Item 1.01
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Entry into a Material Definitive Agreement.
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TD Ameritrade Holding Corporation Credit Agreement
On April 21, 2017, TD Ameritrade Holding Corporation (Parent) entered into a Credit Agreement (the
Parent Credit Agreement) with the lenders party thereto (the Parent Lenders), led by U.S. Bank National Association, as syndication agent, Barclays Bank PLC, TD Securities (USA) LLC (TD Securities) and Wells Fargo
Securities, LLC, as
co-documentation
agents, and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the Parent Lenders have committed to make available to Parent a new $300 million
senior unsecured revolving loan facility (the New Parent Revolving Facility). TD Securities is a wholly-owned subsidiary of The Toronto-Dominion Bank (TD), and TD owns approximately 42% of the outstanding common stock of
Parent. Additional information regarding the relationship between TD and Parent is described in Parents Definitive Proxy Statement for Parents 2017 Annual Meeting of Stockholders filed with the U.S. Securities and Exchange Commission on
January 4, 2017.
The New Parent Revolving Facility replaced Parents existing $300 million unsecured revolving loan
facility (the Existing Parent Revolving Facility), which was scheduled to expire on June 11, 2019. The maturity date of the New Parent Revolving Facility is April 21, 2022. Borrowings under the New Parent Revolving Facility may
be used for working capital needs and for general corporate purposes.
The applicable interest rate under the New Parent Revolving
Facility is calculated as a per annum rate equal to, at the option of Parent, (a) LIBOR plus an applicable margin, which is currently 1.25% (Eurodollar loans) or (b) (i) the greater of (x) the prime rate, (y) the
federal funds effective rate (or if the federal funds effective rate is unavailable, the overnight bank funding rate) plus 0.50% or (z) the eurodollar rate assuming a
one-month
interest period plus 1.00%
plus (ii) an applicable margin, which is currently 0.25% (ABR loans). The applicable margins for both Eurodollar loans and ABR loans under the New Parent Revolving Facility will be reduced in the event of certain improvements in
Parents senior unsecured long-term debt ratings (subject to a minimum of 0.875% for Eurodollar loans and 0% for ABR loans) and will be increased in the event of certain reductions in Parents senior unsecured long-term debt ratings
(subject to a maximum of 1.50% for Eurodollar loans and 0.50% for ABR loans). Parent pays an annual commitment fee which is a percentage of the unused capacity of the New Parent Revolving Facility. The commitment fee varies based on Parents
senior unsecured long-term debt ratings and is currently 0.15%.
The obligations under the Parent Credit Agreement are not guaranteed by
any subsidiary of Parent. Prior to the termination of the Existing Parent Revolving Facility, TD Ameritrade Online Holdings Corp. (TDAOH) guaranteed Parents obligations under the Existing Parent Revolving Facility and its 5.600%
Senior Notes due 2019 issued pursuant to the Indenture dated November 19, 2009 between Parent, TDAOH and The Bank of New York Mellon Trust Company, National Association, as trustee, as supplemented by the First Supplemental Indenture dated
November 25, 2009 (the 2019 Notes). Upon the termination of the Existing Parent Revolving Facility on April 21, 2017, TDAOHs guarantee of 2019 Notes was automatically released.
The Parent Credit Agreement contains negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens,
indebtedness of subsidiaries, change in nature of business, mergers, consolidations, the sale of all or substantially all of the assets of Parent and its subsidiaries, taken as a whole, and transactions with affiliates. Parent is also required to
maintain compliance with a maximum consolidated leverage ratio covenant (not to exceed 3.00:1.00) and a minimum consolidated interest coverage ratio covenant (not less than 4.00:1.00), and Parents broker-dealer subsidiaries are required to
maintain compliance with a minimum regulatory net capital covenant. The Parent Credit Agreement also contains customary affirmative covenants, including, but not limited to, compliance with applicable law, payment of taxes, maintenance of insurance,
preservation of corporate existence, keeping of proper books of record and account and maintenance of properties.
The Parent Credit
Agreement includes events of default customary for such financings, including, but not limited to, nonpayment of principal, interest or fees, cross-defaults to other debt, inaccuracies of representations and warranties, failure to perform negative
covenants, failure to perform other terms and conditions, events of bankruptcy and insolvency, change of control and unsatisfied judgments.
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The foregoing description of the Parent Credit Agreement is qualified in its entirety by
reference to the complete terms and conditions of the Parent Credit Agreement, which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
TD Ameritrade Clearing, Inc. Credit Agreement
On April 21, 2017, TD Ameritrade Clearing, Inc. (TDAC), a wholly-owned subsidiary of Parent, entered into a Credit Agreement
(the TDAC Credit Agreement) with the lenders party thereto (the TDAC Lenders), led by U.S. Bank National Association, as syndication agent, Barclays Bank PLC, TD Securities and Wells Fargo Securities, LLC, as
co-documentation
agents, and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the TDAC Lenders have committed to make available to TDAC a $600 million senior unsecured revolving loan
facility (the New TDAC Revolving Facility).
The New TDAC Revolving Facility replaced TDACs existing $300 million
unsecured revolving loan facility (the Existing TDAC Revolving Facility), which was scheduled to expire on June 11, 2019. The maturity date of the New TDAC Revolving Facility is April 21, 2022. Borrowings under the New TDAC
Revolving Facility may be used for working capital needs and for general corporate purposes.
The applicable interest rate under the New
TDAC Revolving Facility is calculated as a per annum rate equal to, at the option of TDAC, (a) LIBOR plus an applicable margin, which is currently 1.125% (Eurodollar loans) or (b) the federal funds effective rate plus an
applicable margin, which is currently 1.125% (Federal Funds Rate loans). The applicable margins for both Eurodollar loans and Federal Funds Rate loans under the New TDAC Revolving Facility will be reduced in the event of certain
improvements in Parents senior unsecured long-term debt ratings (subject to a minimum of 0.75% for both Eurodollar loans and Federal Funds Rate loans) and will be increased in the event of certain reductions in Parents senior unsecured
long-term debt ratings (subject to a maximum of 1.25% for both Eurodollar loans and Federal Funds Rate loans). TDAC pays an annual commitment fee which is a percentage of the unused capacity of the New TDAC Revolving Facility. The commitment fee
varies based on Parents senior unsecured long-term debt ratings and is currently 0.125%.
The TDAC Credit Agreement contains
negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens, indebtedness of TDAC and its subsidiaries, change in nature of business, mergers, consolidations, and the sale of all or substantially all of the
assets of TDAC and its subsidiaries, taken as a whole. TDAC is also required to maintain minimum consolidated tangible net worth and is required to maintain compliance with minimum regulatory net capital requirements. The TDAC Credit Agreement also
contains customary affirmative covenants, including, but not limited to, compliance with applicable law, payment of taxes, maintenance of insurance, preservation of corporate existence, keeping of proper books of record and account and maintenance
of properties.
The TDAC Credit Agreement includes events of default customary for such financings, including, but not limited to,
nonpayment of principal, interest or fees, cross-defaults to other debt, inaccuracies of representations and warranties, failure to perform negative covenants, failure to perform other terms and conditions, events of bankruptcy and insolvency,
change of control and unsatisfied judgments.
The foregoing description of the TDAC Credit Agreement is qualified in its entirety by
reference to the complete terms and conditions of the TDAC Credit Agreement, which is attached hereto as Exhibit 10.2 and incorporated by reference herein.