Item 1.01 Entry into a Material Definitive Agreement





Agreement and Plan of Merger



Overview

On November 24, 2019, The Charles Schwab Corporation ("Schwab") entered into an Agreement and Plan of Merger (the "Merger Agreement") with TD Ameritrade Holding Corporation, a Delaware corporation ("TD Ameritrade"), and Americano Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Schwab ("Merger Subsidiary"). Upon the terms and subject to the conditions of the Merger Agreement, Merger Subsidiary will merge with and into TD Ameritrade (the "Merger"), with TD Ameritrade surviving as a wholly owned subsidiary of Schwab. The Merger Agreement was unanimously approved by the Board of Directors of each of Schwab and TD Ameritrade, as well as the Strategic Development Committee of the TD Ameritrade Board of Directors-a committee comprised solely of outside, independent directors that was established by the Board of Directors of TD Ameritrade to oversee and conduct the process and all negotiations concerning the transaction on behalf of the TD Ameritrade Board of Directors.

Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of common stock, par value $0.01 per share, of TD Ameritrade ("TD Ameritrade Common Stock") issued and outstanding immediately prior to the Effective Time (other than treasury shares held by TD Ameritrade and certain shares held by Schwab), will be converted into the right to receive 1.0837 shares of voting common stock, par value $0.01 per share, of Schwab ("Schwab Common Stock") (the "Merger Consideration"); provided, however, that if the Merger Consideration issuable in respect of shares of TD Ameritrade Common Stock owned by The Toronto-Dominion Bank ("TD Bank") and its affiliates as of immediately prior to the Effective Time, together with any other shares of Schwab Common Stock then owned by TD Bank and its affiliates, would equal a number of shares of Schwab Common Stock exceeding 9.9% (or such lower percentage of shares of Schwab Common Stock as the Federal Reserve Board permits TD Bank to acquire in the Merger consistent with a determination that TD Bank does not control Schwab for purposes of the Bank Holding Company Act of 1956, as amended (the "BHC Act"), or the Home Owners' Loan Act of 1933, as amended ("HOLA")), of the issued and outstanding shares of Schwab Common Stock as of immediately following the Effective Time, then TD Bank will receive one share of nonvoting common stock, $0.01 par value per share, of Schwab ("Schwab Nonvoting Common Stock" and, together with Schwab Common Stock, "Schwab Common Shares") in lieu of each such excess share of Schwab Common Stock.





Treatment of Equity Awards

At the Effective Time, each outstanding and unexercised option to purchase shares of TD Ameritrade Common Stock, whether vested or unvested, will be assumed by Schwab and become an option to purchase shares of Schwab Common Stock, on the same terms and conditions as applied to each such option immediately prior to the Effective Time, except that (A) the number of shares of Schwab Common Stock subject to such option will equal the product of (i) the number of shares of TD Ameritrade Common Stock that were subject to such option immediately prior to the Effective Time multiplied by (ii) 1.0837, rounded down to the nearest whole share, and (B) the per-share exercise price will equal the quotient of (1) the exercise price per share of Schwab Common Stock at which such option was exercisable immediately prior to the Effective Time, divided by (2) 1.0837, rounded up to the nearest whole cent, and except that each option (A) which is an "incentive stock option" (as defined in Section 422 of the Internal Revenue Code of 1986 (the "Code")) shall be adjusted in accordance with the requirements of Section 424 of the Code and (B) shall be adjusted in a manner that complies with Section 409A of the Code.

At the Effective Time, each outstanding restricted stock unit award with respect to shares of TD Ameritrade Common Stock, whether vested or unvested, will be assumed by Schwab and become a restricted stock unit award with respect to shares of Schwab Common Stock (each, a "Schwab RSU Award"), on the same terms and conditions as applied to such restricted stock award immediately prior to the Effective Time, except that the number of shares of Schwab Common Stock subject to such restricted stock award will equal the product of (i) the number of shares of TD Ameritrade Schwab Stock that were subject to such restricted stock award prior to the Effective Time multiplied by (ii) 1.0837, rounded to the nearest whole share.

At the Effective Time, each outstanding restricted stock unit award with respect to shares of TD Ameritrade Common Stock that is eligible to vest based on the achievement of performance goals (each, a "TD Ameritrade PSU Award") will be converted into a restricted stock unit award of Schwab representing the right to receive shares of Schwab Common Stock with respect to each share of TD Ameritrade Common Stock underlying such TD Ameritrade PSU Award (with the number of shares of TD Ameritrade Common Stock earned to be determined based on the greater of (x) the actual level of achievement of the applicable

performance goals as determined by the compensation committee of TD Ameritrade prior to the Effective Time using the information available as of the latest practicable date prior to the Effective Time and (y) the target level) (each, a "Schwab PSU Award"), except that the number of shares of Schwab Common Stock subject to such Schwab PSU Award will equal the product of (i) the number of shares of TD Ameritrade Common Stock that were subject to such Schwab PSU Award immediately prior to the Effective Time multiplied by (ii) 1.0837, rounded to the nearest whole share.

At the Effective Time, each outstanding restricted stock unit award with respect to shares of TD Ameritrade Common Stock outstanding under the TD Ameritrade Holding Corporation 2006 Directors Incentive Plan, including each deferred restricted stock unit award and any stock unit issued in respect of deferred cash fees (each, a "TD Ameritrade Director RSU Award"), whether vested or unvested, will vest, if unvested, and be cancelled and converted into the right to receive the Merger Consideration as if such TD Ameritrade Director RSU Award had been settled in shares of TD Ameritrade Common Stock immediately prior to the Effective Time; except that each such TD Ameritrade Director RSU Award that constitutes "deferred compensation" for purposes of Section 409A of the Code will instead be settled at the earliest time that would not result in the application of additional taxes or penalties under Section 409A of the Code, and each TD Ameritrade Director RSU Award for which settlement is delayed will be converted into a fully vested Schwab RSU Award.





Closing Conditions

The obligation of the parties to consummate the Merger is subject to customary conditions, including, among others, (i) the approval and adoption of the Merger Agreement by TD Ameritrade's stockholders, including by the holders (other than TD Bank, the Significant Stockholders (as defined below) and their respective affiliates) of a majority of the outstanding shares of TD Ameritrade Common Stock (other than shares of TD Ameritrade Common Stock held by TD Bank, the Significant Stockholders and their respective affiliates), (ii) the approval by Schwab's stockholders of the issuance of Schwab Common Shares in the transaction (the "Share Issuance") and an amendment to Schwab's certificate of incorporation to create Schwab Nonvoting Common Stock with 300 million shares authorized for issuance (the "Charter Amendment"), (iii) the absence of any law, injunction, judgment, order or decree prohibiting or making illegal the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement and the ancillary agreements, (iv) the early termination or expiration of any applicable waiting period or periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of specified governmental consents and approvals (in the case of Schwab's obligations to close, without the imposition of a Burdensome Condition (as defined below)), (v) compliance by Schwab and TD Ameritrade in all material respects with their respective obligations under the Merger Agreement and (vi) subject in most cases to exceptions that do not rise to the level of a "Parent Material Adverse Effect" or a "Company Material Adverse Effect" (each as defined in the Merger Agreement), as applicable, the accuracy of representations and warranties made by Schwab and TD Ameritrade, respectively. The obligation of Schwab and TD Ameritrade to consummate the Merger is also subject to there not having occurred an event that has had or would reasonably be expected to have, individually or in the aggregate, a "Company Material Adverse Effect" or "Parent Material Adverse Effect", respectively. The obligation of Schwab to consummate the Merger is also subject to the parties having received from the Federal Reserve Board a determination in form and substance reasonably satisfactory to Schwab or, as determined by Schwab in its sole discretion, other acceptable confirmation, that the consummation of the Merger will not result in Schwab either (i) being deemed to be "controlled" by TD Bank as that term is interpreted by the Federal Reserve Board under the BHC Act or HOLA or (ii) being deemed to be in "control" of any of the TD Subsidiary Banks (as defined in the Merger Agreement) as that term is interpreted by the Federal Reserve Board under the BHC Act or HOLA (the "Noncontrol Determinations").

Representations and Warranties; Covenants

The Merger Agreement contains customary representations and warranties from both Schwab and TD Ameritrade with respect to each party's business. The Merger Agreement contains customary covenants, including covenants by (i) TD Ameritrade to, subject to certain exceptions, conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and the consummation of the Merger and (ii) Schwab to not conduct its business outside the ordinary course during the interim period between the execution of the Merger Agreement and the consummation of the Merger to the extent it would, or would reasonably be expected to, prevent, enjoin, alter or materially delay the contemplated transactions.

Under the Merger Agreement, each of Schwab and TD Ameritrade has agreed to use its reasonable best efforts to take all actions and to do all things reasonably necessary, proper or advisable to consummate the Merger, including obtaining all consents required to be obtained from any governmental authority or other third party that are necessary, proper or advisable to consummate the Merger. Notwithstanding such general obligation to obtain such consents of governmental authorities, Schwab is not required to take certain actions if such action would reasonably be expected to have a material adverse effect on Schwab, TD Ameritrade and their respective subsidiaries, taken as a whole, in each case, measured on a scale relative to the size

of TD Ameritrade and its subsidiaries (a "Burdensome Condition").

The Merger Agreement provides that Schwab will take all necessary action to cause Todd Ricketts, who has been designated by TD Ameritrade, and two other individuals who will be designated by TD Bank to be appointed to the Board of Directors of Schwab as of the Effective Time, provided that such individuals meet (i) the director qualification and eligibility criteria of the Nominating and Corporate Governance Committee of the Board of Directors of Schwab and (ii) any applicable requirements or standards that may be imposed by a regulatory agency for service on the Board of Directors of Schwab, and will otherwise be reasonably acceptable to the Nominating and Corporate Governance Committee of the Board of Directors of Schwab.

Stockholder Meetings; Non-Solicitation; Intervening Events

The Merger Agreement requires each of Schwab and TD Ameritrade to convene a stockholder meeting for purposes of obtaining the necessary Schwab stockholder approval and TD Ameritrade stockholder approval. In addition, subject to certain exceptions, each of Schwab and TD Ameritrade have agreed (i) not to solicit alternative transactions or enter into discussions concerning, or provide information in connection with, any alternative transaction and (ii) that its Board of Directors will recommend that its stockholders approve the Share Issuance and the Charter Amendment or approve and adopt the Merger Agreement, as applicable.

Prior to the approval of the Share Issuance and the Charter Amendment by Schwab's stockholders or the approval and adoption of the Merger Agreement by TD Ameritrade's stockholders, as applicable, the Board of Directors of Schwab or the Board of Directors of TD Ameritrade, as applicable, may, in connection with (i) the receipt of a "Parent Superior Proposal" or a "Company Superior Proposal" (each as defined in the Merger Agreement), respectively, or (ii) a "Parent Intervening Event" or a "Company Intervening Event" (each as defined in the Merger Agreement), respectively, change its recommendation in favor of the Share Issuance and the Charter Amendment or the Merger Agreement, respectively, in each case, subject to complying with notice and other specified conditions, including giving the other party the opportunity to propose changes to the Merger Agreement in response to such Parent Superior Proposal, Company Superior Proposal, Parent Intervening Event or Company Intervening Event, as applicable, if the failure to make such change in recommendation would be reasonably likely to be inconsistent with its fiduciary duties.

Notwithstanding a change in recommendation by the Board of Directors of Schwab or the Board of Directors of TD Ameritrade, Schwab or TD Ameritrade, as applicable, is still required to convene the meeting of its stockholders as described above.

Termination; Termination Fee

The Merger Agreement may be terminated by Schwab and TD Ameritrade by mutual agreement. Furthermore, either party may terminate the Merger Agreement if (i) subject to limited exceptions, the Merger has not been consummated on or before November 24, 2020, which may be extended to May 24, 2021 under certain circumstances if required regulatory approvals have not been obtained by the . . .

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibits are filed with this report:





Exhibit No.                                Description
2.1             Merger Agreement*
10.1            Stockholder Agreement
10.2            Voting and Support Agreement between Schwab and TD Bank
10.3            Voting and Support Agreement between Schwab, J. Joe Ricketts and
              Marlene Rickets and certain other stockholders
10.4            Letter Agreement
10.5            Registration Rights Agreement between Schwab, Charles R. Schwab, TD
              Bank and certain other stockholders
10.6            Amended and Restated Insured Deposit Account Agreement**

* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Schwab agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request.

** Certain confidential information contained in this agreement has been omitted because it is not material and would be competitively harmful if publicly disclosed.

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