SUPPLEMENT TO THE JOINT PROXY STATEMENT/PROSPECTUS
FOR
THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 2020
May 15, 2020
These definitive additional materials amend and supplement the
definitive joint proxy statement/prospectus dated May 4, 2020, which is referred to in this supplement as the definitive joint
proxy statement/prospectus, initially mailed to stockholders on or about May 6, 2020, by TD Ameritrade Holding Corporation, a Delaware
corporation, which is referred to in this supplement as TD Ameritrade, for the special meeting of stockholders of TD Ameritrade
to be held exclusively online via live audio webcast on June 4, 2020, at 2:00 p.m., Eastern time, which is referred to in this
supplement as the TD Ameritrade special meeting. The TD Ameritrade special meeting can be accessed by visiting www.virtualshareholdermeeting.com/AMTD2020,
where TD Ameritrade stockholders will be able to listen to the meeting, submit questions and vote online. TD Ameritrade stockholders
will need the 16-digit control number included on their proxy card or voting instruction form to join the TD Ameritrade special
meeting.
As previously disclosed, on November 24, 2019, TD Ameritrade
entered into the Agreement and Plan of Merger, which is sometimes referred to in this supplement as the merger agreement, by and
among The Charles Schwab Corporation, a Delaware corporation, which is referred to in this supplement as Schwab, Americano Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of Schwab, which is referred to in this supplement as Merger Sub, and
TD Ameritrade, pursuant to which Merger Sub will be merged with and into TD Ameritrade, with TD Ameritrade continuing as the surviving
corporation and a wholly owned subsidiary of Schwab, in a transaction that is referred to in this supplement as the merger.
On May 14, 2020, TD Ameritrade entered into Amendment No 1.
to the Agreement and Plan of Merger, which is referred to in this supplement as the merger agreement amendment. The merger agreement
amendment revises the Schwab charter amendment, as that term is defined in the definitive joint proxy statement/prospectus, to
reflect certain technical changes to the transfer restrictions applicable to the Schwab nonvoting common stock, as that term is
defined in the definitive joint proxy statement/prospectus, and to remove the option, exercisable under certain limited circumstances,
of a holder of the Schwab nonvoting common stock to convert the Schwab nonvoting common stock to Schwab common stock, as that term
is defined in the definitive joint proxy statement/prospectus. A copy of the merger agreement amendment is attached as Annex A-1
to this supplement.
Other than as expressly modified by the merger agreement amendment,
the merger agreement remains in full force and effect as originally executed on November 24, 2019.
The TD Ameritrade board of directors continues to unanimously
recommend that TD Ameritrade stockholders vote “FOR” the approval and adoption of the merger agreement, as amended,
“FOR” the TD Ameritrade merger-related compensation proposal and “FOR” the TD Ameritrade adjournment proposal.
If any stockholders have not already submitted a proxy for
use at the TD Ameritrade special meeting, they are urged to do so promptly. No action in connection with this supplement is required
by any stockholder who has previously delivered a proxy and who does not wish to revoke or change that proxy.
If you have any questions concerning the proposals to be voted
on at the TD Ameritrade special meeting, the merger, the joint proxy statement/prospectus or this supplement, would like additional
copies or need help voting your shares of TD Ameritrade common stock, please contact TD Ameritrade’s proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders Call Toll-Free: (877) 456-3422
Banks and Brokers Call Collect: (212)
750-5833
The information contained herein speaks only as of May 15, 2020
unless the information specifically indicates that another date applies.
SUPPLEMENTAL DISCLOSURES TO DEFINITIVE
JOINT PROXY STATEMENT/PROSPECTUS
This supplemental information should be read in conjunction
with the definitive joint proxy statement/prospectus, which should be read in its entirety. Defined terms used but not defined
herein have the meanings set forth in the definitive joint proxy statement/prospectus. Supplemental disclosure under “THE
MERGER” and “THE SCHWAB CHARTER AMENDMENT” below is indicated by underlines and strikethroughs as appropriate.
The definitive joint proxy statement/prospectus is amended
and supplemented to add the merger agreement amendment as Annex A-1 thereto. Except as the context may otherwise require, all
references in the definitive joint proxy statement/prospectus to the merger agreement will be deemed to refer to such agreement
as amended by the merger agreement amendment and as may be further amended from time to time. Except as the context may otherwise
require, all references in the definitive joint proxy statement/prospectus to Annex A refer to Annex A and Annex A-1.
Annex B of the definitive joint proxy statement/prospectus
is restated by replacing the Schwab charter amendment attached as Annex B to the definitive joint proxy statement/prospectus with
the Schwab charter amendment attached as Annex B to this supplement. Except as the context may otherwise require, all references
in the definitive joint proxy statement/prospectus to the Schwab charter amendment attached as Annex B refer to such version of
Annex B as replaced by this supplement.
THE MERGER
Background of the Merger
The definitive joint proxy statement/prospectus is amended
and supplemented to add the following after the fourth full paragraph on page 115 of the definitive joint proxy statement/prospectus.
On
May 12, 2020, the Schwab board of directors held a meeting at which members of Schwab management were present. At the meeting,
the Schwab board of directors discussed the proposed terms of Amendment No. 1 to the Agreement and Plan of Merger, dated as of
November 24, 2019, by and among TD Ameritrade, Schwab and Merger Sub, which is referred to in this joint proxy statement/prospectus
as the merger agreement amendment, pursuant to which the Schwab charter amendment would be revised to reflect certain technical
changes to the transfer restrictions applicable to the Schwab nonvoting common stock and to remove the option, exercisable under
certain limited circumstances, of a holder of the Schwab nonvoting common stock to convert such nonvoting common stock to Schwab
common stock. Following these discussions, the Schwab board of directors unanimously (i) determined that the merger agreement
amendment and the related revised charter amendment are advisable and fair to, and in the best interests of, Schwab and the Schwab
stockholders and (ii) after taking into account the merger agreement amendment and the related revised charter amendment, reaffirmed
the recommendations described under “—Schwab’s Reasons for the Merger; Recommendation of the Schwab Board of
Directors.”
On
May 14, 2020, the TD Ameritrade board of directors held a meeting at which members of TD Ameritrade management were present. At
the meeting, the TD Ameritrade board of directors reviewed the proposed terms of the merger agreement amendment. Following discussion,
and upon the unanimous recommendation of the strategic development committee, the TD Ameritrade board of directors unanimously
determined that the merger agreement amendment is advisable and fair to, and in the best interests of, TD Ameritrade and its stockholders,
and approved and adopted the merger agreement amendment. The TD Ameritrade board of directors unanimously recommends that TD Ameritrade
stockholders approve and adopt the merger agreement, as amended, at the TD Ameritrade special meeting. See “—TD Ameritrade’s
Reasons for the Merger; Recommendation of the Strategic Development Committee and the TD Ameritrade Board of Directors.”
On
May 14, 2020, the parties executed and delivered the merger agreement amendment, a copy of which is attached as Annex A-1 to this
joint proxy statement/prospectus. TD Bank consented to the merger agreement amendment under the TD Bank voting agreement and the
letter agreement, and the significant Schwab stockholders consented to the merger agreement amendment under the significant Schwab
stockholders voting agreement.
THE SCHWAB CHARTER AMENDMENT
The following disclosure supplements and restates the fourth
full paragraph on page 190 of the joint proxy statement/prospectus.
Holders of Schwab nonvoting common stock
may not transfer any shares of Schwab nonvoting common stock except (i) to an affiliate of such holder, which is referred to in
this joint proxy statement/prospectus as a permitted inside transfer, or (ii) (w) in a widespread public distribution (or to an
underwriter solely for the purpose of conducting a widespread public distribution), (x) in a transfer in which no relevant transferee
(or group of associated transferees) acquires would
receive 2% or more of the
outstanding securities of any “class of voting shares” (as defined in 12 C.F.R. § 238.2(r)(3) or 12
C.F.R. § 225.2(q)(3), as applicable) of Schwab, (y) to a transferee that would own or control more than
50% of any every
“class of voting shares” (as defined in 12 C.F.R. § 238.2(r)(3) or 12 C.F.R. § 225.2(q)(3), as
applicable) of Schwab without regard to any transfer of shares from the transferring holder,
or (z) to Schwab (the transfer processes set forth in clause (ii) of this paragraph is collectively referred to in this joint
proxy statement/prospectus as a permitted outside transfer); provided, that notwithstanding anything in clause (ii) of this paragraph,
any transfer of shares of Schwab nonvoting common stock by a holder thereof in any transaction described in any of the foregoing
clauses (w), (x), (y) or (z) that is also a permitted inside transfer will constitute a permitted inside transfer and not a permitted
outside transfer. Any attempt to transfer any shares of Schwab nonvoting common stock not in compliance with these transfer restrictions
will be null and void, and Schwab has the authority to cause the transfer agent, if any, for Schwab nonvoting common stock not
to give any effect in Schwab’s stock records to such attempted transfer.
The following disclosure shall be inserted as the first
full paragraph on page 191 of the joint proxy statement/prospectus.
Pursuant
to the original terms of the Schwab charter amendment, any holder of Schwab nonvoting common stock would have had the option to
convert its Schwab nonvoting common stock into Schwab voting common stock upon Schwab ceasing to be a savings and loan holding
company and not controlling any insured depository institution for purposes of HOLA or the BHC. Pursuant to the terms of the merger
agreement amendment, the Schwab charter amendment was revised to delete this optional conversion provision.
Important Information About the Transaction and Where to
Find it
In connection with the proposed transaction between Schwab
and TD Ameritrade, Schwab and TD Ameritrade have filed and will file relevant materials with the Securities and Exchange Commission
(the “SEC”). Schwab has filed a registration statement on Form S-4 that includes a joint proxy statement of Schwab
and TD Ameritrade that also constitutes a prospectus of Schwab. The registration statement on Form S-4, as amended, was declared
effective by the SEC on May 6, 2020 and Schwab and TD Ameritrade mailed the definitive joint proxy statement/prospectus to their
respective stockholders on or about May 6, 2020. INVESTORS AND SECURITY HOLDERS OF SCHWAB AND TD AMERITRADE ARE URGED TO READ
THE REGISTRATION STATEMENT, THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR
WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security
holders may obtain free copies of the registration statement and the definitive joint proxy statement/prospectus and other documents
filed with the SEC by Schwab or TD Ameritrade through the website maintained by the SEC at http://www.sec.gov or by contacting
the investor relations department of Schwab or TD Ameritrade at the following:
The Charles Schwab Corporation
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TD Ameritrade Holding Corporation
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211 Main Street
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200 South 108th Avenue
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San Francisco, CA 94105
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Omaha, Nebraska 68154
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Attention: Investor Relations
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Attention: Investor Relations
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(415) 667-7000
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(800) 669-3900
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investor.relations@schwab.com
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Schwab, TD Ameritrade, their respective directors and certain
of their respective executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed
transaction. Information regarding the directors and executive officers of Schwab, and their direct or indirect interests in the
transaction, by security holdings or otherwise, is contained in Schwab’s Form 10-K for the year ended December 31, 2019,
its proxy statement filed on March 31, 2020 and its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Information
regarding the directors and executive officers of TD Ameritrade, and their direct or indirect interests in the transaction, by
security holdings or otherwise, is contained in TD Ameritrade’s Form 10-K for the year ended September 30, 2019, as amended,
and its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, is contained
in the definitive joint proxy statement/prospectus and other relevant materials filed with the SEC.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation
of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
ANNEX A-1
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1
TO AGREEMENT AND PLAN OF MERGER (this “Amendment”), dated as of May 14, 2020, is by and among The Charles Schwab
Corporation, a Delaware corporation (“Parent”), Americano Acquisition Corp., a Delaware corporation and a direct,
wholly owned Subsidiary of Parent (“Merger Sub”), and TD Ameritrade Holding Corporation, a Delaware corporation
(the “Company”).
W I T N E S S E T H:
WHEREAS, Parent, Merger
Sub and the Company are parties to that certain Agreement and Plan of Merger, dated as of November 24, 2019 (the “Merger
Agreement”);
WHEREAS, Section 11.03
of the Merger Agreement provides that any amendment to the Merger Agreement must be made in writing and signed by each of Parent,
Merger Sub and the Company; and
WHEREAS, Parent, Merger
Sub and the Company desire to amend the Merger Agreement pursuant to Section 11.03 thereof as set forth herein.
NOW THEREFORE, in consideration
of the covenants set forth herein, and for other good and valuable consideration, Parent, Merger Sub and the Company hereby agree
as follows:
SECTION 1. Definitions.
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement.
SECTION 2. Amendment
to the Merger Agreement. Exhibit B of the Merger Agreement is hereby amended and restated in its entirety as set forth on
Annex I of this Amendment.
SECTION 3. No Further
Amendment. Except as and to the extent expressly modified by this Amendment, the Merger Agreement is not otherwise being amended,
modified or supplemented and shall remain in full force and effect in accordance with its terms.
SECTION 4. References
to the Merger Agreement. Once this Amendment becomes effective, each reference in the Merger Agreement to “this Agreement,”
“hereof,” “hereunder” or words of like import referring to the Merger Agreement shall refer to the Merger
Agreement as amended by this Amendment.
SECTION 5. Miscellaneous
Provisions. Article 11 of the Merger Agreement shall apply to this Amendment mutatis mutandis and to the Merger Agreement
as modified by this Amendment, taken together as a single agreement, reflecting the terms as modified hereby.
[Signature Page
Follows]
IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be executed as of the date first above written.
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THE CHARLES SCHWAB CORPORATION
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By:
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/s/
Peter Crawford
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Name:
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Peter Crawford
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Title:
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Executive Vice President and
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Chief Financial Officer
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AMERICANO ACQUISITION
CORP.
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By:
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/s/
Joseph R. Martinetto
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Name:
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Joseph R. Martinetto
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Title:
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Senior Executive Vice President
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and Chief Operating Officer
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TD AMERITRADE HOLDING
CORPORATION
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By:
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/s/
Stephen J. Boyle
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Name:
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Stephen J. Boyle
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Title:
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Interim President and Chief
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Executive Officer
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[Signature Page
to Amendment No. 1 to Agreement and Plan of Merger]
Annex I
Parent Charter Amendment
[See Annex B to this supplement.]
ANNEX B
AMENDMENT TO
FIFTH RESTATED CERTIFICATE OF INCORPORATION OF
THE CHARLES SCHWAB CORPORATION
(Effective [·])
(Originally incorporated on November 25,
1986,
under the name CL Acquisition Corporation)
It is hereby certified that
First.
The name of this corporation (hereinafter called the “Corporation”) is THE CHARLES SCHWAB CORPORATION.
Second.
The Fifth Restated Certificate of Incorporation of the Corporation is hereby amended by striking out Article FOURTH thereof
and restating it in its entirety as follows:
“FOURTH.
(A)
This Corporation is authorized to issue three classes of stock: preferred stock, common stock and nonvoting common stock.
The authorized number of shares of capital stock is Three Billion, Three Hundred Nine Million, Nine Hundred Forty Thousand (3,309,940,000)
shares, of which the authorized number of shares of preferred stock is Nine Million, Nine Hundred Forty Thousand (9,940,000),
the authorized number of shares of common stock is Three Billion (3,000,000,000) and the authorized number of shares of nonvoting
common stock is Three Hundred Million (300,000,000). As used in this Fifth Restated Certificate of Incorporation, references to
“common stock” refer to the class of voting shares of common stock, references to “Nonvoting common stock”
refer to the class of nonvoting common stock, and the class of common stock together with the class of Nonvoting common stock
are collectively referred to as the “Common Shares.” The stock, whether preferred stock, common stock or Nonvoting
common stock, shall have a par value of one cent ($0.01) per share. The number of authorized shares of any class or classes of
stock may be increased or decreased (but not below the number of shares of such class then outstanding plus the number of shares
of such class reserved for issuance, including shares reserved for issuance upon the conversion or exercise of any security of
the Corporation providing for the issuance or delivery of shares of such class upon the conversion or exercise thereof) by the
affirmative vote of the holders of a majority of common stock.
(B)
Common Shares.
(1)
Dividends and Other Distributions. Subject to the preferences applicable to any series of preferred stock, if any,
outstanding at any time, and subject to the proviso in the following sentence, the holders of Common Shares shall share equally
and be treated identically, on a per share basis, in dividends and other distributions of cash, property or shares of stock of
the Corporation as may be declared by the Board of Directors from time to time with respect to the Common Shares out of assets
or funds of the Corporation legally available therefor, including, without limitation, in respect of related declaration dates,
record dates and payment dates. In furtherance and not in limitation of the foregoing, no dividend may be declared or paid with
respect to shares of common stock unless an identical per share dividend is simultaneously declared and paid in respect of shares
of Nonvoting common stock, and no dividend may be declared or paid with respect to shares of Nonvoting common stock unless an
identical per share dividend is simultaneously declared and paid in respect of shares of common stock; provided, however,
that in the event that any dividend is paid in the form of Common Shares or rights to acquire Common Shares, the holders of common
stock shall receive common stock or rights to acquire common stock, as the case may be, and the holders of Nonvoting common stock
shall receive Nonvoting common stock or rights to acquire Nonvoting common stock, as the case may be.
(2)
Voting Rights.
(a)
Except as otherwise provided by applicable law, this Restated Certificate of Incorporation or any certificate of designations,
all of the voting power of the Corporation shall be vested in the holders of common stock, and each holder of common stock shall
have one vote for each share of common stock held by such holder on all matters to be voted upon by the stockholders; provided,
however, that, except as otherwise required by law, holders of common stock shall not be entitled to vote on any amendment
to this Restated Certificate of Incorporation (including any certificate of designations relating to any series of preferred stock)
that relates solely to the terms of one or more outstanding series of preferred stock if the holders of such affected series are
entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant
to this Restated Certificate of Incorporation (including any certificate of designations relating to any series of preferred stock).
For the avoidance of doubt, the reference to “this Corporation’s common stock” in the definition of “Voting
Stock” in paragraph (C)(12) of Article TENTH shall be deemed to be a reference to the common stock.
(b)
Nonvoting common stock shall not have any voting power (and shall not be included in determining the number of shares voting
or entitled to vote on a given matter), except (i) that any amendment, alteration or repeal (including by merger, consolidation
or otherwise) of any provision of this Restated Certificate of Incorporation in a manner that significantly and adversely affects
the rights or preferences of the Nonvoting common stock contained in this Fifth Restated Certificate of Incorporation, relative
to the effect of such amendment, alteration or repeal on the common stock, shall require the affirmative vote of a majority of
the outstanding shares of Nonvoting common stock, voting separately as a class, or (ii) as otherwise required by applicable law.
Each holder of Nonvoting common stock shall have one vote for each share of Nonvoting common stock held by such holder on all
matters to be voted upon by the holders of Nonvoting common stock.
(3)
Liquidation. Subject to the preferences applicable to any series of preferred stock, if any outstanding at any time,
in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation,
the holders of common stock and the holders of Nonvoting common stock shall be entitled to share equally, on a per share basis,
all assets of the Corporation of whatever kind available for distribution to the holders of Common Shares.
(4)
Subdivision or Combinations. If the Corporation in any manner subdivides or combines the outstanding shares of one
class of Common Shares (including by way of a dividend payable in shares of common stock or Nonvoting common stock, but subject
to the proviso to Section (B)(1) of this Article FOURTH), the outstanding shares of the other class of Common Shares will be subdivided
or combined in the same manner proportionately and on the same basis per share.
(5)
Transfer Restrictions.
(a)
No holder of shares of Nonvoting common stock may transfer any shares of Nonvoting common stock except pursuant to (i)
a Permitted Inside Transfer or (ii) a Permitted Outside Transfer.
(b)
Any attempt to transfer any shares of Nonvoting common stock not in compliance herewith shall be null and void, and the
Corporation shall not, and shall cause the transfer agent, if any, for Nonvoting common stock not to, give any effect in the Corporation’s
stock records to such attempted transfer.
(6)
Conversion of Nonvoting Common Stock.
(a)
Automatic Conversion Upon Permitted Outside Transfer. Upon any Permitted Outside Transfer, each share of Nonvoting
common stock so transferred shall, automatically and without the act of the holder thereof, be converted into one share of common
stock in the hands of the transferee, subject to paragraph (B)(6)(b) of this Article FOURTH. Such conversion shall take effect
simultaneously with the applicable Permitted Outside Transfer.
(b)
Certain Conversion Terms. After any Permitted Outside Transfer, the new holder of the shares of Nonvoting common
stock so converted shall present to the Corporation such evidence of transfer as the Corporation may reasonably request, and as
soon as practicable after the presentation thereof and, if required, the payment of all transfer and similar taxes, the Corporation
shall issue and register in book-entry form in the name of such holder the number of shares of common stock issuable upon such
conversion. Each holder of Nonvoting common stock shall give prompt notice to the Corporation of any Permitted Outside Transfer
of shares of Nonvoting common stock by such holder; provided that in the case of any shares of Nonvoting common stock that
are sold by a holder thereof in an offering that is a widespread public distribution under an effective registration statement
pursuant to the Securities Act of 1933, as amended, no further evidence or notice of transfer shall be required and each transferee
shall receive shares of common stock in such transfer, subject to the concurrent delivery of the shares of Nonvoting common stock
to the Corporation. All shares of common stock issued or delivered upon conversion of shares of Nonvoting common stock shall be
validly issued, fully paid and non-assessable and shall be free of preemptive or similar rights and free of any lien or adverse
claim created by the Corporation. The Corporation shall take all such actions as may be necessary
to assure that all such shares of common stock issuable upon conversion of the Nonvoting common stock (i) will be listed or quoted
on each securities exchange upon which the common stock is listed or quoted and (ii) will be so issued without violation of any
applicable law or governmental regulation (insofar as such applicable law or governmental regulation applies generally to such
issuance and not to unique circumstances related to the relevant holder) or any requirements of any securities exchange upon which
shares may be listed or quoted (except, in the case of clauses (i) and (ii), for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance). The Corporation shall not close its books against the transfer of Nonvoting
common stock or of common stock issued or issuable upon conversion of Nonvoting common stock in any manner which interferes with
the timely conversion of Nonvoting common stock.
(c)
Effect of Conversion. Upon conversion as provided herein, each outstanding share of Nonvoting common stock so converted
shall cease to be outstanding, dividends and distributions on such share shall cease to accrue or be due and all rights in respect
of such share shall terminate, other than (i) the right to receive, upon compliance with paragraph (B)(6)(b) of this Article FOURTH,
appropriate evidence of the share of common stock registered in book-entry form into which such share of Nonvoting common stock
has been converted and (ii) on the appropriate payment date after the date of conversion, the amount of all dividends or other
distributions payable with respect to such share of Nonvoting common stock with a record date prior to the date of conversion
and a payment date subsequent to the date of conversion. The conversion of shares of Nonvoting common stock shall be made without
charge to the holder or holders of such shares for any issuance tax in respect thereof or other costs incurred by the Corporation
in connection with such conversion.
(d)
Reservation of Common Stock. The Corporation shall, at all times when any shares of Nonvoting common stock are outstanding,
reserve and keep available, free from preemptive rights, out of its authorized but unissued common stock, the full number of shares
of common stock then issuable upon conversion of all then outstanding shares of Nonvoting common stock. Notwithstanding anything
herein to the contrary, the Corporation may, at its election, deliver, upon conversion of Nonvoting common stock, treasury shares
of common stock or other shares of common stock that the Corporation has reacquired, provided such shares comply with the
third sentence of paragraph (B)(6)(b) of this Article FOURTH.
(7)
No Optional Conversion. At no time may any share of Nonvoting common stock be converted at the option of the holder
thereof. For the avoidance of doubt, this paragraph (B)(7) of this Article FOURTH shall not affect the automatic conversion of
Nonvoting common stock upon a Permitted Outside Transfer pursuant to paragraph (B)(6) of this Article FOURTH.
(8)
Equal Status. Except as expressly provided in this Article FOURTH, common stock and Nonvoting common stock shall
have the same rights and privileges and rank equally, share ratably, be identical in all respect as to all matters and be treated
equally by the Corporation in any merger (other than any merger to create a holding company in which the common stock and Nonvoting
common stock are treated equally except that each receives securities that mirror their respective Common Shares), consolidation,
share exchange pursuant to an exchange offer by the Corporation, share repurchase pursuant to a tender offer, tender offer pursuant
to an agreement to which the Corporation is a party or other similar transaction; provided that, for the avoidance of doubt,
the foregoing shall not prohibit the Corporation from making open market repurchases of common stock without repurchasing or offering
to repurchase Nonvoting common stock.
(9)
The following definitions shall apply with respect to this Article FOURTH:
(a)
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with such Person. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”) has the meaning set forth
in 12 C.F.R. § 238.2(e) or 12 C.F.R. § 225.2(e)(1), as applicable.
(b)
“Permitted Inside Transfer” means any transfer of shares of Nonvoting common stock by a holder thereof
to an Affiliate of such holder; provided that, for the avoidance of doubt, if, following such transfer, the transferee
ceases to be an Affiliate of the transferor, such transfer shall not be considered a Permitted Outside Transfer that results in
the conversion of the Nonvoting common stock into common stock pursuant to paragraph (B)(6) of Article FOURTH.
(c)
“Permitted Outside Transfer” means any transfer of shares of Nonvoting common stock by a holder thereof
(i) in a widespread public distribution (or to an underwriter solely for the purpose of conducting a widespread public distribution),
(ii) in a transfer in which no relevant transferee (or group of associated transferees) would receive 2% or more of the outstanding
securities of any “class of voting shares” (as defined in 12 C.F.R. § 238.2(r)(3) or 12 C.F.R. § 225.2(q)(3),
as applicable) of the Corporation, (iii) to a transferee that would control more than 50% of every “class of voting shares”
(as defined in 12 C.F.R. § 238.2(r)(3) or 12 C.F.R. § 225.2(q)(3), as applicable) of the Corporation without any transfer
from the transferring holder or (iv) to the Corporation; provided that, notwithstanding anything to the contrary in this
definition, any transfer of shares of Nonvoting common stock by a holder thereof in any transaction described in any of the foregoing
clauses (i), (ii), (iii) or (iv) that is also a Permitted Inside Transfer shall constitute a Permitted Inside Transfer and not
a Permitted Outside Transfer.
(C)
Preferred Stock. Shares of preferred stock may be issued from time to time in one or more series. The Board of Directors
of this Corporation is hereby authorized to fix or alter the voting rights, powers, preferences and privileges, and the relative,
participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any wholly unissued
series of preferred stock; and to fix the number of shares constituting any such series and the designation thereof; and to increase
or decrease the number of shares of any series of preferred stock (but not below the number of shares thereof then outstanding).”
Third.
This Amendment to the Fifth Restated Certificate of Incorporation of The Charles Schwab Corporation amends Article FOURTH
of the Fifth Restated Certificate of Incorporation of The Charles Schwab Corporation pursuant to Sections 242 of the Delaware
General Corporation Law.