/3) of the then current value following
         February 28, 2001, one-half (1/2) of the then current value following
         February 28, 2002 and all remaining amounts following February 28,
         2003. Allocations will be valued on February 28 in any such year or, if
         February 28 is not a Business Day, on the next following Business Day
         and distributions will be made as soon as practicable thereafter during
         open insider trading windows. Distributions will be made in cash or in
         kind, at the election of each Canadian Participant.

     o   Each U.S. Participant shall receive a distribution of an amount equal
         to the balance of his bookkeeping account effective on August 31, 2003
         (or, if such day is not a Business Day, on the next following Business
         Day). Alternatively, a U.S. Participant can elect to receive
         distributions of his or her bookkeeping account balance prior to that
         date, provided that: (i) the U.S. Participant must make an election to
         receive a distribution at least 12 months prior to the date chosen to
         receive that distribution; (ii) the date chosen to receive a
         distribution must be either February 28 or August 31 (or, if such date
         is not a Business Day, then the next Business Day following such date);
         (iii) the U.S. Participant can receive a distribution of not more than:
         (a) one-third (1/3) of his or her bookkeeping account balance in the
         year 2001; and (b) two-thirds (2/3) of his or her bookkeeping account
         balance, less prior distributions, in the year 2002; and (iv) any
         amounts credited to a U.S. Participant's bookkeeping account which have
         not been paid prior to August 31, 2003 (or the next Business Day
         following such date) shall be paid effective on such date.

     o   In the case of U.K. Participants, Discretionary Allocations may be
         distributed in cash or in kind solely in the discretion of the trustees
         of the EI Trust.

     All distributions from the Plan and the EI Trust must be made in
accordance with the Bank insider trading windows policy in respect of TD common
shares and any other trading policies governing the Participant's business.

     UNLESS OTHERWISE INDICATED, ALL DOLLAR AMOUNTS AND VALUES ARE EXPRESSED IN
TERMS OF CANADIAN DOLLARS.

                                      (ii)
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                                   GLOSSARY
                                   --------

Bank or TD means The Toronto-Dominion Bank.

Board means the Board of Directors of the Bank.

Business Day means a day on which the Bank is open for domestic business in
Toronto and New York City, excluding Saturdays, Sundays and statutory holidays
in Ontario and New York State.

Canadian Participants means employee participants in the Plan that are resident
in Canada or in any other jurisdiction that Senior Management from time to time
designates for participation in the Plan as Canadian Participants, excluding
those employees designated by Senior Management for participation in the Plan
as U.S. Participants or U.K. Participants.

Canadian Tax means the amount equal to the total value of an Equity Partnership
Allocation declared in favour of a Canadian Participant resident in Canada
multiplied by the highest marginal tax rate (expressed as a percentage) under
applicable Canadian income tax legislation as at such date. Canadian Tax will
be withheld and remitted to the relevant Canadian governmental tax authority on
behalf of each such Canadian Participant by the Plan on or about the
Declaration Date.

Declaration Date in respect of an Allocation means the date on which the
Allocation is valued and declared, which date shall be following the Vesting
Date and after the audited financial statements of the Bank for the fiscal
year immediately preceding the Vesting Date have been approved by the Board.

Discretionary Allocation means the value determined by the trustees of the EI
Trust which is held as part of the EI Trust for the future potential benefit of
beneficiaries of the EI Trust specified by the trustees. The Bank will request
that the trustees accept the spirit of the Plan so that a Discretionary
Allocation reflects those characteristics of an Equity Partnership Allocation
under the Plan for Canadian Participants including investment and
distributions. The Bank will request the trustees of the EI Trust to consider
exercising their discretion to provide an initial value for a Discretionary
Allocation equivalent to the value of an Equity Partnership Allocation made
under the Plan, but with no adjustment for taxation, to be supplemented by an
amount equivalent to any corporate social security liability that could have
been incurred had an Equity Partnership Allocation been made under the Plan and
been paid out at the Declaration Date.

Effective Date means the effective date of any Award granted under the Plan,
which shall be November 1, 1998 unless otherwise determined by Senior
Management.

EI Trust means The Toronto-Dominion Bank [Europe Limited] Employee Incentive
Trust.

Eligible Earnings means the combined eligible business units' pre-tax earnings
adjusted for the accrued and recorded credit losses and less the constant level
of provisioning for credit losses.

Equity Partnership Allocation or Allocation means the pro rata share of
Partnership Earnings for the fiscal year immediately preceding the Vesting Date
awarded to holders of Awards in the same proportion that the dollar value of
each holder's Award is to the aggregate dollar amount of all Awards.
Allocations will be invested after the Declaration Date. Actual or deemed
investment returns earned on an Allocation will be added to the value of the
Allocation. In the case of Canadian Participants, Canadian Tax will be deducted
from the value of an Allocation and, in the case of U.S. Participants, U.S.
Payroll Tax will be deducted from the value of an Allocation, in each case
after the Declaration Date and prior to investment or deemed investment under
the Plan. U.K. Participants should see, instead, the definition of
"Discretionary Allocation".

                                    (iii)
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Equity Partnership Award or Award means the portion of the Partnership Equity
awarded in notional dollars to a Participant as determined by Senior Management.
The aggregate dollar amount of Awards at any time may not exceed the dollar
value of the Partnership Equity at such time. Awards vest on the Vesting Date,
on which date holders of Awards (except U.K. Participants) are entitled to an
Allocation in favour of the holder on the Declaration Date. An Award is a
notional equity allocation and does not represent any right or entitlement prior
to the Vesting Date or any monetary value to the holder prior to the Declaration
Date.

Green Line Funds means Canadian dollar denominated mutual funds forming part of
the Green Line family of mutual funds from time to time.

Investment Committee means a committee comprised of such individuals as may,
from time to time, be selected by Senior Management for purposes of, among other
things, selecting the U.S. Mutual Fund Investments in which a portion of the
Allocations of U.S. Participants are deemed to be invested under the Plan.

Participant means a Canadian Participant, a U.S. Participant or a U.K.
Participant, as the context requires.

Partnership Earnings means an amount equal to fifteen percent (15%) of the
excess of Eligible Earnings for the fiscal year immediately preceeding the
Vesting Date over the Plan Hurdle. Partnership Earnings for the fiscal year
immediately preceding the Vesting Date will be paid by the Bank to the Plan on
or about the Declaration Date.

Partnership Equity means an amount of up to 15% of the eligible business units'
(excluding the corporate lending portfolio) notional equity capitalization at
the Effective Date expressed in dollars. Partnership Equity is notionally
granted to Participants in the form of Equity Partnership Awards. The amount of
the Partnership equity will be determined and reviewed, from time to time, by
Senior Management.

Plan means the Long Term Capital Plan dated November 1, 1998.

Plan Hurdle means an amount (expressed in dollars) equal to the sum of: (i) the
amount determined by applying a hurdle rate (9.25%) to the average amount of
equity attributed to the eligible business units (including the corporate
lending portfolio) for the fiscal year ended October 31, 2000; and (ii) the
Shortfall.

Previous Plan Hurdle means the "Plan Hurdle" as defined by, and determined in
accordance with, the 1997 Long Term Capital Plan of the Bank dated December 15,
1997.

Senior Management means the senior management committee comprised of the
Chairman and Chief Executive Officer of the Bank and his designates. Senior
Management is charged with overseeing the Plan.

Shortfall means an amount (expressed in dollars) equal to the greater of: (i)
zero; and (ii) the excess of the Previous Plan Hurdle over Eligible Earnings for
the fiscal year ended October 31, 1999.

T. Rowe Funds means U.S. dollar denominated mutual funds forming part of the T.
Rowe Price family of mutual funds from time to time.

TDAM means TD Asset Management Inc.

TDSI means TD Securities Inc.

U.K. Participants means employee participants in the Plan that are resident in
the United Kingdom for income tax purposes on the Vesting Date or in any other
jurisdiction that Senior Management from time to time designates for
participation in the Plan as U.K. Participants, excluding those employees
designated by Senior Management for participation in the Plan as Canadian
Participants or U.S. Participants.

                                      (iv)
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U.S. Income Tax Withholdings means the amount required to be withheld and
remitted pursuant to applicable federal, state or other income tax withholding
rules and regulations in the United States.

U.S. Mutual Fund Investments means investments, which shall consist of T. Rowe
Funds or such other U.S. dollar denominated mutual funds selected, in each case,
by the Investment Committee.

U.S. Participants means employee participants in the Plan that are citizens of
or legal residents in the United States or in any other jurisdiction that Senior
Management from time to time designates for participation in the Plan as U.S.
Participants, excluding those employees designated by Senior Management for
participation in the Plan as Canadian Participants or U.K. Participants.

U.S. Payroll Tax means the amount required to be withheld and remitted by the
Bank pursuant to applicable federal, state or other payroll tax rules and
regulations in the United States including, but not limited to FICA and Medicare
tax.

Vesting Date in respect of any Equity Partnership Award means November 1, 2000.

Vesting Period in respect of any Equity Partnership Award means the period from
and including November 1, 1998 to but excluding November 1, 2000.

                                      (v)
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                           THE TORONTO-DOMINION BANK
                                      1998
                             LONG TERM CAPITAL PLAN

THE PLAN

     The Long Term Capital Plan has been designed to reward selected TD
employees who work in the Investment Banking and Corporate Banking Groups of
the Bank. The Plan offers employees a notional "equity" participation
opportunity that aligns the long term compensation opportunities of
participating employees with the future successes and achievements of the
Investment Banking and Corporate Banking Groups of the Bank. The Plan's goal is
to increase the sense of ownership felt by the employees making a contribution
to the Investment Banking and Corporate Banking Groups of the Bank.

     UNLESS OTHERWISE INDICATED, ALL DOLLAR AMOUNTS AND VALUES ARE EXPRESSED IN
TERMS OF CANADIAN DOLLARS.

ELIGIBILITY

     The Plan is open to full and part-time professionals working in specified
areas within the Investment Banking and Corporate Banking Groups of the Bank.
Senior Management will identify eligible employees for the purpose of the Plan.
The decision to grant an Award will be made by Senior Management. Before
determining an employee's eligibility or granting an Award to any employee,
Senior Management will consult with the head of that employee's business unit.

OPERATION OF THE PLAN

CAPITALIZATION OF ELIGIBLE BUSINESS UNITS

     The eligible business units will be assessed, on an annual basis, an
aggregate notional equity capitalization determined by the Finance Division of
the Bank in consultation with Senior Management. This notional equity
capitalization will reflect an assessment of the equity required to operate the
eligible business units (excluding the corporate lending portfolio) in the
context of current market conditions, having regard to comparable industry
standards. The notional capitalization will be reviewed by Senior Management on
an annual basis and may be adjusted to reflect changes within the Bank and
within each business unit.

PARTNERSHIP EQUITY AND GRANTS OF EQUITY PARTNERSHIP AWARDS

     Up to fifteen percent (15%) of the eligible business units' notional
equity capitalization (determined as aforesaid) at the Effective Date will form
the Partnership Equity. The dollar amount of the Partnership Equity will be
determined and reviewed from time to time by Senior Management. The Partnership
Equity will be awarded to eligible employees in the form of "Equity Partnership
Awards" during the Vesting Period, such Awards to be effective as of the
Effective Date. The aggregate dollar amount of all Awards at any time shall not
exceed the dollar amount of Partnership Equity at such time. Each Participant is
eligible to receive only one Award under the Plan. An Award is merely a
notional allocation of a portion of the Partnership Equity (expressed in
dollars), in effect at the date of the Award. Prior to the Vesting Date, Awards
have no monetary value and the holder of an Award has no right or entitlement
to any assets or to any return or distribution under the Plan or otherwise.
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     The dollar value of Awards granted to individual employees may vary within
each business unit. All decisions concerning Awards will be based on an
individual's performance and anticipated future contributions to the success of
the Investment Banking and Corporate Banking Groups and their particular
business unit, as well as the business unit's performance determined, in each
case, by Senior Management in consultation with the heads of the participating
business units. Awards made to employees involved in credit approval and risk
management functions will be determined by Senior Management.

VESTING OF EQUITY PARTNERSHIP AWARDS

     Awards granted under the Plan will vest on the Vesting Date, on which date
holders of Awards (except U.K. Participants as set forth below) become entitled
to an Equity Partnership Allocation, when declared, based on a PRO RATA share
of Partnership Earnings (determined as set forth below) for the immediately
preceding fiscal year in the same proportion that the dollar value of each
holder's Award is to the aggregate dollar amount of all Awards. Equity
Partnership Allocations will be valued and declared on the Declaration Date,
following which date they will be invested as set forth under the heading
"Investment of the Equity Partnership Allocations". In the case of Canadian
Participants resident in Canada, Canadian Tax will be withheld from the
Allocation after the Declaration Date and the after-tax value of the Allocation
will be invested under the Plan. In the case of U.S. Participants resident in
the United States, U.S. Payroll Tax will be withheld from the Allocation after
the Declaration Date, and the net value will be deemed to be invested through
bookkeeping accounts established under the Plan. In the case of U.K.
Participants, instead of Allocations under the Plan, the Bank intends to
contribute an amount to the EI Trust and will request the trustees of the EI
Trust to consider exercising their discretion to provide an initial value for a
Discretionary Allocation not less than the dollar value of Allocations that
would have been declared in favour of U.K. Participants if the Bank were to
make such Allocations, supplemented by an amount equal to any corporate social
security liability that could have been incurred had such Allocations been paid
out at the Declaration Date.

DETERMINATION OF PARTNERSHIP EARNINGS

     The Partnership Earnings for the fiscal year immediately preceding the
Vesting Date must be determined prior to valuing and declaring Allocations.
Following Board approval of the audited financial statements of the Bank for
such fiscal year, Eligible Earnings will be determined by the Finance Division
of the Bank in consultation with Senior Management. The Eligible Earnings will
be determined based on an allocation of the Bank's income and expenses
(including indirect expenses) to the eligible business units. Partnership
Earnings will be an amount equal to fifteen percent (15%) of the excess of
Eligible Earnings in the fiscal year immediately preceding the Vesting Date
over the Plan Hurdle (calculated as set forth below). The Partnership Earnings
for the fiscal year immediately preceding the Vesting Date will be paid by the
Bank to the Plan on or about the Declaration Date.

     To reflect the Bank's integrated corporate and investment banking
approach, any earnings from corporate lending (adjusted to reflect a constant
level of provisioning for credit losses) in excess of the Plan Hurdle will be
included in the calculation of Eligible Earnings. Accordingly, the capital
employed in lending activities will not be added to the Partnership Equity.
Therefore, corporate loan losses will impact Partnership Earnings only to the
extent of the constant level of provisioning.

                                       2
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Calculation of the Plan Hurdle

     The Plan Hurdle will be an amount (expressed in dollars) equal to the sum
of: (i) the amount determined by applying a hurdle rate (9.25%) to the average
amount of equity attributed to the eligible business units (including the
corporate lending portfolio) for the fiscal year ended October 31, 2000; and
(ii) the Shortfall. The Shortfall will be an amount, if any, expressed in
dollars equal to the greater of: (i) zero; and (ii) the excess of the Previous
Plan Hurdle over Eligible Earnings for the fiscal year ended October 31, 1999.

Investment of the Equity Partnership Allocations

     General

     From the Declaration Date, Allocations will be invested (or deemed to be
invested in the case of U.S. Participants) in interest-bearing money market
instruments until: (i) the appropriate number of TD common shares is acquired on
the open market for investment, deemed investment or contribution as discussed
below on behalf of each category of Participant; and (ii)(a) in the case of
Canadian Participants, transfer into the appropriate FutureBuilder accounts and
selection of the additional TD common shares and/or Green Line Funds in which a
portion of the Allocation is to be initially invested: (b) in the case of U.S.
Participants, establishment of the necessary bookkeeping accounts and the
selection of the initial U.S. Mutual Fund Investments by the Investment
Committee in which a portion of each Allocation is to be deemed to be invested;
and (c) in the case of U.K. Participants, contribution of the appropriate
amounts to the EI Trust and Discretionary Allocations are invested by the
Trustees of the EI Trust. The accounts of Canadian Participants and U.S.
Participants and, in the case of U.K. Participants Discretionary Allocations,
will be credited with any such interest or deemed interest.

     All returns on the Plan's invested funds will be reinvested in the Plan. In
the case of Canadian Participants, dividends paid in respect of TD common shares
will be used to purchase additional TD common shares on the open market and
distributions made on Green Line Funds will be used to purchase additional Green
Line Fund securities. As regards U.S. Participants, dividends and distributions
deemed to have been received in respect of deemed investments in TD common
shares and U.S. Mutual Fund Investments will be deemed to have been reinvested
in the bookkeeping accounts maintained for such Participants. Reinvestment, in
the case of U.K. Participants, will be governed exclusively by the provisions of
the EI Trust. TD common shares can only be acquired in accordance with the
Bank's insider trading windows policy and any other trading policies governing
the Participant's business.

     Awards, Allocations and Discretionary Allocations may not be assigned or
transferred by any Participant in whole or in part either directly or by
operation of law or otherwise. There is no market for Awards, Allocations or
Discretionary Allocations and they may not be redeemed or sold except in
accordance with the terms of the Plan and EI Trust, as the case may be.

     Canadian Participants

     In the case of Canadian Participants, the after-tax balance of each Equity
Partnership Allocation will be transferred to an account established for each
such Participant pursuant to the "FutureBuilder" program. A mandatory fifty
percent (50%) of the initial value of each Equity Partnership Allocation shall
be invested in TD common shares to be acquired on the open market. The remaining
50% shall be invested in a combination of additional TD common shares and/or
Green Line Funds selected by the Canadian

                                       3
<PAGE>   10
Participant. In order to establish the FutureBuilder account and make investment
elections as to the non-mandatory component of their accounts. Canadian
Participants will be required to complete an investment election form. The 50%
mandatory investment component that applies to TD common shares cannot be
subsequently transferred into other investments; however. Canadian Participants
may elect to alter the investment mix in respect of the remaining 50% component
at any time by submitting the prescribed investment change form subject to
compliance with the policies of FutureBuilder, the Bank insider trading windows
policy and any other trading policies governing the Paticipants' business. In no
event shall investments other than TD common shares and Green Line Funds be
permitted.

     U.S. Participants

     Following declaration of Allocations in favour of U.S. Participants. the
Bank will establish bookkeeping accounts on behalf of each such Participant in
which Allocations(less U.S. Payroll Tax) will be reflected. In respect of the
initial value of each Allocation, such bookkeeping accounts will be deemed to be
invested as to 50% in TD common shares with the remaining 50% deemed to be
invested in U.S. Mutual Fund Investments selected in the sole discretion of the
Investment Committee. Each bookkeeping account will mirror the performance of
such deemed investments. U.S. Participants shall not be entitled at any time, to
alter the mix of investments in which their Allocations are deemed to be
invested.

Discretionary Allocations

     U.K. Participants

     In the case of U.K. Participants, the investment of Discretionary
Allocations will be conducted by the trustees of the EI Trust, previously
established for UK-based employees. The trustee of the EI Trust are independent
of the Bank and have full discretion over investment except that they are not
permitted to use the funds in the EI Trust to provide a benefit to the Bank. The
Bank will request that the trustees of the EI Trust accept the spirit of the
Plan and treat the contributions as if they were held under the same terms as
under the Plan for Canadian Participants, including investment and distribution
so that investment of Discretionary Allocations by the trustees of EI Trust in
TD common shares is not limited to 50% of the value of the contribution and that
the wishes of U.K. Participants be taken into account in this respect.
Reinvestment will be governed exclusively by the provisions of the EI Trust.

INCOME TAX CONSIDERATIONS

Canada

     The value of each Equity Partnership Allocation will be considered to be
received as employment income as at the Declaration Date by Canadian
Participants resident in Canada. In order to pay the required taxes on behalf of
Canadian Participants resident in Canada as at the Declaration Date, an amount
equal to the total value of each Allocation multiplied by the highest marginal
tax rate (expressed as a percentage) under applicable Canadian income tax
legislation at such date (the "Canadian Tax") will be withheld and remitted to
the relevant Canadian governmental tax authority on behalf of each such Canadian
Participant whose Award is vesting in that year. While the Plan will withhold
and remit the Canadian Tax on behalf of Canadian Participants resident in
Canada, each such Canadian Participant remains liable in respect of any claim by
Revenue Canada for any additional amounts owing in respect of income taxes,
charges or other penalties.

                                      4
<PAGE>   11
    The balance of the value of the Allocation will be invested in such
Canadian Participant's name, as described above under "Investment of Equity
Partnership Allocations" and will represent the aggregate cost basis to such
employee of the investments.

    Each Canadian Participant resident in Canada holding an Equity Partnership
Allocation will be responsible for payment of all applicable taxes from and
after the Declaration Date on income from the investment of an Allocation,
including dividends paid on TD common shares and gains realized on the
disposition of investments.

    A Canadian Participant who is not resident in Canada may be subject to
different income tax considerations, and should consult with the appropriate
advisor when Awards are granted to such Canadian Participant or thereafter.

United States

    For purposes of United States taxation, U.S. Payroll Tax shall be deducted
from the Allocations on the Declaration Date. Distributions of Allocations are
treated as ordinary income and are subject to taxation in the United States
under federal, state and local laws at the time that the distributions are made
to U.S. Participants by the Bank in respect of such U.S. Participants'
bookkeeping accounts. Applicable U.S. Income Tax Withholdings (which is the
amount that the Bank is legally required to withhold) shall be withheld as
required by law from amounts distributed to such U.S. Participants resident in
the United States under the Plan and shall be remitted to the Internal Revenue
Service by the Bank on behalf of such U.S. Participants. U.S. Participants may
have additional tax liability in connection with such distributions.

    Each U.S. Participant remains liable in respect of any claim by the
Internal Revenue Service for any additional amounts owing in respect of income
taxes, charges or other penalties.

    A U.S. Participant who is not resident in the United States may be subject
to different income tax considerations, and should consult with the appropriate
advisor when Awards are granted to such U.S. Participant or thereafter.

United Kingdom

    There should be no income tax or National Insurance contribution ("NIc")
consequence for a U.K. Participant in relation either to funds being
contributed to the EI Trust by the Bank or on a Discretionary Allocation being
made by the trustees of the EI Trust. As investment returns belong to the EI
Trust there is no consequence to a beneficiary at the time income and gains are
realized. The tax and NIc consequence of benefits being provided will depend on
the nature of the benefit, the country of residence of the U.K. Participant,
whether it is received by a U.K. Participant or a family member and whether
such U.K. Participant is still employed with the Bank at the time of receipt by
them of a benefit. As the range of possible consequences is wide, the trustees
of the EI Trust will need to review the particular circumstances when provision
of benefit is being considered.

    Neither the Bank nor the trustees of the EI Trust are responsible for
meeting tax obligations of the beneficiaries who should ensure that their own
tax obligations are met.

    The trustees are responsible for meeting all proper tax obligations and
liabilities that could otherwise fall on the Bank which arise from decisions
taken by the trustees. Accordingly, the trustees will

                                      5
<PAGE>   12
account for any income tax that needs to be deducted and also any social
security contributions. As the trustees may provide benefit in a wide range of
circumstances, they will need to ensure that they are properly meeting such
obligations by reference to the particular beneficiary. For example, a
beneficiary might be resident in a country outside the U.K., and the trustees
will take professional advice at the time of benefit provision. In the U.K. the
obligations of the trustees are to account for income tax deductions under the
Pay as You Earn (PAYE) system and for NIc liability, for both the primary
("employee") and the secondary ("employer") contributions. Not all benefit
provisions attract deduction of PAYE or liability to NIc. When making
contributions to the EI Trust in respect of the value under the Plan, the
potential cost of NIc liability at that time will be taken into account by the
Bank but no consideration will be given at the time of contribution to any
subsequent growth in value of contributions by the Bank.

     The trustees also need to ensure that the Bank fulfills tax reporting
requirements and so will inform the Bank and the Inland Revenue of any benefit
that should be reported.

     The above comments are based on the current Law and Inland Revenue/
Contributions Agency practice which may have changed by the time the
Trustees of the EI Trust resolve, at their discretion, to confer benefits.

MANAGEMENT OF INVESTMENTS

CANADA

     As regards Canadian Participants, investment of the after-tax value of
Allocations under the Plan will be conducted through the FutureBuilder program.
Each Canadian Participant receiving an Allocation will have his or her own
personal account established under the FutureBuilder program. The FutureBuilder
program is administered by the Bank or its agents. The administrator will be
responsible for maintaining the accounts of each Canadian Participant as well
as arranging for the purchase and sale of TD common shares on the open market
and the acquisition and redemption of the relevant Green Line Funds. The
administrator will acquire and dispose of TD common shares on behalf of
Canadian Participants through a registered dealer (including TDSI) and will
communicate purchase and redemption orders in respect of the Green Line Funds
to TDAM, the manager and principal distributor of the Green Line Funds.

UNITED STATES

     As regards U.S. Participants, Allocations (less U.S. Payroll Tax) will be
reflected in bookkeeping accounts established by the Bank on behalf of each such
Participant. Based on the initial value of the Allocation, the amount credited
to each bookkeeping account will be deemed to have been invested as to 50% in
TD common shares and as to 50% in U.S. Mutual Fund Investments. The amounts
reflected in the bookkeeping accounts of U.S. Participants will fluctuate, from
time to time, with the value of such deemed investments. The specific mutual
funds comprising the U.S. Mutual Fund Investments upon which the performance of
50% of the initial value of the bookkeeping account of each U.S. Participant is
based will be selected by the Investment Committee. The bookkeeping accounts
will be credited with dividend and/or distribution equivalents which will
appreciate (or depreciate) in the same manner as the deemed investments.

                                       6
<PAGE>   13
UNITED KINGDOM

     The Bank will request that the trustees of the EI Trust exercise their
discretion so that:

     o   the value suggested for a Discretionary Allocation which is represented
         by TD common shares remains invested in that form until benefit is
         provided for the U.K. Participant or a family member or dependent
         thereof;

     o   dividends on TD common shares held as part of a Discretionary
         Allocation are invested in acquiring further TD common shares to be
         added to that Discretionary Allocation; and

     o   the value suggested for a Discretionary Allocation which is represented
         by cash is invested in such securities, including TD common shares, as
         are acceptable to the trustees in exercise of their discretion, from a
         range which may be suggested by the employee whose name is put forward
         for a Discretionary Allocation being made and, until such suggestions
         are made, that the trustees invest in such money market instruments as
         in their absolute discretion they consider suitable.

VALUATION OF EQUITY PARTNERSHIP ALLOCATIONS

VALUATION AT DECLARATION

     On the Declaration Date, an Allocation represents a PRO RATA share of the
Partnership Earnings in the fiscal year immediately preceding the Vesting Date
allocated to holders of Awards (except U.K. Participants) in the same
proportion that the dollar value of each holder's Award is to the aggregate
dollar value of all Awards. Allocations will be valued and declared after the
Vesting Date and following Board approval of the audited financial statements
for such fiscal year. Where the valuation of an Award prior to the Vesting Date
is required by the terms of the Plan, such valuation shall be made by Senior
Management in its sole discretion. In the case of a Canadian Participant, the
after-tax value of the Allocation is invested under the Plan. In the case of a
U.S. Participant, applicable U.S. Payroll Tax shall be deducted from the value
of an Allocation prior to crediting the bookkeeping account of such Participant.

VALUATION FOLLOWING DECLARATION

     The value of an Equity Partnership Allocation at any time following the
Declaration Date, in the case of a Canadian Participant, is directly related to
the then market value of the investments held by the Participant through such
Participant's FutureBuilder account, which would take into account any
appreciation or depreciation in the value of TD common shares and the Green
Line Funds held in the account as well as reinvestment of dividends and
distributions. In the case of a U.S. Participant, the value of an Equity
Partnership Allocation at any time following the Declaration Date is directly
related to the then market value of the deemed investments in TD common shares
and U.S. Mutual Fund Investments credited to the bookkeeping account maintained
for that Participant, which would take into account appreciation or
depreciation in deemed investments as well as deemed dividends and
distributions. The value of the account of each Participant will reflect the
invested value of interest received to the extent that Allocations are invested
(or deemed to be invested) in money market instruments for any period following
the Declaration Date. In the case of U.K. Participants, the value of any
Discretionary Allocation will be determined in accordance with the EI Trust.

                                       7
<PAGE>   14
No Guarantee of Value

     The market value of the investments or deemed investments held on behalf of
any Participant will fluctuate from time to time, according to general economic
and market conditions in Canada, the United States, the United Kingdom and
elsewhere. There is no representation or guarantee by the Bank, the EI Trust or
any other party associated with the Plan or the EI Trust as to the market value
of any investments or deemed investments made under the Plan or the EI Trust on
behalf of or for the benefit of holders of Awards, Allocations or Discretionary
Allocations. Allocations are not "deposits" insured under the Canada Deposit
Insurance Corporation Act or otherwise and are not insured or guaranteed as to
principal or interest in any way by the Bank or the EI Trust or any other party
associated with the Plan or the EI Trust. For U.S. tax law purposes, the Plan
shall be unfunded and U.S. Participants shall be general unsecured creditors of
the Bank with respect to their bookkeeping accounts under the Plan.

DISTRIBUTION OF FUNDS

Canadian Participants

     In each of the three years following the Vesting Date, a set percentage of
the then current value of each Allocation will be distributed by the Plan to
each Canadian Participant. The appropriate portion of the investments held in
the FutureBuilder account of each Canadian Participant will be liquidated and
the cash value thereof will be distributed, unless the Participant elects to
receive payments in kind. Payment in kind shall be effected by the transfer of
the appropriate securities from the FutureBuilder account to the Participant's
Green Line or TD Evergreen account. Each Allocation will be distributed as
follows: (i) one-third (1/3) of the then current value of such Allocation
following February 28, 2001; (ii) one-half (1/2) of the then current value
following February 28, 2002; and (iii) all remaining amounts following February
28, 2003. Allocations will be valued on February 28 in any such year or, if
February 28 is not a Business Day, on the next following Business Day.
Distributions will be made as soon as practicable following valuation during
open insider trading windows. Canadian Participants will be entitled to
determine the composition of any particular distribution (i.e. that portion of
any distribution to consist of Mandatory TD common shares, additional TD common
shares and/or Green Line Funds) provided that no more than one-third (1/3) of
the original number of mandatory TD common shares shall be distributed in each
of the years 2001 and 2002 and further provided that the aggregate value of any
distribution shall not exceed the relevant limit set forth above. Canadian
Participants must provide a completed withdrawal form to FutureBuilder prior to
February 28 in each relevant year. All withdrawals from the Plan (whether in
cash or in kind) must be made in accordance with the Bank's insider trading
windows policy in respect of TD common shares or any other trading policy
governing the Participant's business.

U.S. Participants

     Each U.S. Participant shall receive a distribution of an amount equal to
the balance of his or her bookkeeping account as of August 31, 2003 (or, if such
date is not a Business Day, on the next following Business Day). Alternatively,
a U.S. Participant may elect to receive distributions of his or her bookkeeping
account balance prior to that date, provided that: (i) the U.S. Participant must
make an election to receive a distribution at least twelve months prior to the
date chosen to receive that distribution; (ii) the effective date chosen to
receive a distribution must be either February 28 or August 31 (or, if such date
is not a Business Day, then the next following Business Day); (iii) the U.S.
Participant can receive a distribution of not more than; (a) one-third (1/3) of
his or her bookkeeping account balance in the year 2001; and (b) two-thirds
(2/3) of his or her bookkeeping account balance, less prior distributions, in
the year

                                       8
<PAGE>   15
2002; and (iv) any amounts credited to a U.S. Participant's bookkeeping account
which have not been paid prior to August 31, 2003 (or the next Business Day)
shall be paid as at such date. If a U.S. Participant elects to receive a
distribution prior to August 31, 2003, the Investment Committee will determine
the manner in which the bookkeeping accounts will be adjusted to reflect the
distributions. The value of any distribution will be determined based on the
then market value of the deemed TD common share component and the deemed U.S.
Mutual Fund Investments component of the Participant's bookkeeping account as
at February 28 or August 31 of the relevant year or, if such day is not a
Business Day, on the next following Business Day. Such distributions will be
made only in cash form and will be made as soon as practicable following
February 28 or August 31 in the relevant year. All distributions in respect of
deemed investments must be made in accordance with the Bank's insider trading
windows policy in respect of TD common shares or any other trading policies
governing the Participant's business.

U.K. Participants

    U.K. Participants can only be provided with benefit at the entire and
unfettered discretion of the trustees of the EI Trust. The Bank will request
the trustees of the EI Trust to accept the spirit of the Plan terms and deal
with contributions, including provision of benefit, in a fashion generally
similar to the manner in which the Plan operates as regards Canadian
Participants. In particular, the following request will be made to the trustees
of the EI Trust that:

    o  any benefit provision from the Discretionary Allocation is not made at
       any time before the time at which distributions could be made under the
       terms of the Plan and that any benefit provision at such a time is of no
       greater value then the corresponding potential distribution; and

    o  any benefit provision from the Discretionary Allocation does not reduce
       the number of TD common shares initially forming part of that
       Discretionary Allocation by more than one-third on each of the first
       three occasions of benefit.

    All distributions from the EI Trust must be made in accordance with the
Bank insider trading windows policy in respect of TD common shares and any
other trading policies governing the Participant's business.

Compliance with Laws

    Purchases of TD common shares and distributions from the Plan and the EI
Trust may be subject to applicable securities laws and will be governed by the
Bank insider trading windows policy and any other trading policy governing the
business of the Participant. Participants will be responsible for all insider
reporting and other regulatory filings which may be required under applicable
securities legislation and regulations. Information concerning the "Windows"
policy and other trading policies is available from the TD  Compliance
Department at (416) 982-8895.

Statutory Deductions

    All withholdings and deductions required by law, including withholdings in
respect of applicable taxes, will be made as required by applicable law.

                                      9
<PAGE>   16
TRANSFER OF EMPLOYEES WITHIN TD AND LEAVES OF ABSENCE

     Employees who are transferred within TD to a business unit which does not
participate in the Plan will remain eligible to receive an Award based on the
time they spent in the participating business unit and on their individual
contribution to that unit's success. Equity Partnership Awards will continue to
vest notwithstanding any such transfer.

     Where a participating employee is transferred to an eligible business unit
in another jurisdiction, Senior Management reserves the right to make such
adjustments to Awards, Allocations, vesting rules and distribution procedures
under the Plan as may be necessary to avoid negative taxation implications to
such employee as a result of such transfer.

     Employees who take an approved leave of absence will be eligible to
receive a pro-rated Award based on the amount of time during the year that they
spent with the business unit and on their personal contribution to the unit's
successful performance. Any pro-rated Award will be made at the time Senior
Management announces the annual Awards granted under the Plan. Senior
Management reserves the right, in its sole discretion, to make all
determinations in respect of vesting in such circumstances including, without
limitation, whether vesting is to occur and when.

TERMINATION OF EMPLOYMENT

GENERAL

     To be eligible to receive an Award under the Plan, each individual must be
employed by TD when the Award is granted.

     Any employee who has been granted an Award and resigns or is terminated
(with or without cause) prior to the Vesting Date will no longer participate in
the Plan and will forfeit any right or entitlement he or she may have had to
any payment under the Plan and, the case of U.K. Participants, will not be
recommended for a Discretionary Allocation. The notional value of forfeited
Equity Partnership Awards may be re-allocated by Senior Management to new
Participants or to existing holders of Equity Partnership Awards.

     To be eligible for an Equity Partnership Allocation or a Discretionary
Allocation, as the case may be, each Participant must be employed by the Bank
or one of its subsidiaries on the Vesting Date. Any Participant who resigns or
is terminated (with or without cause) after the Vesting Date will receive the
value of his or her Allocations in accordance with the "Distribution of Funds"
section above. Similar principles are intended to apply to U.K. Participants
and the trustees of the EI Trust will be asked to give consideration to the
Bank's purpose when considering provision of benefit to beneficiaries who have
left employment with the Bank.

     The right of the Bank or its subsidiaries to terminate at will (whether by
dismissal, discharge or otherwise) any Participant's employment with the Bank at
any time is specifically reserved.

     The Bank will not pay damages or other compensation to any employee who
ceases to be eligible to receive Awards under the Plan and who does not receive
any Awards, Allocations, Discretionary

                                       10
<PAGE>   17
Allocations, payments, rights or benefits under the Plan to which that employee
might otherwise have been entitled.

DEATH AND DISABILITY

     An exception will be made for employees who become totally disabled (as
determined in accordance with the applicable policies of the Bank or the
subsidiary making use of the services of the participating employee at the
relevant time) or die during a year in which they would have been eligible for
an Award or an Allocation under the Plan. Senior Management may elect to grant
to such employee or to the estate of such employee, as applicable, the Equity
Partnership Award which would otherwise have been granted to such employee.
Vesting of all previously granted Awards will proceed without interruption, and
the entire value of the corresponding Equity Partnership Allocations will be
paid forthwith following the Declaration Date to the employee or the trustee or
executor of the employee's estate, as applicable. With respect to previously
declared Equity Partnership Allocations, the value of such Allocations will be
paid upon the death of the holder to the trustee or executor of the holder's
estate, as applicable. Similar principals are intended to apply to U.K.
Participants and the trustees of the EI Trust will be asked to give
consideration to the Bank's purpose when considering provision of benefit to
beneficiaries who become totally disabled (as determined above) or die during
the year in which they would have been eligible for an Award or in which the
Bank intends to contribute an amount to the EI Trust as described under
"Vesting of Equity Partnership Awards" or after the trustees of the EI Trust
have made a Discretionary Allocation as described under "Investment of Equity
Partnership Allocations".

     All amounts paid by the Plan to the employee or the employee's estate will
be paid net of applicable taxes.

RETIREMENT

     Awards held by Participants who retire from the Bank prior to the Vesting
Date will continue to vest without interruption and such Participants will
remain eligible to receive Allocations and to receive a distribution of the
entire value of such Allocations at any time within one year following the
Declaration Date or as otherwise determined by Senior Management and, in the
case of U.S. Participants, within the calendar year of retirement but after the
Declaration Date. Senior Management reserves the right to cancel any previously
granted Awards prior to the Vesting Date in the event that a retired employee
is determined by Senior Management to be engaged in activities which are
competitive with those of the Bank or its subsidiaries. Similar principles are
intended to apply to U.K. Participants and the trustees of the EI Trust will be
asked to give consideration to the Bank's purpose when considering provision of
benefit to beneficiaries who have retired from the Bank.

EMPLOYEE BENEFITS

     Awards granted, Allocations declared under the Plan and Discretionary
Allocations declared by the trustees of the EI Trust and distributions in
respect of Allocations to U.S. Participants will not be considered as eligible
earnings under employee benefit plans such as long or short term disability
plans and pension plans.

     Awards granted, Allocations declared under the Plan and Discretionary
Allocations declared by the EI Trust will include all amounts in respect of
vacation pay. No additional vacation pay will accrue or be payable to employees
as a result of participation in the Plan.

                                       11
<PAGE>   18
PARTICIPATION IN OTHER TD INCENTIVE PLANS

    Employees who participate in the Plan are not eligible to participate in
any other long term incentive programs which may from time to time be offered
by the Bank or its subsidiaries.

ADMINISTRATION OF THE PLAN

General

    The Plan will be administered by such administrators selected by Senior
Management. The interpretation by Senior Management of any provision of the
Plan and any determination by Senior Management pursuant to any provision of
the Plan shall be final and conclusive.

Fees and Expenses

    All fees and expenses related to the administration of the Plan including
without limitation, brokerage costs and record keeping charges, will be paid by
the Bank. Accordingly, such fees and expenses will be factored into the
determination of Eligible Earnings prior to the Declaration Date.

ACCOUNT INFORMATION

General

    Holders of Awards and Allocations will receive the following information
concerning the Plan:

    0  written confirmation of the amount of their Award;

    0  the Vesting Date for their Award;

    0  written confirmation as to the value of their Allocations when declared,
       which will be provided following Board approval of the audited financial
       statements for the immediately preceding fiscal year;

    0  written confirmation as to the number of TD common shares held or deemed
       to be held by the accounts of each participant in respect of the 50%
       mandatory TD common share component of each such account as at the date
       of initial investment (or deemed investment) of each Allocation;

    0  quarterly account statements (or bookkeeping account statements) as at
       the last business day of March, June, September and December in each year
       detailing all account transactions and current market value (or deemed
       balance in bookkeeping accounts) in respect of Allocations for the
       quarter;

    0  relevant tax receipts and details concerning any remittances by the Plan
       in respect of Canadian Tax, U.S. Payroll Tax and U.S. Income Tax
       Withholdings or other taxes paid as required by law; and

                                      12
<PAGE>   19
     *     copies of any revised Plan documents prior to the date on which any
           changes to the Plan become effective.

     The provision of account information to a U.K. Participant following
contributions made by the Bank to the EI Trust and declaration of Discretionary
Allocations for the benefit of such Participant will be governed by the EI
Trust.

CHANGES TO THE PLAN

     The Bank reserves the right to make any changes or alterations to the Plan
and to any related agreements or to terminate the Plan at any time. The Bank
reserves the right to amend, rescind or terminate any previously granted Equity
Partnership Awards, including any such action as may be necessary to comply with
applicable regulatory requirements. Details of any changes or amendments will be
given to holders of Equity Partnership Awards and Allocations and to eligible
Participants prior to the date that such changes become effective.

     Any such change, revision or termination will not adversely affect any
rights previously granted to holders of Equity Partnership Allocations which
have vested prior to the effective date of such change, revision or termination.

EXCLUSION OF LIABILITY

     No liability shall attach to the Bank or to any of Senior Management, TDAM,
TDSI, or any members of the Investment Committee for any loss, mistake,
negligence or error in judgment in connection with the administration of the
Plan. Each of Senior Management, TDAM, TDSI, and the Investment Committee shall
be liable only for its or his own willful wrongdoing or defalcation.

                                       13<PAGE>   1
                                                                    Exhibit 10.6
<PAGE>   2
                        [TD WATERHOUSE GROUP LETTERHEAD]

                                                   October 1, 1999

Stephen D. McDonald
348 Cortleigh Blvd.
Toronto, Ontario M5N 1R4

Dear Mr. McDonald:

     TD Waterhouse Group, Inc. (the "Company") hereby offers to employ you upon
the following terms and conditions:

1.   POSITION, DUTIES AND RESPONSIBILITIES.

          a.   The Company shall employ you in the position of Chief Executive
Officer. You shall perform your assigned duties at the Company or at one of its
subsidiaries or affiliates. You shall devote your full time and efforts to the
performance of all of the duties associated with that position as well as any
and all other duties Company management may from time to time designate or
assign consistent with your title and position.

          b.   During your employment, you may not, without prior written
consent of the Company, accept an appointment, whether or not for remuneration,
as Director, Officer, Manager, Employee or Consultant of a company or business
that is not affiliated with the Company.

2.   EMPLOYMENT.

          This Agreement shall become effective, and your employment as
provided shall commence, on October 1, 1999 (the "Effective Date") and shall
continue through the third anniversary of the Effective Date (such period
hereinafter referred to as the "Term"), subject to earlier termination as
provided in Section 6 hereof. Notwithstanding the preceding sentence,
commencing with October 1, 2002 and on each October 1 thereafter (each an
"Extension Date"), the Term shall be automatically extended for an additional
one-year period, unless the Company or you provide the other party hereto 90
days' prior written notice before the next Extension Date
<PAGE>   3
                                                                               2

that the Term shall not be so extended. For the avoidance of doubt, "Term"
shall include any extension that becomes applicable pursuant to the preceding
sentence.

3.   COMPENSATION.

     a.   Base Salary. You will receive a base salary at the rate of $450,000
Canadian per annum ("Base Salary"), payable in accordance with the Company's
prevailing payroll practices. You shall be entitled to such increases in Base
Salary, if any, as may be determined from time to time in the sole discretion of
the Management Resources and Compensation Advisory Committee of the Board of
Directors of the Company (the "Committee").

     b.   Annual Bonus. You will be eligible to participate in the Company's
annual performance-based bonus program for each calendar year of service during
the Term. Such Annual Bonus shall be established by the Committee in its sole
discretion and payable in accordance with Company practices.

     c.   Stock-Based Awards. You will be eligible to participate in
stock-based compensation plans of the Company or any affiliate as determined by
the Committee.

4    BENEFITS.

     The Company shall provide you, in accordance with the terms of the
Company's employee benefit plans in effect from time to time, health and short
and long term disability coverage, retirement benefits and fringe benefits
(collectively "Employee Benefits") on the same basis as those benefits are
generally made available to employees of similar position.

5.   EXPENSES.

     All documented and verified, reasonable and necessary expenses which you
incur in connection with the performance of your duties hereunder shall be
reimbursed in accordance with the Company's general policies.

6.   TERMINATION OF EMPLOYMENT.

     Your employment hereunder may be terminated by either party at any time and
for any reason other than death or retirement upon 30 days advance written
notice; provided that the Company may immediately terminate your employment for
Cause. Notwithstanding any other provision of this Agreement, the provisions of
this Section 6 shall exclusively govern your rights upon termination of
employment.

     a.   Death or Disability. Your employment shall terminate on your death,
and the Company may terminate your employment on account of your Disability.
Upon termination under this Section 6(a), you or your estate (i) shall be
entitled to receive only that portion of your Base Salary earned, but unpaid, as
of the date of termination and (ii) a pro rata portion of any Annual Bonus that
you would have been entitled to receive pursuant to Section 3(b) hereof in

<PAGE>   4
                                                                               3

such year based upon the percentage of the calendar year that shall have elapsed
through the date of your termination of employment, payable when such Annual
Bonus would have otherwise been payable had your employment not terminated.
Benefits shall cease in accordance with the terms of the applicable Company
policies or plans. As used herein, "Disability" shall mean your inability to
perform in all material respects your duties and responsibilities to the
company, or any affiliate of the Company, by reason of a physical or mental
disability or infirmity which inability is reasonably expected to be permanent
and has continued (i) for a period of six consecutive months or (ii) such
shorter period as the Committee may reasonably determine in good faith. The
Disability determination shall be in the sole discretion of the Committee and
your (or your representative) shall furnish the Committee with medical evidence
documenting your disability or infirmity which is satisfactory to the Committee.

       b.   With Cause. The Company shall have the right to terminate your
employment for Cause (as defined below). Upon the effective date of a
termination under this Section 6(b), you (i) shall be entitled to receive only
that portion of your Base Salary earned, but unpaid, as of the date of
termination and (ii) shall not be entitled to any unpaid Annual Bonus. Benefits
shall cease or be paid in accordance with the terms of the applicable Company
policies or plans.

       c.   Without Cause. The Company, in its discretion, shall have the right
to terminate your employment without Cause. Upon your termination without Cause
you shall be entitled to, subject to your continued compliance with the
provisions of Sections 7,8,9 and 10, (upon your execution of a General Release
in the standard form used by the Company) (i) Base Salary earned to the date of
termination, (ii) continued payment of Base Salary and your average Annual
Bonus (calculated based on the prior 2 years) until 24 months after your
termination of employment (the "Severance Period"). All other benefits shall
cease or be paid based on your date of termination in accordance with
applicable Company policies or plans. No benefit accruals based on service,
including, but not limited to, vacation benefits, shall accrue beyond the
effective date of termination.

      d.   Voluntary Resignation. You shall have the right to resign from your
employment and if the Company, elects in its sole discretion, you shall be
entitled to, subject to your continued compliance with the provisions of
Sections 7,8,9 and 10, (upon your execution of a General Release in the
standard form used by the Company) (i) Base Salary earned to the date of
termination, (ii) continued payment of Base Salary and average Annual Bonus
(calculated based on the prior 2 years) until 12 months after your termination
of employment (the "Severance Period") and (iii) employee health benefits
continuation for the Severance Period. All other benefits shall cease or be
paid based on your date of termination in accordance with applicable Company
policies or plans. No benefit accruals based on service, including, but not
limited to, vacation benefits, shall accrue beyond the effective date of
termination. In event that Company fails to notify you in writing of the
foregoing election within 10 business days of receipt of your notice of
resignation, Company shall have waived its right to such election.

       e.   As used herein, "Cause" shall mean:

<PAGE>   5
                                                                               4

          (i)  your continued failure to substantially perform your duties
     hereunder (other than as a result of total or partial incapacity due to
     physical or mental illness) for a period of 10 days following written
     notice by the Company to you of such failure or upon such written notice
     if, in the good faith judgment of the Company, you would not be able to
     rectify such failure within 10 days;

         (ii)  dishonesty in the performance of your duties hereunder;

        (iii)  an act or acts on your part constituting (x) a felony under the
     laws of the United States or any state thereof or (y) a misdemeanor
     involving dishonesty, breach of trust or moral turpitude;

         (iv)  your willful malfeasance or willful misconduct in connection with
     your duties hereunder or any intentional act or omission which is
     materially injurious to the financial condition or business reputation of
     the Company or any of its subsidiaries or affiliates; or

          (v)  your breach of the provisions of Sections 7,8,9 or 10 of this
     Agreement.

7.   NON-COMPETITION.

          You acknowledged and recognize the highly competitive nature of the
discount broker business of the Company and its affiliates and accordingly
agree that while you are employed with the Company, and for a period of 12
months following the termination of your employment by the Company or, if
elected pursuant to Section 6(d), your resignation of employment (the
"Restricted Period"), you will not directly or indirectly, (i) engage in any
business that competes with the discount broker business of the Company or its
affiliates (including, without limitation, discount broker businesses which the
Company or its affiliates have specific plans to conduct in the future and as
to which you are aware of such planning), (ii) enter the employ of, or render
any services to, any person engaged in any discount broker business that
competes with the discount broker business of the Company or its affiliates,
(iii) acquire a financial interest in, or otherwise become actively involved
with, any person engaged in any discount broker business that competes with the
discount broker business of the Company or its affiliates, directly or
indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, trustee or consultant, or (iv) interfere with business
relationships (whether formed before or after the date of this Agreement)
between the Company or any of its affiliates and customers, suppliers,
partners, members or investors of the Company or its affiliates.

          Notwithstanding anything to the contrary in this Agreement, you may,
directly or indirectly own, solely as an investment, securities of any person
engaged in the discount broker business of the Company or its affiliates which
are publicly traded on a national or regional stock exchange or on the
over-the-counter market if you (i) are not a controlling person of, or a member
of a group which controls, such person and (ii) do not, directly or indirectly,
own 1% or more of any class of securities or such person.

<PAGE>   6
                                                                               5

8. NON-SOLICITATION.

     While you are employed with the Company, and during the Restricted Period:

     (a) you will not recruit or hire any current employee or consultant of the
Company (or any person who was an employee or consultant of the Company within
the prior 12 month), or otherwise solicit or induce, directly or indirectly, or
cause other persons to solicit or induce, any such employee or consultant to
leave the employment or service of the Company, to become an employee of or
otherwise be associated with you or any company or business with which you are
or may become associated or to encourage or assist in the hiring process or any
employee or consultant of the Company or in the modification of any such
employee's or consultant's relationship with the Company; and

     (b) you will not, directly or indirectly, solicit the trade or business of
any clients or customers of the Company, regardless of location, with respect
to any such client or customer as of the time of termination.

9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.

     You will not at any time, whether during your employment or following the
termination of your employment, for any reason whatsoever, and forever
hereafter, directly or indirectly disclose or furnish to any firm, corporation
or person, except as otherwise required by law, any confidential or proprietary
information of the Company with respect to any aspect of its operations or
affairs. "Confidential or proprietary information" shall mean information
generally unknown to the public to which you gain access by reason of your
employment by the Company and includes, but is not limited to, information
relating to business and marketing plans, sales, trading and financial data
and strategies, salaries and employees benefits and operational costs.

10. RETURN OF COMPANY PROPERTY AND COMPANY WORK PRODUCT.

     All records, files, memoranda, reports, customer information, client
lists, documents, equipment, and the like, relating to the business of the
Company, which you shall use, prepare, or come into contact with, shall remain
the sole property of the Company. You agree that on request of the Company, and
in any event upon the termination of your employment, you shall turn over to
the Company all documents, papers, or other material in your possession and
under your control which may contain or be derived from confidential
information, together with all documents, notes, or other work product which is
connection with or derived from your services to the company whether or not
such material is in your possession. You agree you shall have no proprietary
interest in any work product developed or used by you and arising out of
employment by the Company.

11. RIGHT TO INJUNCTIVE RELIEF.

<PAGE>   7
                                                                               6

    The undertaking in Section 7 (Non-Competition), Section 8 (Non-Solicitation,
Section 9 (Non-Disclosure of Confidential Information) and Section 10 (Return of
Company Property and Work Product) hereof shall survive the termination of your
employment with the Company for any reason whatsoever. You acknowledge that the
Company will suffer irreparable injury, not readily susceptible of valuation in
monetary damages, if you breach any or your obligations under Sections 7, 8, 9
or 10. Accordingly, in addition to any other rights and remedies which the
Company may have, you agree that the Company will be entitled to injunctive
relief against any breach or prospective breach by you of your obligations under
Sections 7, 8, 9 or 10 in any federal or state court of competent jurisdiction
located in New York State. You hereby submit to the jurisdiction of said courts
for the purpose of any actions or proceedings instituted by the Company to
obtain such injunctive relief, and agree that process may be served on you by
registered mail at your last address known to the Company, or in any other
manner authorized by law, and that you will pay the Company's costs and
reasonable attorney's fees in the event the Company is required to initiate a
proceeding for injunctive relief to enforce the provisions hereof, and such an
injunction is issued.

12. NOTICES.
    --------

     Any notice to be given hereunder shall be in writing and delivered
personally or sent by certified mail, postage prepaid, return receipt
requested, addressed to the party concerned at the address indicated below or
to such other address as such party may designate in writing:

To:  Stephen D. McDonald        To:  Wayne Kyle
     348 Cortleigh Blvd.        Executive Vice President, Human Resources
     Toronto, Ontario M5N IR4   TD Waterhouse Group, Inc.
                                100 Wall Street
                                New York, NY 10005

     Any notice delivered personally under this Section shall be deemed given
on the date delivered, and any notice sent be certified mail, postage prepaid,
return receipt requested, shall be deemed given on the date mailed.

13. SAVINGS.
    --------

     Should any provision herein be rendered or declared legally invalid or
unenforceable by a court of competent jurisdiction or by the decision of an
authorized governmental agency, such invalidation of such part shall not
invalidate the remaining portions thereof.

14. OTHER AGREEMENTS.
    -----------------

     You represent and warrant that you are not a party to any agreement or
bound by any obligation which would prohibit you from accepting and agreeing
hereto or fully performing the obligation hereunder.

15. COMPLETE AGREEMENT.
    -------------------

<PAGE>   8
                                                                               7

          The provisions herein contain the entire agreement and understanding
of the parties and fully supersede any and all prior agreements or
understandings between them pertaining to the subject matter hereof. There have
been no representations, inducements, promises or agreements of any kind which
have been made by either party, or by any person acting on behalf of either
party, which are not embodied herein. The provisions hereof may not be changed
or altered except in writing duly executed by you and a duly authorized agent
of the Company.

16.  WITHHOLDING TAXES.

          The Company may withhold from any amounts payable under this
Agreement, such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.

17.  APPLICABLE LAW.

          The interpretation and application of the terms herein shall be
governed by the laws of the State of New York without regard to principles of
conflict of laws.

18.  CONSENT TO JURISDICTION.

          The sole jurisdiction and venue for actions related to the subject
matter of this Agreement shall be the courts of the State of New York, the
court of the United States of America for the Southern District of New York,
and appellate courts from any of the foregoing.

19.  NO WAIVER.

          Any failure by either party to exercise its rights to terminate this
Agreement or to enforce any of its provisions shall not prejudice such party's
rights of termination or enforcement for any subsequent or further violation or
defaults by the other party.

20.  TITLES.

          Titles to the sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference
to the title of any section.

21.  COUNTERPARTS.

          This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

          If the foregoing terms of employment are acceptable, please so
indicate in the space provided below.
<PAGE>   9
                                                                               8

                                        Sincerely,

                                        By:/s/   A. WAYNE KYLE

                                           Name:  A. Wayne Kyle
                                           Title: Executive Vice President
                                                  Human Resources

AGREED AND ACCEPTED:

Signed: /s/   STEPHEN D. MCDONALD

Printed:Stephen D. McDonald

Date:  10/1/99

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