Schedule 13D Page 1 of 19
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ______)*
TD AMERITRADE HOLDING CORPORATION
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
872364Y108
(CUSIP Number)
CHRISTOPHER A. MONTAGUE, ESQ.
THE TORONTO-DOMINION BANK
TORONTO-DOMINION CENTRE
P.O. BOX 1
TORONTO, ONTARIO M5K IA2
(416) 982-8222
COPIES TO:
LEE MEYERSON, ESQ.
SIMPSON THACHER & BARTLETT LLP
425 LEXINGTON AVENUE
NEW YORK, NY 10017
(212) 455-2000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
JANUARY 24, 2006
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Schedule 13D Page 2 of 19
CUSIP No. 872364Y108
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
The Toronto-Dominion Bank
I.R.S. Identification No. 13-5640479
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X....................................................................
(b) .....................................................................
3. SEC Use Only .............................................................
4. Source of Funds (See Instructions) OO, WC.................................
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) .............................................................
6. Citizenship or Place of Organization
Canada....................................................................
7. Sole Voting Power
196,300,000*..................................................
Number of 8. Shared Voting Power
Shares
Beneficially 0.............................................................
Owned by
Each 9. Sole Dispositive Power
Reporting
Person With 196,300,000*..................................................
10. Shared Dispositive Power
0.............................................................
11. Aggregate Amount Beneficially Owned by Each Reporting Person
196,300,000*.............................................................
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)............................................................
13. Percent of Class Represented by Amount in Row (11)
32.5%*...................................................................
14. Type of Reporting Person (See Instructions)
BK.......................................................................
* Based on the provisions relating to voting agreements and (except with respect
to the Ricketts Grandchildren Trust) the grant of proxies contained in the
Stockholders Agreement (as defined herein), the TD Entities (as defined herein)
may be deemed to share voting power over the shares beneficially owned by the
Ricketts Parties (as defined herein). Based on information provided by the
Ricketts Parties, as of January 24, 2006, the Ricketts Parties beneficially
owned, in the aggregate, 111,274,650 shares of Issuer Common Stock (as defined
herein), representing approximately 18.4% of the outstanding shares of Issuer
Common Stock. The TD Entities disclaim beneficial ownership of all shares held
by the Ricketts Parties. The number of shares reported as held by the TD
Entities does not include shares held by the Ricketts Parties. However, as
described in response to Item 6, the TD Entities and the Ricketts Parties
acknowledge that they constitute a "group," for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), with respect to TD Ameritrade.
Schedule 13D Page 3 of 19
CUSIP No. 872364Y108
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
TD Discount Brokerage Holdings LLC
I.R.S. Identification No. 20-4135150
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X....................................................................
(b) .....................................................................
3. SEC Use Only .............................................................
4. Source of Funds (See Instructions) OO, WC.................................
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) .............................................................
6. Citizenship or Place of Organization
Delaware..................................................................
7. Sole Voting Power
196,300,000*..................................................
8. Shared Voting Power
Number of 0.............................................................
Shares
Beneficially 9. Sole Dispositive Power
Owned by
Each 196,300,000*..................................................
Reporting
Person With 10. Shared Dispositive Power
0.............................................................
11. Aggregate Amount Beneficially Owned by Each Reporting Person
196,300,000*.............................................................
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)............................................................
13. Percent of Class Represented by Amount in Row (11)
32.5%*...................................................................
14. Type of Reporting Person (See Instructions)
OO.......................................................................
* Based on the provisions relating to voting agreements and (except with respect
to the Ricketts Grandchildren Trust) the grant of proxies contained in the
Stockholders Agreement, the TD Entities may be deemed to share voting power over
the shares beneficially owned by the Ricketts Parties. Based on information
provided by the Ricketts Parties, as of January 24, 2006, the Ricketts Parties
beneficially owned, in the aggregate, 111,274,650 shares of Issuer Common Stock,
representing approximately 18.4% of the outstanding shares of Issuer Common
Stock. The TD Entities disclaim beneficial ownership of all shares held by the
Ricketts Parties. The number of shares reported as held by the TD Entities does
not include shares held by the Ricketts Parties. However, as described in
response to Item 6, the TD Entities and the Ricketts Parties acknowledge that
they constitute a "group," for purposes of Section 13(d) of the Exchange Act,
with respect to TD Ameritrade.
Schedule 13D Page 4 of 19
Item 1. Security and Issuer
This statement on Schedule 13D (this "Statement") relates to the common
stock, $0.01 par value per share (the "Issuer Common Stock") of TD Ameritrade
Holding Corporation, a Delaware corporation (the "Issuer" or "TD Ameritrade"),
which prior to the consummation of the transactions described in Item 3 below
was named "Ameritrade Holding Corporation". The principal executive offices of
the Issuer are located at 4211 South 102nd Street, Omaha, Nebraska 68127.
Item 2. Identity and Background
This statement is being filed by The Toronto-Dominion Bank, a Canadian
chartered bank ("TD"), and TD Discount Brokerage Holdings LLC, a Delaware
limited liability company and a wholly owned subsidiary of TD ("TDDBH" and,
together with TD, the "TD Entities"). TD and its subsidiaries are principally
engaged in the business of personal, commercial and wholesale banking and wealth
management. The principal executive offices of the TD Entities are located at
Toronto-Dominion Centre, P.O. Box 1, Toronto, Ontario, Canada M5K IA2.
The name, business address, citizenship and present principal occupation
or employment of each director and executive officer of each of the TD Entities
and the name and principal business and address of any corporation or other
organization in which such employment is conducted are set forth in Schedule I
hereto and are incorporated by reference herein.
During the last five years, none of the TD Entities or, to the knowledge
of the TD Entities, any of their respective executive officers or directors
named in Schedule I hereto has (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On January 24, 2006, pursuant to the consummation of the transactions
contemplated by the Agreement of Sale and Purchase dated as of June 22, 2005, as
amended as of October 28, 2005 and as of December 22, 2005 (as amended, the
"Purchase Agreement"), between TD and the predecessor of the Issuer, TDDBH
received 196,300,000 shares of Ameritrade common stock, representing
approximately 32.5% of the outstanding shares of Issuer Common Stock, and
$20,000 in cash, in exchange for all of the outstanding capital stock of TD
Waterhouse Group, Inc. ("TD Waterhouse"), a Delaware corporation (the
"Transaction"). Prior to the consummation of such transactions and pursuant to
the terms of the Purchase Agreement, TD caused TD Waterhouse to have sufficient
cash to pay its portion of the special dividend provided to shareholders of
Ameritrade Holding Corporation in connection with the Transaction by providing
TD Waterhouse with a short-term loan in the amount of $270,000,000.
All funds required for the payment of the consideration in the tender
offer described below will be obtained from available funds of TD and its
subsidiaries.
Item 4. Purpose of Transaction
TDDBH acquired its initial ownership position in the Issuer as
consideration for the sale of TD Waterhouse to the Issuer.
Schedule 13D Page 5 of 19
In connection with the Transaction, TD entered into a Stockholders
Agreement, dated as of June 22, 2005, among TD, the Issuer, J. Joe Ricketts,
Marlene M. Ricketts, the J. Joe Ricketts 1994 Dynasty Trust, the Marlene M.
Ricketts 1994 Dynasty Trust and the Ricketts Grandchildren Trust (Mr. and Mrs.
Ricketts and such affiliated trusts, collectively, the "Ricketts Parties") (such
agreement, as it may be amended, restated or otherwise modified from time to
time, the "Stockholders Agreement"), which contains various provisions relating
to the governance of TD Ameritrade following the completion of the transaction,
including board composition, stock ownership, transfers by TD and the Ricketts
Parties, voting and other matters. Pursuant to the Stockholders Agreement, TD is
initially entitled to designate five of the twelve directors of TD Ameritrade
and the Ricketts Parties are initially entitled to designate three of the twelve
directors of TD Ameritrade, each subject to adjustment in accordance with the
provisions of the Stockholders Agreement. The initial TD designees to the TD
Ameritrade board of directors were appointed concurrent with the consummation of
the Transaction. The initial Ricketts Parties designees to the TD Ameritrade
board of directors were serving as directors prior to the consummation of the
Transaction, and accordingly remained in such positions upon consummation of the
Transaction. The description of the Stockholders Agreement contained in Item 6
below is incorporated by reference in this Item 4.
Pursuant to the Stockholders Agreement, TD is obligated to commence a cash
tender offer, at a price of at least $16 per share, pursuant to which TD will
offer to purchase a number of shares of Issuer Common Stock constituting the
lesser of (i) 8% of the outstanding shares of Issuer Common Stock and (ii) a
number of shares such that, if TD successfully acquires all shares subject to
the tender offer, it will beneficially own 39.9% of the outstanding shares of
Issuer Common Stock. TD currently intends to commence the tender offer in the
near future. TD has been advised by the Ricketts Parties that they do not intend
to tender any of their shares of Issuer Common Stock in the tender offer.
TD intends to review from time to time its investment in the Issuer and
the Issuer's business affairs, financial position and capital requirements.
Based upon such review, as well as general economic, market and industry
conditions and prospects existing at the time, the TD Entities may consider from
time to time alternative courses of action as permitted by the Stockholders
Agreement. Subject to the terms of the Stockholders Agreement, such actions may
include the acquisition of additional shares of Issuer Common Stock or other
securities of the Issuer directly from the Issuer, through open market
purchases, in privately negotiated transactions, through a tender or exchange
offer or a merger, reorganization or comparable transaction, through exercise of
its rights under the Stockholders Agreement or otherwise. Subject to the terms
of the Stockholders Agreement, these actions may constitute a "going-private
transaction" and/or could result in (i) changes to the board of directors of the
Issuer, (ii) changes in the capitalization or dividend policy of the Issuer,
(iii) changes in the Issuer's certificate of incorporation or bylaws, (iv)
delisting of the Issuer Common Stock from the Nasdaq National Market System (or
other national securities market or inter-dealer quotation system), (v)
termination of registration of the Issuer Common Stock pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended, and/or (vi) other
events comparable to those enumerated above. Without limiting the foregoing,
pursuant to the tender offer described in this Statement and, if necessary,
through other actions, the TD Entities currently intend to take one or more of
the actions described in the second preceding sentence, consistent with the
Stockholders Agreement and subject to market conditions and other
considerations, to acquire additional shares of Issuer Common Stock. It is TD's
current plan to acquire, within the time period specified by the Stockholders
Agreement, additional shares of Issuer Common Stock such that it will continue
to be entitled to designate five members of the Issuer's board of directors.
Alternatively, and consistent with the terms of the Stockholders Agreement and
subject to market conditions and other considerations, the TD Entities may sell
all or a portion of their securities of the Issuer in the open market, in
privately negotiated transactions, through a public offering or otherwise.
Schedule 13D Page 6 of 19
Other than as described in this Statement, the TD Entities do not have any
present plans or proposals that relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) and (b) As of January 24, 2006, TDDBH was the record and beneficial
owner of 196,300,000 shares of Issuer Common Stock, representing approximately
32.5% of the outstanding shares of Issuer Common Stock. TD, as the sole member
of TDDBH, controls TDDBH and accordingly beneficially owns the shares of Issuer
Common Stock held by TDDBH. To the knowledge of the TD Entities, as of January
24, 2006, none of the individuals listed on Schedule I beneficially owns any
shares of Issuer Common Stock.
Based on the provisions relating to voting agreements and (except with
respect to the Ricketts Grandchildren Trust) the grant of proxies contained in
the Stockholders Agreement, the TD Entities may be deemed to share voting power
over the shares beneficially owned by the Ricketts Parties. Based on information
provided by the Ricketts Parties, as of the close of business on January 24,
2006, the Ricketts Parties beneficially owned, in the aggregate, 111,274,650
shares of Issuer Common Stock, representing approximately 18.4% of the
outstanding shares of Issuer common stock. The TD Entities disclaim beneficial
ownership of all shares held by the Ricketts Parties. However, as described in
response to Item 6, the TD Entities and the Ricketts Parties acknowledge that
they constitute a "group," for purposes of the Exchange Act, with respect to TD
Ameritrade.
All information contained in this Statement relating to the Ricketts
Parties is based on information provided to the TD Entities by the Ricketts
Parties. While the TD Entities have no reason to believe that such information
is inaccurate or incomplete, the TD Entities do not assume any responsibility
for the accuracy or completeness of such information.
(c) Except as set forth in Item 3 above, none of the TD Entities, or, to
the knowledge of the TD Entities, any of the individuals named in Schedule I
hereto, has engaged in any transaction during the past 60 days in any shares of
Issuer Common Stock.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements or Understandings with Respect to Securities of
the Issuer
Except as set forth in this Statement, to the knowledge of the TD
Entities, there are no other contracts, arrangements, understandings or
relationships (legal or otherwise) between the TD Entities or any of the
individuals named in Schedule I hereto and any other person with respect to the
securities of the Issuer, including but not limited to transfer or voting of any
of the securities of the Issuer, joint ventures, loan or option arrangements,
puts or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies, or a pledge or contingency the occurrence of which
would give another person voting power over the securities of the Issuer.
a. Stockholders Agreement
In connection with the Transaction, the Issuer, the Ricketts Parties and
TD entered into the Stockholders Agreement, which, among other things, contains
certain governance arrangements and various provisions relating to board
composition, stock ownership, stock transfers by TD and the Ricketts
Schedule 13D Page 7 of 19
Parties, voting and other matters. The following is a summary of selected
provisions of the Stockholders Agreement. While the TD Entities believe this
description covers the material terms of the Stockholders Agreement, it is
qualified in its entirety by reference to the Stockholders Agreement, a copy of
which is included as Exhibit 4 of this Statement and incorporated herein by
reference.
Due to certain agreements contained in the Stockholders Agreement, the TD
Entities and the Ricketts Parties have acknowledged that they constitute a
"group," for purposes of Section 13(d) of the Exchange Act, with respect to TD
Ameritrade.
Governance of TD Ameritrade
Under the terms of the Stockholders Agreement, the board of directors of
TD Ameritrade is classified into three classes, with each class serving
staggered, three-year terms. The board of directors consists of twelve members,
and the persons to be nominated for election as directors of TD Ameritrade were
initially designated as follows:
- the Ricketts Parties initially had the right to designate three of
the directors, initially J. Joe Ricketts, J. Peter Ricketts and
Thomas S. Ricketts (each of whom was assigned to a different class
of directors, as designated by the Ricketts Parties);
- TD initially had the right to designate five of the directors,
initially W. Edmund Clark, Fredric J. Tomczyk, Daniel A.
Marinangeli, Marshall A. Cohen and Wilbur J. Prezzano (one of whom
is a class I director, two of whom are class II directors and two of
whom are class III directors, as designated by TD);
- the individual serving as chief executive officer of TD Ameritrade,
initially Joseph H. Moglia (who is a class I director); and
- three of the directors are to be outside independent directors, who
initially are Michael D. Fleisher, Glenn H. Hutchins and Dan W. Cook
III (each of whom was assigned to a different class of directors).
The number of directors designated by the Ricketts Parties (the "Ricketts
directors") may increase or decrease from time to time depending on the
ownership position of the Ricketts Parties. Generally, the number of Ricketts
directors relates to the Ricketts Parties' ownership as set forth in the table
below, subject to specified cure periods in the event of a decrease in ownership
from one threshold to another and minimum holding periods in the event of an
increase in ownership from one threshold to another. Any vacancy resulting from
the reduction of the number of Ricketts directors will be filled with an outside
independent director, effective immediately prior to the following annual
meeting of TD Ameritrade stockholders. In the event that the number of Ricketts
directors increases as a result of an increase in the Ricketts Parties'
ownership position, the corresponding number of outside independent directors
will be removed and replaced with new Ricketts directors.
RICKETTS PARTIES OWNERSHIP LEVEL TOTAL NUMBER OF
RICKETTS DIRECTORS
Greater than 20.83% 3
Greater than 12.50% to 20.83% 2
Greater than 4.17% to 12.50% 1
4.17% or less 0
Schedule 13D Page 8 of 19
If, on the first anniversary of the closing date of the Transaction, the
Ricketts Parties do not beneficially own at least 20.83% of the outstanding
voting securities of TD Ameritrade, and the number of Ricketts directors has not
already been reduced, then one of the Ricketts directors must resign from the
board of directors of TD Ameritrade, and the resulting vacancy will be filled by
an outside independent director, effective immediately prior to the following
annual meeting of TD Ameritrade stockholders. Following any such resignation,
however, the number of Ricketts directors may continue to increase or decrease
based on the ownership position of the Ricketts Parties, as described above.
The number of directors designated by TD (the "TD directors") may increase
or decrease from time to time depending on the ownership position of TD.
Generally, the number of TD directors relates to TD's ownership as set forth in
the table below, subject to specified cure periods in the event of a decrease in
ownership from one threshold to another and minimum holding periods in the event
of an increase in ownership from one threshold to another. Any vacancy resulting
from the reduction of the number of TD directors will be filled with an outside
independent director, effective immediately prior to the following annual
meeting of TD Ameritrade stockholders. In the event that the number of TD
directors increases as a result of an increase in TD's ownership position, the
corresponding number of outside independent directors will be removed and
replaced with new TD directors.
TD OWNERSHIP LEVEL TOTAL NUMBER OF TD
DIRECTORS
Greater than 37.5% 5
Greater than 29.17% to 37.50% 4
Greater than 20.83% to 29.17% 3
Greater than 12.50% to 20.83% 2
Greater than 4.17% to 12.50% 1
4.17% or less 0
If, on the first anniversary of the closing date of the Transaction, TD's
percentage ownership of the outstanding voting securities of TD Ameritrade is
not at least 37.5%, and the number of TD directors has not already been reduced,
then one of the TD directors must resign from the board of directors of TD
Ameritrade, and the resulting vacancy will be filled by an outside independent
director, effective immediately prior to the following annual meeting of TD
Ameritrade stockholders. Following any such resignation, however, the number of
TD directors may continue to increase or decrease based on the ownership
position of TD, as described above.
The Stockholders Agreement also sets forth procedures by which outside
independent directors are selected. A committee of the board of directors of TD
Ameritrade comprised solely of all of the outside independent directors,
referred to as the outside independent director committee, has the sole
authority on behalf of the board of directors to nominate candidates for
election to serve as outside independent directors, except that TD and the
Ricketts Parties have the right to reject a director candidate, but not without
a reasonable basis for doing so.
Subject to applicable laws and certain conditions, TD Ameritrade is
required to cause each committee of its board of directors (other than the
outside independent director committee and a committee of the board of directors
comprised solely of all directors who are not TD directors) to consist of two TD
directors, one Ricketts director, and two outside independent directors. These
levels of committee representation are subject to adjustment from time to time
based on TD's and the Ricketts Parties' maintenance of specified ownership
levels.
The parties to the Stockholders Agreement have agreed to vote their shares
of Issuer Common Stock in favor of the election of each director nominated for
election in the manner provided for in the Stockholders Agreement and in favor
of the removal of each director designated for removal in the manner provided
for in the Stockholders Agreement, and have agreed not to vote in favor of any
candidate for director who is not nominated in accordance with the Stockholders
Agreement. The Ricketts Parties (other than the Ricketts Grandchildren Trust)
and TD irrevocably appointed an officer of
Schedule 13D Page 9 of 19
Ameritrade as their respective proxy and attorney-in-fact to vote in accordance
with the terms of the Stockholders Agreement in the event they fail to comply
with its terms. TD Ameritrade has agreed to take all actions within its control
to effectuate the corporate governance provisions of the Stockholders Agreement.
Tender Offer and Share Ownership
The Stockholders Agreement requires TD to commence a cash tender offer
pursuant to which TD will offer to purchase a number of shares of Issuer Common
Stock constituting the lesser of (i) 8% of the outstanding shares of Issuer
Common Stock and (ii) a number of shares such that, upon successful completion
of the offer, TD will beneficially own up to 39.9% of the outstanding shares of
Issuer Common Stock.
Following the tender offer:
- TD may acquire additional shares of Issuer Common Stock only up to
an aggregate beneficial ownership interest of 39.9% of the
outstanding voting securities of TD Ameritrade for a period of three
years following completion of the Transaction, and up to an
aggregate beneficial ownership of 45% for the remaining term of the
Stockholders Agreement; and
- the Ricketts Parties may acquire additional shares of Issuer Common
Stock only up to an aggregate beneficial ownership interest of 29%
of the outstanding voting securities of TD Ameritrade.
Notwithstanding the limitations on TD's ownership described above, TD may
make a non-public proposal to the board of directors of TD Ameritrade to acquire
additional shares pursuant to a tender offer, merger or other business
combination for 100% of the outstanding shares of Issuer Common Stock not owned
by TD, and TD may complete such a transaction, subject to the approval of a
majority of the outside independent directors and the holders of a majority of
the outstanding shares of Issuer Common Stock not affiliated with TD. TD will
not, subject to certain exceptions, solicit proxies with respect to Issuer
Common Stock.
If TD Ameritrade receives a bona fide inquiry or proposal from a third
party that could result in a proposal with respect to a merger, acquisition or
other business combination involving TD Ameritrade or its subsidiaries in which
more than 25% of the voting securities or consolidated assets of TD Ameritrade
would be acquired or received by the third party, TD Ameritrade must promptly
notify TD of receipt of the inquiry or proposal and offer TD the opportunity to
participate in parallel discussions with TD Ameritrade, and must consider
proposals from TD regarding a comparable transaction.
Right to Purchase Securities
TD and the Ricketts Parties have the right to purchase up to their
respective proportionate share of future issuances of Issuer Common Stock,
options, warrants or other debt or equity securities that are convertible into
or exchangeable or exercisable for Issuer Common Stock, other than issuances of
Issuer Common Stock as consideration in connection with an acquisition by TD
Ameritrade and certain other issuances specified in the stockholders agreement.
If TD Ameritrade proposes to issue shares as consideration in an acquisition, TD
Ameritrade will discuss in good faith with TD and the Ricketts Parties
alternative structures in which a portion of such shares would be sold to TD or
the Ricketts Parties, with the proceeds of such sale used to fund the
acquisition.
Schedule 13D Page 10 of 19
Transfer and Other Restrictions
In general, absent approval of a majority of the independent directors, TD
and the Ricketts Parties may not transfer shares of Issuer Common Stock to any
holders of 5% or more of the outstanding shares of Issuer Common Stock, subject
to certain exceptions.
For so long as TD and TD Ameritrade constitute the same audit client for
audit independence purposes under applicable law, TD will not engage the auditor
of TD Ameritrade to provide any non-audit services to TD and TD Ameritrade will
not engage the auditor of TD to provide specified non-audit services to TD
Ameritrade.
Information Rights
TD is entitled to access to and information regarding TD Ameritrade's
business, operations and plans as TD may reasonably require to appropriately
manage and evaluate its investment in TD Ameritrade and to comply with its
obligations under U.S. and Canadian laws. This access is subject to
confidentiality and nondisclosure obligations of TD. Likewise, TD is required to
provide TD Ameritrade with any information regarding TD that is reasonably
required for TD Ameritrade to comply with applicable laws. These information
rights terminate on the first date that TD no longer owns at least 15% of the
outstanding shares of TD Ameritrade.
Obligation to Repurchase Shares
If TD Ameritrade issues shares of its common stock pursuant to any
compensation or similar program or arrangement, then TD Ameritrade will, subject
to certain exceptions, use its reasonable efforts to repurchase a corresponding
number of shares of its common stock in the open market within 120 days after
any such issuance.
Non-Competition Covenants
Subject to certain exceptions described below, none of J. Joe Ricketts (so
long as he is serving as a director of TD Ameritrade), TD or any of their
respective affiliates, may participate in or own any portion of a business
engaged in the business of providing securities brokerage services in the U.S.
(or, solely in the case of Mr. Ricketts and his affiliates, in Canada) to retail
traders, individual investors and registered investment advisors. If TD acquires
indirectly such a competing business as a result of its acquisition of a
non-competing business, TD must offer to sell the competing business to TD
Ameritrade at its appraised fair value as determined in accordance with the
terms of the Stockholders Agreement. If TD Ameritrade decides not to purchase
the competing business, TD must use commercially reasonable efforts to divest
the competing business within two years.
J. Joe Ricketts (so long as he is serving as a director of TD Ameritrade),
TD and their respective affiliates will be permitted under the terms of the
Stockholders Agreement to own a passive investment representing less than 2% of
a class of equity securities of a competing business so long as the class of
equity securities is traded on a national securities exchange in the U.S. or the
Toronto Stock Exchange or quoted on the NASDAQ National Market. In addition,
neither TD nor any of its affiliates is prohibited from engaging in various
activities specified in the Stockholders Agreement.
In addition, TD Ameritrade may not hold or acquire control of a bank or
similar depository institution except:
- incidentally in connection with the acquisition of an entity not
principally engaged in the banking business; or
Schedule 13D Page 11 of 19
- in the event that TD does not control any bank or similar depository
institution which is able to offer money market deposit accounts to
clients of TD Ameritrade as a designated sweep vehicle or TD has
indicated that it is not willing to offer such accounts to clients
of TD Ameritrade through one or more of any banks or similar
depository institutions it controls.
Termination of the Stockholders Agreement
The Stockholders Agreement will terminate (1) with respect to the Ricketts
Parties, when their aggregate ownership of Issuer Common Stock falls below
approximately 4% of the outstanding voting securities of TD Ameritrade, and (2)
upon the earliest to occur of:
- the consummation of a merger, tender offer or other business
combination pursuant to which TD offers to acquire 100% of the
Issuer Common Stock not owned by TD;
- the 10th anniversary of the consummation of the Transaction;
- the date on which TD's ownership of Issuer Common Stock falls below
approximately 4% of the outstanding voting securities of TD
Ameritrade;
- the commencement by a third party of a tender offer or exchange
offer for not less than 25% of the Issuer Common Stock unless the TD
Ameritrade board recommends against such tender offer or exchange
offer and continues to take all reasonable steps to oppose such
tender offer or exchange offer (as reasonably determined by TD);
- the approval by the TD Ameritrade board of a business combination
that would result in another party owning 25% of TD Ameritrade's
voting securities or its consolidated assets or which would
otherwise result in a change of control of TD Ameritrade; or
- the acquisition of 20% of the voting securities of TD Ameritrade by
a third party.
For a period of up to one year following a termination due to events
described in the fourth, fifth or sixth bullet points above, TD and the Ricketts
Parties will be prohibited from acquiring shares of Issuer Common Stock that
would cause TD's aggregate ownership to exceed 45% of the outstanding voting
securities of TD Ameritrade (39.9% in the first three years) or the aggregate
ownership of the Ricketts Parties to exceed 29% of the outstanding voting
securities of TD Ameritrade, except that either TD or the Ricketts Parties may
exceed these thresholds in connection with a merger, tender offer or other
business combination for 100% of the outstanding shares of Issuer Common Stock
approved by the holders of a majority of the outstanding shares of Issuer Common
Stock (other than the Ricketts Parties and TD). Furthermore, during that period
of up to one year following such termination, the provisions of the Stockholders
Agreement relating to the designation and election of directors, transfer
restrictions and certain other provisions will remain in effect. In the event
that TD's beneficial ownership of Issuer Common Stock falls below approximately
4% of the outstanding voting securities of TD Ameritrade, TD must cause each of
the TD directors to immediately resign as directors of TD Ameritrade.
b. Amended and Restated Registration Rights Agreement
Concurrently with entering into the Purchase Agreement and the
Stockholders Agreement, TD, the Issuer, the Ricketts Parties and certain other
persons who are no longer party to the agreement, entered into the Amended and
Restated Registration Rights Agreement (the "Registration Rights Agreement") to,
Schedule 13D Page 12 of 19
among other things, include TD as a party to the existing registration rights
agreement among the Issuer, the Ricketts Parties and such other persons. The
Registration Rights Agreement is substantially the same as the preexisting
registration rights agreement except for the provision of registration rights to
TD, the elimination of the term of the registration rights and the potential
provision of additional registration rights to the Ricketts Parties. The
following is a summary of selected provisions of the Registration Rights
Agreement. While the TD Entities believe this description covers the material
terms of the Registration Rights Agreement, it is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which is included as
Exhibit 5 to this Statement and incorporated herein by reference.
Demand Registrations
TD Ameritrade has granted the Ricketts Parties and TD, collectively, the
right to demand registration of the shares of Issuer Common Stock held by them
on nine separate occasions. Six of the nine demand rights, including two shelf
registrations, are allocated to TD, and three of the nine demand rights,
including one shelf registration, are allocated to the Ricketts Parties.
Piggy Back Registrations
TD Ameritrade has also agreed to provide TD and the Ricketts Parties with
piggy back registration rights, such that if at any time TD Ameritrade proposes
to file a registration statement with respect to any offering of its securities
for its own account or for the account of any stockholder who holds its
securities (subject to certain exceptions) then, as expeditiously as reasonably
possible (but in no event less than 20 days prior to the proposed date of filing
such registration statement), TD Ameritrade shall give written notice of such
proposed filing to all holders of securities subject to registration rights
pursuant to the Registration Rights Agreement, or registrable securities, and
such notice shall offer the holders of such registrable securities the
opportunity to register such number of registrable securities as each such
holder may request in writing.
The registration rights granted in the Registration Rights Agreement are
subject to customary restrictions such as minimums, blackout periods and
limitations on the number of shares to be included in any underwritten offering
imposed by the managing underwriter. In addition, the Registration Rights
Agreement contains other limitations on the timing and ability of stockholders
to exercise demands for registration.
Item 7. Material to be Filed as Exhibits
1. Agreement of Sale and Purchase (incorporated by reference to
Exhibit 2.1 on Form 8-K filed by Issuer on June 22, 2005 (SEC File No.
0-49992)).
2. Amendment No. 1 to the Agreement of Sale and Purchase, dated as of
October 28, 2005 (incorporated by reference to Exhibit 2.2 on Form 8-K filed
by the Issuer on October 28, 2005 (SEC File No. 0-49992)).
3. Amendment No. 2 to the Agreement of Sale and Purchase, dated as of
December 23, 2005 (incorporated by reference to Exhibit 2.3 on Form 8-K filed
by the Issuer on December 29, 2005 (SEC File No. 0-49992)).
4. Stockholders Agreement, dated as of June 22, 2005 (incorporated by
reference to Exhibit 10.1 on Form 8-K filed by Issuer on June 22, 2005 (SEC
File No. 0-49992)).
Schedule 13D Page 13 of 19
5. Amended and Restated Registration Rights Agreement, dated as of
June 22, 2005 (incorporated by reference to Exhibit 99.1 on Form 8-K filed by
the Issuer on September 12, 2005 (SEC File No. 0-49992)).
6. Joint Filing Agreement between TD and TDDBH, dated as of January 25,
2006.
Page 14 of 19
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE TORONTO-DOMINION BANK
By: /s/ Christopher A. Montague
--------------------------------------------
Name: Christopher A. Montague, Esq.
Title: Executive Vice President and General Counsel
TD DISCOUNT BROKERAGE HOLDINGS LLC
By: /s/ Frank Tripodi
--------------------------------------------
Name: Frank Tripodi
Title: President, Secretary and Treasurer
Dated: January 25, 2006
Schedule 13D Page 15 of 19
SCHEDULE I
INFORMATION RELATING TO THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
TORONTO-DOMINION BANK
The following is a list of the directors and executive officers of the TD
Entities as of the date of this Statement. Unless otherwise indicated, each of
the directors and executive officers is a citizen of Canada. Unless otherwise
indicated, the business address for each of the executive officers is: The
Toronto-Dominion Bank, P.O. Box 1, Toronto-Dominion Centre, Toronto, Ontario M5K
1A2, Canada. Unless otherwise indicated, each occupation set forth opposite an
executive officer's name refers to employment with TD.
THE TORONTO-DOMINION BANK
Name Present Principal Occupation or Employment and
Address
------------------------- -------------------------------------------------
DIRECTORS
William E. Bennett Corporate Director
(United States Citizen) 55 West Monroe Street
Suite 2530
Chicago, Illinois 60603-5008
Hugh J. Bolton Chair of the Board
EPCOR Utilities Inc.
EPCOR Centre
1800-10065 Jasper Ave., N.W.
Edmonton, Alberta
T5J 3B1
John L. Bragg President and Co-Chief Executive Officer
Oxford Frozen Foods Limited
4881 Main Street
P.O. Box 220
Oxford, Nova Scotia
B0M 1P0
W. Edmund Clark President and Chief Executive Officer
The Toronto-Dominion Bank
P.O. Box 1
Toronto-Dominion Centre
Toronto, Ontario
M5K 1A2
Marshall A. Cohen Counsel
Cassels Brock & Blackwell LLP
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario
M5H 3C2
Schedule 13D Page 16 of 19
Wendy K. Dobson Professor and Director
Institute for International Business
Joseph L. Rotman School of Management
University of Toronto
105 St. George Street
Toronto, Ontario
M5S 3E6
Darren Entwistle President and Chief Executive Officer
TELUS Corporation
8th Floor, 555 Robson St.
Vancouver, BC
V6B 3K9
Donna M. Hayes Publisher and Chief Executive Officer
Harlequin Enterprises Limited
225 Duncan Mill Road, 9th Floor
Don Mills, Ontario
M3B 3K9
Henry H. Ketcham Chairman of the Board,
(United States and President and Chief
Canadian citizen) Executive Officer
Suite 501-858 Beatty St.
Vancouver, BC
V6B 1C1
Pierre H. Lessard President & Chief Executive Officer
METRO INC.
11011, boul. Maurice-Duplessis
Montreal, Quebec
H1C 1V6
Harold H. MacKay Counsel
MacPherson Leslie & Tyerman LLP
1500 - 1874 Scarth Street
Regina, Saskatchewan
S4P 4E9
Brian F. MacNeill Chairman of the Board
Petro-Canada
P.O. Box 2844, 28th Floor PCCW
150 - 6th Avenue SW
Calgary, Alberta
T2P 3E3
Roger Phillips Corporate Director
(Canadian and British c/o IPSCO Inc.
citizen) P.O. Box 1670
Armour Road
Regina, Saskatchewan
S4P 3C7
Schedule 13D Page 17 of 19
Wilbur J. Prezzano Corporate Director
(United States citizen) 28 Murray Blvd.
Charleston, South Carolina 29401-2350
William J. Ryan Chairman, President and Chief Executive Officer
(United States citizen) TD Banknorth Inc.
P.O. Box 9540
Two Portland Square
Portland, Maine 04112-9540
Helen K. Sinclair Chief Executive Officer
BankWorks Trading Inc.
20 Adelaide St. East, Suite 1250
Toronto, Ontario
M5C 2T6
John M. Thompson Chairman of the Board
The Toronto-Dominion Bank
P.O. Box 1
Toronto-Dominion Centre
Toronto, Ontario
M5K 1A2
Henry H. Ketcham Chairman of the Board,
(United States and President and Chief Executive Officer
Canadian Citizen) West Fraser Timber Co Ltd. Suite 501-858
Bently St.
Vancouver, BC
VGB 1C1
EXECUTIVE OFFICERS
W. Edmund Clark President and Chief
Executive Officer
Robert E. Dorrance Group Head --
Wholesale Banking,
and Chairman and
Chief Executive
Officer - TD
Securities, and Vice
Chair - TDBFG
Bernard T. Dorval Group Head --
Business Banking and
Insurance, and
Co-Chair TD Canada
Trust
William H. Hatanaka Group Head -- Wealth
Management, and
Chairman and Chief
Executive Officer --
TD Waterhouse Canada
Inc.
Timothy D. Hockey Group Head --
Personal Banking, and
Co-Chair -- TD Canada
Trust
Schedule 13D Page 18 of 19
William J. Ryan Group Head -- U.S.
(United States citizen) Personal and
Commercial Banking,
Chairman, Chief
Executive Officer and
President - TD
Banknorth, and Vice
Chair --
TDBFG
Colleen M. Johnston Chief Financial
Officer and Executive
Vice President -
TDBFG
Bharat B. Masrani Vice Chair and Chief
Risk Officer
Fredric J. Tomczyk Vice Chair --
Corporate Operations
Robert F. MacLellan Executive Vice
President
and Chief Investment
Officer
Andrea Rosen (on leave) Vice Chair - TD Bank
Financial Group
TD DISCOUNT BROKERAGE HOLDINGS LLC
Name Present Principal Occupation or Employment and
Address
------------------------- -------------------------------------------------
DIRECTOR
Frank Tripodi Chief Financial Officer
Toronto Dominion Holdings (U.S.A.), Inc.
31 W. 52nd Street
New York, NY 10019
EXECUTIVE OFFICER
Frank Tripodi President, Secretary
and Treasurer