Document:

rcel-ex1018_898.htm

Exhibit 10.18

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and between Avita Medical Ltd., an Australian corporation (the "Company"), and Donna Shiroma, an individual (the "Executive") with reference to the following:

 

RECITALS

 

WHEREAS, the Board of Directors of the Company (the "Board") desires to employ Executive to serve as the General Counsel of the Company;

 

WHEREAS, the Executive is willing to serve in the role of General Counsel of the Company and provide services to the Company and its subsidiaries under the terms and conditions stated herein,

 

WHEREAS, the Executive would serve as General Counsel, of the Company, but her direct employer shall be Avita Medical Americas, LLC ("Avita America"), effective as of June 25, 2018 (the Effective Date");

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and intending to be legally bound, it is hereby agreed by and between the parties hereto as follows:

 

	
 
	
1.
	
Employment and Duties

 

1.1Employment. The Company hereby employs the Executive as the General Counsel, of the Company and the Executive hereby accepts such employment as of the Effective Date pursuant to the terms and conditions set forth herein. The Executive shall report directly to the Chief Executive Officer ("CEO").

 

1.2Duties. The Executive shall perform, to the best of her ability and in a manner satisfactory to the CEO, all such duties that are consistent with her title and position, and such other duties as may reasonably be assigned to her by the CEO. The Executive's duties will be conducted principally from the Company's North America office, currently located in Valencia, California, or at such other location as determined by the CEO (but subject to the terms of this Agreement), with travel to such other locations from time to time as reasonably required.

 

1.3Time and Efforts. The Executive shall devote her full business time and provide her best efforts, attention, and energies to the business of the Company and its subsidiaries and to the performance of Executive's duties hereunder, and Executive shall not engage in any other business, profession or occupation for compensation or otherwise during the employment period without the prior written consent of the Board; provided that, nothing herein shall preclude Executive from serving in any capacity with any civic, educational, or charitable organization, and provided, further that, in each case, and in the aggregate, such services do not materially conflict or interfere with Executive's obligations to the Company or its subsidiaries hereunder and such service is disclosed in advance by Executive to the Board.

 

 

 

 

Executive further acknowledges that she owes the Company both a fiduciary duty and a duty of loyalty while employed during the employment period to act at all times in the best interests of the Company and its subsidiaries.

 

	
 
	
2.
	
Compensation

 

As the total consideration for the Executive's services rendered hereunder, Executive shall be entitled to the following:

 

2.1Base Salary. The Executive shall be paid an annual base salary of Three Hundred Thousand Dollars ($300,000.00) per year ("Base Salary"), subject to applicable tax deductions and withholdings, beginning on the Effective Date of the Agreement and payable in regular installments in accordance with the customary payroll practices of Avita America. The Executive's salary will be subject to annual review by the Board and may be increased in the sole discretion of the Board.

 

	
 
	
2.2
	
Bonus and Relocation Expenses.

 

Annual Performance Bonus. In addition to Base Salary, the Executive shall be eligible to receive an annual performance bonus ("Annual Bonus") based upon the Executive's performance for the preceding year as measured against certain performance targets as mutually established by the parties to this Agreement. The Annual Bonus, if earned, shall be paid 60 days after the close of the fiscal year. The amount of the Annual Bonus shall be twenty-five percent (25%) of Executive's Base Salary ("Target Bonus"). For 2018, Executive will be eligible to receive an Annual Bonus that is equal to 25% of the pro-rata share of the Base Salary (excluding any other bonus or compensation) Executive earned in 2018. At the sole discretion of the Board, Executive may be entitled to an additional amount of up to fifty percent (an additional 12.5%) of the Target Bonus based upon performance. For the Annual Bonus to be deemed earned, and in order to be eligible and entitled to receive any Annual Bonus payment, the Executive must be employed by, and not have given notice of resignation to the Company, or have been given notice of termination by the Company.

 

Retention Bonus. In addition to Base Salary and Annual Performance Bonus, the Executive shall be eligible to receive a retention bonus ("Retention Bonus") of $15,000. The Retention Bonus shall be paid as follows:

 

	
 
	
•
	
Bonus amount will be paid after twelve (12) months employment. This payment is provided with the express understanding that it is being paid with the expectation that Executive shall remain employed with the Company for at least one year following the Effective Date. Accordingly, the Retention Bonus is an advance that will not be considered earned by either Executive or the Company until Executive has completed one year of employment with the Company.
	
 

 

Relocation Expenses. The Company will provide reimbursement of shipment of reasonable household goods to the Los Angeles area. In addition, the Company will reimburse temporary housing expenses in the Valencia area of up to $4,000 per month from June 25, 2018 through October 31, 2018.

 

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2.3Equity. Executive shall be eligible for 3,000,000 options, which will vest as follows:

 

	
 
	
e
	
2,220,000 options will vest based upon Executive's achieving certain established metrics as agreed upon between Executive and the CEO;
	
 

 

	
 
	
•
	
800,000 options will vest based on Executive's continued employment with the Company at a rate of 200,000 per year for four years, commencing with the first 200,000 option installment, which will vest upon the completion of Executive's first year of service.
	
 

 

2.4Business Expenses. During employment, the Executive is entitled to reimbursement (through Avita America) for reasonable and necessary business expenses incurred by Executive in connection with the performance of Executive's duties, subject to proper documentation and approval as required pursuant to the applicable Company expense reimbursement policies.

2.5Fringe Benefits. The Executive shall be entitled to fringe benefits in accordance with the plans, practices, programs and policies as in effect generally with respect to other peer executives of the Company.

 

2.6Vacation. The Executive shall be entitled each year to a vacation, during which time her compensation shall be paid in full. The time allotted for such vacation shall be four (4) weeks per year. Executive can accrue up to six (6) weeks of vacation time, at which point no additional vacation may accrue beyond the six (6) weeks until a portion thereof is used. Any accrued vacation will roll over into the following calendar year and will not be forfeited. The Executive agrees to schedule planned vacation to be taken at a time mutually convenient to the Executive and the Company.

 

2.7Health Insurance and Benefits. The Executive shall be eligible to participate in the Company's health, dental and vision plans, as well as the Company's 401k program.

	
 
	
3.
	
Term and Termination of Employment

 

3.1At-Will Employment. The Company and the Executive hereby agree that the Executive's employment by the Company shall be "at-will" and for an indefinite period of time. Subject to the provisions of this Section, both the Executive and the Company shall have the right to terminate this Agreement and the employment relationship at any time and for any reason, with or without Cause, with or without Good Reason, and with or without advance notice.

 

	
 
	
3.2
	
Definitions.

 

(a)Cause. For purposes of this Agreement, "Cause" shall mean the occurrence of one or more of the following: (i) conviction of, or a plea of guilty or nolo contendere to, a felony or crime involving moral turpitude; (ii) participation in an act of fraud or theft against the Company; (iii) willful and material breach of Section 4.1 of this Agreement; (iv) willful and repeated failure to satisfactorily perform job duties; or (v) any willful act that is likely

 

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to and which does in fact have the effect of injuring the reputation, business, or a business relationship of the Company, provided, however, that the conduct described in the foregoing subsections (ii) through (v) will only constitute Cause if such conduct is not cured within thirty

(30) days after the Executive's receipt of written notice from the Company specifying the particulars of the conduct the Company believes constitutes Cause.

 

(b)Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) a material diminution in Executive's authority, duties, or responsibilities in effect at the time of this Agreement; (ii) any reduction in the Executive's then-current base salary; (iii) relocation of Executive's principal place of work by a distance of fifty (50) miles or more from the Executive's then-current principal place of work without the Executive's consent; (iv) material breach by the Company of any provision of this Agreement; (v) material reduction of the Target Bonus for the then-current fiscal year before the end of the then-current fiscal year; or

(vi) the occurrence of a Change in Control of the Company as defined in Section 3.3(c) below, provided, however, that the conduct described in the foregoing subsections (i) through (v) will only constitute Good Reason if such conduct is not cured within thirty (30) days after the Company's receipt of written notice from the Executive specifying the particulars of the conduct the Executive believes constitutes Good Reason.

 

(c)Change in Control.  For purposes of this Agreement, "Change in Control" shall mean any of the following events occurring after the date of this Agreement: (i) a sale or transfer of all or substantially all of the assets of the Company; (ii) any merger, consolidation or acquisition of the Company with, by or into another corporation, entity or person; (iii) any change in ownership of more than fifty percent (50%) of the voting capital stock of Company in one or more related transactions such as a buy out or exit of the Company (but excluding any change in stock listing).

 

	
 
	
3.3
	
Termination.

 

(a)Termination for Cause or Resignation without Good Reason. In the event that the Company terminates the Executive's employment for Cause or the Executive resigns her employment without Good Reason, this Agreement will terminate without further obligations to Executive other than the following: Executive shall be entitled to receive her unpaid base salary earned through her last day of employment, accrued but unused vacation pay, and vested benefits through and including Executive's last day of employment.

 

(b)Involuntary Termination Without Cause or Resignation With Good Reason. In the event of either an involuntary termination of the Executive's employment Without Cause or a voluntary resignation by the Executive for Good Reason, in exchange for the Executive signing a separation and release of all claims agreement in a form acceptable to the Company, the Company shall provide the Executive with the following severance benefits in accordance with the timing set forth in Section 3.3(b)(v) below:

 

	
 
	
(i)
	
Base Salary: The Company shall pay the Executive the equivalent of six (6) months of the Executive's annual base salary in effect at the time of the termination Without Cause or resignation with
	
 

 

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Good Reason in one lump sum payment, less standard deductions and withholdings.

 

Benefits Coverage. The Company shall continue to provide group health, vision, and dental plan benefits to the Executive for a period of six (6) months from and after the date of termination, with the cost of all regular premiums for such benefits paid by the Company (or its successor).

 

	
 
	
(iii)
	
Pro-Rated Annual Bonus. The Company shall pay the Executive a pro-rata portion of her Annual Bonus payment for the then-current fiscal year. The pro-rata Annual Bonus calculation shall assume that the Executive attained 100% of the performance target established for the then-current fiscal year and then will be prorated for the time the Executive actually remained employed during the then-current fiscal year.
	
 

 

	
 
	
(iv)
	
Equity. Executive's stock options shall immediately accelerate so that 100% of any then unvested stock options shall immediately vest and become exercisable upon the date of Executive's termination Without Cause or resignation with Good Reason and shall continue to be exercisable for either a period of 180 days after such termination or resignation or for the period specified in the vesting schedule of the applicable stock agreement, whichever is longer.
	
 

 

	
 
	
(v)
	
Timing of Payments. The severance benefits in the above subsections 3.3(b)(i) and 3.3(b)(iii) shall be paid to executive within 15 days of the date the Executive signs the severance and release agreement and the revocation period, if any, has expired.
	
 

 

(c)Termination or Resignation In Connection With Change In Control. In the event Executive is terminated or resigns in connection with or within one (1) year following a Change in Control and for Good Reason as defined in 3.2(b), the Executive shall be entitled to all of the severance benefits set forth in Section 3.3(b) above.

 

	
 
	
4.
	
Proprietary Information

 

The Executive acknowledges that: (i) the Executive has a major responsibility for the operation, development and growth of the Company's business and subsidiaries; (ii) the Executive's work for the Company and its subsidiaries has brought the Executive and will continue to bring the Executive into close contact with "Confidential Information" (as defined below); and (iii) the agreements and covenants contained in this Section 4 are essential to protect the business interests of the Company and its subsidiaries and that the Company will not enter into this Agreement but for such agreements and covenants. Accordingly, the Executive covenants and agrees to the following:

 

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4.1Confidential Information. Both during the term of the Executive's employment under this Agreement and indefinitely after the Executive is no longer employed as General Counsel of the Company, the Executive shall not, directly or indirectly, (i) knowingly use for an improper personal benefit any "Confidential Information" (as defined below) that was acquired by, learned by or disclosed to Executive by reason of the Executive's employment as General Counsel of the Company (before or after the date of this Agreement), or (ii) disclose any such Confidential Information to any person, business or entity, except in the proper course of the Executive's duties as General Counsel, of the Company. As used in this Agreement, "Confidential Information" means any and all confidential or proprietary information of the Company and its subsidiaries or affiliates that is not generally known to the public, including, without limitation, business, financial, marketing, technical, developmental, operating, performance, know-how, and process information, drawings and designs, customer information (including contact information, pricing and buying trends and needs), employee information (including the skills, abilities and compensation of other employees), and other trade secret information, now existing or hereafter discovered or developed. Confidential Information shall include information in any form whatsoever, including, without limitation, any digital or electronic record-bearing media containing or disclosing such information. The provisions of this Section 5 shall not apply to information that has become generally available to the public other than as a result of a disclosure by the Executive. In the event that the Executive is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, then the Executive will notify the Company within two (2) business days of receiving the request or requirement so that the Company may seek an appropriate protective order. If, in the absence of a protective order or the receipt of a waiver hereunder, the Executive is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, the Executive may disclose such Confidential Information to the tribunal; provided, however, that the Executive shall use the Executive's reasonable best efforts to obtain, at the expense and reasonable request of the Company, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Company shall designate. The Executive acknowledges that all Confidential Information is the exclusive property of the Company. The Executive further acknowledges that the Executive's entire work product, including working drafts and work sheets, shall be the sole property of the Company, and that the Executive will have no rights, title or interest in any such material whether prepared by the Executive alone, by others or by the Executive in conjunction with others. Executive agrees as a condition of continued employment to execute the Company's standard form Intellectual Property and Confidentiality Agreement protecting the trade secrets and other intellectual property of the Company.

 

4.2Duty of Loyalty and Non-Competition. While employed by the Company, the Executive shall not, without the prior written consent of the Company, participate, directly or indirectly, as an individual proprietor, partner, stockholder, officer, employee, director, manager, joint venture participant, investor, lender, consultant or in any capacity whatsoever (within the United States of America, or in any country where the Company or its subsidiaries or affiliates do business or have reasonable plans to do business) in a business engaged in competition with

 

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the Company or any of its subsidiaries or affiliates, or in a business that the Company or any of its subsidiaries or affiliates has taken reasonable steps to engage in (including, but not limited to, meeting with management teams or entering into preliminary or definitive term sheets, letters of intent, purchase agreements, or other similar arrangements or agreements) of which the Executive has knowledge at the time of Executive's employment; provided, however, that such participation shall not include the mere ownership of not more than one percent (1%) of the total outstanding stock of a publicly held company. At all times following the termination of Executive's employment as General Counsel of the Company for any reason, Executive shall not, either directly or indirectly, engage in any unlawful competitive activities or use confidential trade secret information for any purpose.

 

4.3Non-Solicitation. For a period beginning on the Effective Date and ending two years after the date on which the Executive is no longer employed as General Counsel of the Company (the "Non-Solicitation Period"), the Executive shall not in any capacity, either separately or in association with others: (i) unlawfully solicit for employment or endeavor in any way to unlawfully entice away from employment with the Company or its subsidiaries or affiliates any employee of the Company or its subsidiaries or affiliates, or any person or entity that had been an employee or affiliate of the Company or its subsidiaries within the six month period preceding the commencement of such activity; nor (ii) use confidential trade secret information to solicit or use any other unlawful means to induce or influence any supplier, customer, agent, consultant or other person or entity that has a business relationship with the Company or its subsidiaries to discontinue, reduce or modify such relationship with the Company or its subsidiaries.

 

4.4Non-disparagement. The Executive agrees (whether during or after Executive's employment as General Counsel of the Company) not to issue, circulate, publish or utter any comments or statements to the press or other media, or to any third parties, or to any employees of the Company or its subsidiaries or affiliates, or any consultants or any individual or entity with whom the Company or its subsidiaries or affiliates has a business relationship, which could reasonably be expected to adversely affect in any manner: (i) the conduct of the business of the Company or its subsidiaries or affiliates (including, without limitation, any products, services, or business plans or prospects); or (ii) the business reputation of the Company or its subsidiaries or affiliates (including its financial condition or the direction of the business), or any of their respective products or services, or their past or present officers, directors, executives or employees. Notwithstanding the foregoing, nothing contained in this Agreement will be deemed to restrict Executive from providing truthful information to any governmental or regulatory agency (or in any way limit the content of any such information) to the extent requested or required to provide such information pursuant to applicable law or regulation. Nothing in this section is intended to limit Executive's rights under Section 7 of the National Labor Relations Act.

 

4.5Return of Property. Upon termination of her employment as General Counsel of the Company or at any time as the Company requests, the Executive will promptly deliver to the Company all documents (whether prepared by the Company, a subsidiary, an affiliate, the Executive or a third party) relating to the Company, any of its subsidiaries, an affiliate or any of their businesses or property that the Executive may possess or have under the Executive's

 

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direction or control other than documents provided to the Executive in the Executive's capacity as a participant in any employee benefit plan, policy or program of the Company.

 

4.6Remedies. The Executive acknowledges that (i) the Executive has had a..11 opportunity to seek the advice of counsel in connection with this Agreement; (ii) the provisions of this Section 4 are reasonable in scope and in all other respects; (iii) any violation of these provisions will result in irreparable injury to the Company; (iv) money damages may not be an adequate remedy for the Company in the event of a breach of any of these provisions by the Executive; and (v) specific performance in the form of injunctive relief would be an appropriate remedy for the Company. If the Executive breaches or threatens to breach any of these provisions, the Company shall be entitled, in addition to all other remedies, to seek an injunction restraining any such breach, without any bond or other security being required and without the necessity of showing actual damages.

	
 
	
5.
	
Assignment

 

This Agreement is personal in nature, and neither this Agreement nor any part of any obligation herein shall be assignable by Executive. The Company shall be entitled to assign this Agreement to any affiliate of the Company or any entity that assumes the ownership and control of the business of the Company.

 

	
 
	
6.
	
Severability

 

Should any term, provision, covenant or condition of this Agreement be held to be void or invalid, the same shall not affect any other term, provision, covenant or condition of this Agreement, but such remainder shall continue in full force and effect as though each such voided term, provision, covenant or condition is not contained herein.

 

	
 
	
7.
	
Binding Arbitration

 

Any and all disputes which involve or relate in any way to this Agreement and/or to Executive's employment or termination of employment as General Counsel of the Company, whether initiated by Executive or by the Company and whether based on contract, tort, statute, or common law, shall be submitted to and resolved by final and binding arbitration as the exclusive method for resolving all such disputes. The arbitration shall be private and confidential and conducted in Los Angeles, California pursuant to the Federal Arbitration Act and applicable California law, and pursuant to the applicable rules of the American Arbitration Association ("AAA") relating to employment disputes, unless the parties otherwise mutually agree to modify the AAA Rules. A copy of the AAA Employment Rules are available for review at www.adr.org/employment and are incorporated herein by reference.

 

The party demanding arbitration shall submit a written claim to the other party, setting out the basis of the claim or claims, within the time period of any applicable statute of limitations relating to such claim(s). If the parties cannot mutually agree upon an Arbitrator, then the parties shall select a neutral Arbitrator through the procedures established by the AAA. The Arbitrator shall have the powers provided under the California Code of Civil Procedure relating to the arbitration of disputes, except as expressly limited or otherwise provided in this Agreement. The parties shall have the right to reasonable discovery. The parties agree that the Company shall pay

 

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the administration costs of the AAA arbitration, including payment of the fees for the Arbitrator, and any other costs directly related to the administration of the arbitration. The parties shall otherwise be responsible for their own respective costs and attorneys' fees relating to the dispute, such as deposition costs, expert witnesses and similar expenses, except as otherwise provided in this Agreement to the prevailing party.

 

The Arbitrator may award, if properly proven, any damages or remedy that a party could recover in a civil litigation and shall award costs and reasonable attorneys' fees to the prevailing party as provided by law. The award of the Arbitrator shall be issued in writing, setting forth the basis for the decision, and shall be binding on the parties to the fullest extent permitted by law, subject to any limited statutory right to appeal as provided by law. Judgment upon the award of the Arbitrator may be entered in any state or federal court sitting in Los Angeles, California.

 

Nothing in this Section shall prevent Executive from filing or maintaining a claim for workers' compensation, state disability insurance, or unemployment insurance benefits, and nothing in this section shall be construed to prevent or excuse Executive or the Company from using existing internal procedures for the resolution of complaints. Employee may bring claims before administrative agencies when the law permits the agency to adjudicate those claims, even when there is an agreement to arbitrate; examples include claims or charges with the United States Equal Employment Opportunity Commission (or comparable state agency), the National Labor Relations Board, the U.S. Department of Labor, or the Office of Federal Contract Compliance Programs. Nothing in this Section shall require arbitration of disputes that are excluded from coverage by this section or by law.

 

The Company and Executive agree that any dispute in arbitration will be brought on an individual basis only, and not on a class, collective, or representative basis on behalf of others (this agreement to be referred to hereafter as the Class Action Waiver). The Class Action Waiver does not apply to any claim that Executive brings on behalf of both herself and others under the California Private Attorneys General Act of 2004. Executive will not be subject to any retaliation or discrimination if Executive seeks to challenge this arbitration provision or participate in a class, collective, or representative action in any forum, but Company may lawfully seek enforcement of this Agreement under the Federal Arbitration Act and seek dismissal of any class, collective, or representative actions or claims to the fullest extent allowed by law.

	
 
	
8.
	
Governing Law

 

This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be carried out in California. Each of the parties agrees to submit to the personal jurisdiction of any state or federal court sitting in Los Angeles, California in any action or proceeding arising out of or relating to this Agreement.

 

	
 
	
9.
	
Notice

 

All notices and other communications under this Agreement shall be in writing and mailed, telegraphed, telecopied, or delivered by hand (by a party or a recognized courier service) to the other party at the following address (or to such other address as such party may have specified by notice given to the other party pursuant to this provision):

 

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If to the Company:

Avita Medical

28159 Avenue Stanford

Suite 220

Valencia, CA 91355

 

If to Executive:

Donna Shiroma

At current home address on file with the Company

 

	
 
	
10.
	
Miscellaneous

 

10.1Binding Agreement. This Agreement shall inure to the benefit of and shall be binding upon the Company, its successors and assigns.

 

10.2Entire Agreement. This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth otherwise herein. In this regard, each of the parties represents and warrants to the other party that such party is not relying on any promises or representations that do not appear in writing herein. This Agreement supersedes any prior verbal or written agreements with the Company regarding Executive's employment or offer of employment, except as specifically referenced herein. Each of the parties further agrees and understands that this Agreement can be amended or modified only by a written agreement signed by all parties.

 

10.3Representations and Warranties. Executive and the Company hereby represent and warrant to the other that: (a) she or it has full power, authority and capacity to execute and deliver this Agreement, and to perform her or its obligations hereunder; (b) such execution, delivery and performance will not (and with the giving of notice or lapse of time or both would not) result in the breach of any agreements or other obligations to which she or it is a party or she or it is otherwise bound; (c) this Agreement is her or its valid and binding obligation in accordance with its terms; (d) Executive represents and warrants that she is under no other obligations, contractual or otherwise, that could impair her ability to perform fully and satisfactorily all of her obligations under this Agreement; (e) Executive has had full opportunity to review this Agreement, to obtain all legal advice she has deemed necessary or appropriate and has either done so, or voluntarily and knowingly declined to do so; and (f) neither party has been induced to enter into this Agreement through any promises, threats, coercion, or benefits not set forth expressly in writing in this Agreement.

 

10.4Attorney's Fees.  In the event that any party shall bring an action or proceeding in connection with the performance, breach or interpretation of this Agreement, then the prevailing party in any such action or proceeding, as determined by the court, arbitrator or other body having jurisdiction, shall be entitled to recover from the losing party all reasonable costs and expenses of such action or proceeding, including reasonable attorneys' fees and court costs.

 

 

 

 

10.5Counterparts. This Agreement may be executed on separate copies, any one of which need not contain signatures of more than one party but all of which taken together shall constitute one and the same Agreement.

 

 

IN WITNESS WHEREOF, this Agreement is executed as of May 7, 2018.

 

 

"COMPANY"

Avita Medical Ltd., an Australian corporation

 

 

 

By:

	
 
	
Name
	
Dr. Michael S. Perry Title:CEO
	
 

and

 

 

"EXECUTIVE"

Donna Shiroma

 

 

 

By:

Donna Shiroma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11EX-4.66

 Exhibit 4.66 

THE CHARLES SCHWAB CORPORATION, as Issuer 

and 
 THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., as Trustee 
  

 
 1.950% Senior
Notes due 2031 
  
  

Eighteenth Supplemental Indenture 

Dated as of August 26, 2021 

to 
 Senior Indenture
dated as of June 5, 2009 

 Table of Contents 

 

							
	 	 	 	  	Page	 
		
	 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	  	 	1	 
	 Section 1.01
	 	Definitions	  	 	1	 
	 Section 1.02
	 	Conflicts with Base Indenture	  	 	4	 
		
	 ARTICLE II FORM OF NOTES
	  	 	4	 
	 Section 2.01
	 	Form of Notes	  	 	4	 
		
	 ARTICLE III THE NOTES
	  	 	4	 
	 Section 3.01
	 	Amount; Series; Terms.	  	 	4	 
	 Section 3.02
	 	Denominations	  	 	5	 
	 Section 3.03
	 	Execution, Authentication, Delivery and Dating	  	 	5	 
	 Section 3.04
	 	Additional Notes	  	 	6	 
		
	 ARTICLE IV OPTIONAL REDEMPTION OF SECURITIES
	  	 	7	 
	 Section 4.01
	 	Optional Redemption.	  	 	7	 
		
	 ARTICLE V COVENANTS AND REMEDIES
	  	 	8	 
	 Section 5.01
	 	Limitations on Liens	  	 	8	 
		
	 ARTICLE VI SUPPLEMENTAL INDENTURES
	  	 	8	 
	 Section 6.01
	 	Supplemental Indentures with Consent of Holders	  	 	8	 
		
	 ARTICLE VII MISCELLANEOUS
	  	 	9	 
	 Section 7.01
	 	Sinking Funds	  	 	9	 
	 Section 7.02
	 	Conversion of Notes	  	 	9	 
	 Section 7.03
	 	Reports by the Company	  	 	9	 
	 Section 7.04
	 	Confirmation of Indenture	  	 	9	 
	 Section 7.05
	 	Counterparts	  	 	9	 
	 Section 7.06
	 	Governing Law	  	 	9	 
	 Section 7.07
	 	Trustee	  			
			
	 Exhibit A
	 	Form of Note	  	 	A-1	 

  

  
 i 

 EIGHTEENTH SUPPLEMENTAL INDENTURE, dated as of August 26, 2021 (“Supplemental
Indenture”), to the Indenture dated as of June 5, 2009 (as amended, modified or supplemented from time to time in accordance therewith, other than with respect to a particular series of debt securities, the “Base
Indenture” and, as amended, modified and supplemented by this Supplemental Indenture, the “Indenture”), by and among THE CHARLES SCHWAB CORPORATION (the “Company”), and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as trustee (the “Trustee”). 
 Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Notes: 
 WHEREAS, the Company has duly authorized the execution and delivery of the Base
Indenture to provide for the issuance from time to time of senior debt securities to be issued in one or more series as provided in the Base Indenture; 

WHEREAS, the Company has duly authorized the execution and delivery, and desires and has requested the Trustee to join it in the execution and
delivery, of this Supplemental Indenture in order to establish and provide for the issuance by the Company of a new series of Securities designated as its 1.950% Senior Notes due 2031 (the “Notes”), on the terms set forth herein;

 WHEREAS, Article IX of the Base Indenture provides that a supplemental indenture may be entered into by the parties for such purpose
provided certain conditions are met; 
 WHEREAS, the conditions set forth in the Base Indenture for the execution and delivery of this
Supplemental Indenture have been met; and 
 WHEREAS, all things necessary to make this Supplemental Indenture a valid and legally binding
agreement of the parties, in accordance with its terms, and a valid and legally binding amendment of, and supplement to, the Base Indenture with respect to the Notes have been done; 

NOW, THEREFORE: 
 ARTICLE I 

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 

Section 1.01    Definitions. Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to them in the Base Indenture. The words “herein”, “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to
any particular section hereof. 
 As used herein, the following terms have the specified meanings: 

“Additional Notes” has the meaning specified in Section 3.04 of this Supplemental Indenture. 

  
 1 

 “Base Indenture” has the meaning specified in the recitals of this
Supplemental Indenture. 
 “Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions in Los Angeles, California or New York, New York are authorized or obligated by law or executive order to close. 

“Company” has the meaning specified in the recitals of this Supplemental Indenture. 

“Comparable Treasury Issue” means the United States Treasury security or securities selected by the Quotation Agent as being
the U.S. Treasury security that has a remaining maturity closest to the remaining maturity of the Notes to be redeemed, assuming for this purpose that the Notes would mature on the Par Call Date, provided that if two or more U.S. Treasury securities
have the same maturity, the Quotation Agent shall select the U.S. Treasury security that is trading closest to par and that is otherwise consistent with customary financial practice. 

“Comparable Treasury Price” means, with respect to any Redemption Date pursuant to Section 4.01 of this Supplemental
Indenture, (A) the arithmetic average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than
five such Reference Treasury Dealer Quotations, the arithmetic average of all such quotations for such Redemption Date. 

“Depositary” means The Depository Trust Company or such other Depositary designated by the Company from time to time. 

“EDGAR” means the Electronic Data Gathering, Analysis and Retrieval system or such successor system so designated by the
Commission. 
 “Indenture” has the meaning specified in the recitals of this Supplemental Indenture. 

“Interest Payment Date” has the meaning set forth in Section 3.01(d) of this Supplemental Indenture. 

“ISIN” means International Securities Identifying Number. 

“Notes” has the meaning specified in the recitals of this Supplemental Indenture. 

“Par Call Date” means September 1, 2031. 

“Permitted Liens” has the meaning set forth in Section 5.01 of this Supplemental Indenture. 

“Primary Treasury Dealer” means a primary U.S. Government securities dealer in the United States. 

  
 2 

 “Quotation Agent” means the Reference Treasury Dealer that is selected by
the Company in connection with an optional redemption pursuant to Article IV hereof to act as Quotation Agent in addition to acting as a Reference Treasury Dealer; provided, however, that if such Reference Treasury Dealer ceases to be a Primary
Treasury Dealer, the Company will substitute another Primary Treasury Dealer. 
 “Redemption Date,” when used with respect
to any Note to be redeemed, means the date specified for redemption by the Company. 
 “Redemption Price” means, when used
with respect to any Note to be redeemed, the price at which it is to be redeemed pursuant to this Supplemental Indenture. 

“Reference Treasury Dealer” means each of (i) Citigroup Global Markets Inc. (or its successor) or any affiliate
that is a Primary Treasury Dealer; (ii) Credit Suisse Securities (USA) LLC (or its successor) or any affiliate that is a Primary Treasury Dealer; (iii) J.P. Morgan Securities LLC (or its successor) or any affiliate that is a Primary
Treasury Dealer; (iv) Wells Fargo Securities, LLC (or its successor) or any affiliate that is a Primary Treasury Dealer, and (v) one other Primary Treasury Dealer selected by the Company; provided, however, that if any of the foregoing or
their affiliates cease to be a Primary Treasury Dealer, the Company will substitute therefor another Primary Treasury Dealer. 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the
arithmetic average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference
Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such Redemption Date. 
 “Regular Record
Date” has the meaning set forth in Section 3.01(d) of this Supplemental Indenture. 
 “Supplemental
Indenture” has the meaning specified in the recitals of this Supplemental Indenture. 
 “Treasury Rate” means,
with respect to any Redemption Date pursuant to Section 4.01 of this Supplemental Indenture, the yield calculated by the Quotation Agent after 4:15 p.m., New York time, on the third business day preceding the redemption date, as follows: for
the latest business day that appears in the statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily)—H.15” (or any successor designation or publication)
(“H.15”) under the caption “Treasury Constant Maturities – Nominal,” the Quotation Agent shall select two maturities – one for the maturity immediately before and one for the maturity immediately after the remaining
maturity of the Notes (assuming for this purpose that the Notes would mature on the Par Call Date) – and, using the arithmetic means of such yields for the immediately preceding week for each maturity, interpolate on a straight-line basis to
the Par Call Date; or 
 (i) if there is no maturity immediately before or immediately after, or if a maturity on H.15 matches exactly the
remaining maturity of the Notes (rounding to the nearest month and 

  
 3 

 
assuming the Notes matured on the Par Call Date) (e.g., a remaining maturity of less than one month or exactly three years), the Quotation Agent shall select the single maturity immediately
following or preceding, or which matches exactly, as the case may be, the remaining maturity of the Notes (assuming for this purpose that the Notes would mature on the Par Call Date) and use the arithmetic mean of such yield for the immediately
preceding week; or 
 (ii) if H.15 is no longer published or regularly available, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, selected by the Quotation Agent assuming a price equal to the Comparable Treasury Price for such redemption date (expressed in each case as a percentage of its principal amount). 

“Voting Securities” has the meaning specified in Section 5.01 of this Supplemental Indenture. 

Section 1.02    Conflicts with Base Indenture. In the event that any provision of this Supplemental Indenture
limits, qualifies or conflicts with a provision of the Base Indenture, such provision of this Supplemental Indenture shall control. 

ARTICLE II 
 FORM OF NOTES 

Section 2.01    Form of Notes. The Notes shall be substantially in the form of Exhibit A hereto, which is
hereby incorporated in and expressly made a part of this Indenture. 
 ARTICLE III 

THE NOTES 

Section 3.01    Amount; Series; Terms. 

(a)    There are hereby created and designated a new series of Securities under the Base Indenture: the title of the Notes
shall be “1.950% Senior Notes Due 2031”. The changes, modifications and supplements to the Base Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes and shall not
apply to any other series of Securities that may be issued under the Base Indenture unless a supplemental indenture with respect to such other series of Securities specifically incorporates such changes, modifications and supplements. 

(b)    The aggregate principal amount of the Notes that initially may be authenticated and delivered under this
Supplemental Indenture shall be limited to $850,000,000, subject to increase as set forth in Section 3.04 of this Supplemental Indenture. 

(c)    The Stated Maturity of the Notes shall be December 1, 2031. The Notes shall be payable and may be presented
for payment, redemption, registration of transfer and exchange, without service charge, at the Corporate Trust Office. 

  
 4 

 (d)    The Notes shall bear interest at the rate of 1.950% per annum
from and including August 26, 2021, or from and including the most recent date to which interest has been paid or duly provided for, as further provided in the form of Notes annexed hereto as Exhibit A. Interest shall be computed on the basis
of a 360-day year composed of twelve 30-day months. For the Notes, the dates on which such interest shall be payable (each, an “Interest Payment Date”)
shall be June 1 and December 1 of each year, commencing on December 1, 2021, and the “Regular Record Date” for any interest payable on each such Interest Payment Date shall be the close of business on the immediately
preceding May 16 and November 16, respectively, whether or not a Business Day. Interest will be payable to the Holder of record on the Regular Record Date, provided, however, interest payable on the Stated Maturity of the Notes will be
paid to the person to whom the principal will be payable. 
 (e)    If any Interest Payment Date, Redemption Date or the
Stated Maturity is not a Business Day, then the related payment of interest and/or principal payable, as applicable, on such date will be paid on the next succeeding Business Day with the same force and effect as if made on such Interest Payment
Date, Redemption Date or Stated Maturity and no further interest will accrue as a result of such delay. 
 (f)    The
Notes will be issued in the form of one or more Global Securities, duly executed by the Company and authenticated by the Trustee as provided in Section 3.03 of this Supplemental Indenture and the Base Indenture and deposited with the Trustee as
custodian for the Depositary or its nominee. 
 (g)    Initially, the Trustee will act as Paying Agent. The Company may
change any Paying Agent without notice to the Holders. 
 Section 3.02    Denominations. The Notes shall be
issuable only in registered form without coupons and only in denominations of $2,000 and any multiple of $1,000 in excess thereof. 

Section 3.03    Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer or its Treasurer, and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Notes may be manual,
facsimile or electronic signature (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) and
shall not be required to be under the Company’s corporate seal. 
 Notes bearing the manual, facsimile or electronic signatures of
individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes. 
 Pursuant to a Company Order, the Trustee shall authenticate for original issue Notes in an
aggregate principal amount specified in the Company Order. The Trustee shall be provided with an Officer’s Certificate and an Opinion of Counsel of the Company that it may 

  
 5 

 
reasonably request in connection with such authentication of Notes. Such Company Order shall specify the amount of Notes to be authenticated and the date on which the original issue of Notes is
to be authenticated. 
 Each Note shall be dated the date of its authentication. 

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for in the Base Indenture executed by the Trustee by manual, facsimile or electronic signature (including any electronic signature covered by the U.S. federal ESIGN Act of 2000,
Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. 
 Section 3.04    Additional Notes. The Company may, from time to
time, subject to compliance with any other applicable provisions of this Indenture, without notice to or consent of the Holders of the Notes, create and issue pursuant to this Indenture additional Notes (“Additional Notes”) having
terms and conditions set forth in this Supplemental Indenture, identical to the Notes issued on the date hereof, except that Additional Notes may: 

(i)    have a different issue date than other Outstanding Notes; 

(ii)    have a different issue price than other Outstanding Notes; 

(iii)    have a different initial Interest Payment Date than other Outstanding Notes; and 

(iv)    have a different amount of interest that has accrued prior to the issue date of such Additional
Notes than has accrued on other Outstanding Notes; 
 provided, no Additional Notes shall be issued unless such Additional Notes will be fungible for U.S.
federal income tax and securities law purposes with Notes issued on the date hereof; and provided further, the Additional Notes have the same CUSIP number as the Notes issued on the date hereof. No Additional Notes may be issued if on the issue date
therefor, any Event of Default has occurred and is continuing. 
 The Notes issued on the date hereof and any Additional Notes shall be
treated as a single class for all purposes under this Indenture, including waivers, amendments and United States federal tax purposes. 

With respect to any issuance of Additional Notes, the Company shall deliver to the Trustee a resolution of the Board of Directors or, if
applicable, a certificate signed by the Chairman of the Board of Directors of the Company, the Chief Executive Officer, the Chief Financial Officer or the Treasurer of the Company and an Officers’ Certificate in respect of such Additional
Notes, which shall together provide the following information: 
 (i)    the aggregate principal amount of such
Additional Notes to be authenticated and delivered pursuant to this Indenture; and 

  
 6 

 (ii)    the issue date, issue price, the first Interest Payment Date,
the amount of interest accrued and payable on the first Interest Payment Date, the CUSIP number and corresponding ISIN of such Additional Notes. 

ARTICLE IV 
 OPTIONAL REDEMPTION
OF SECURITIES 
 Section 4.01    Optional Redemption. (a)    The provisions of Article
XI of the Base Indenture, as supplemented by the provisions of this Supplemental Indenture, shall apply to the Notes. 

(b)    On or after February 26, 2022, and prior to September 1, 2031, the Notes shall be redeemable, as a whole
or in part, at the Company’s option, on at least 10 days, but not more than 60 days, prior notice electronically delivered or mailed to each registered Holder of the Notes to be redeemed, at a Redemption Price equal to the greater of (i) 100%
of the principal amount of the Notes to be redeemed, or (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of interest and principal thereon (exclusive of interest accrued and unpaid to,
but not including, the Redemption Date), assuming for this purpose that the Notes would mature on September 1, 2031, discounted to the Redemption Date on a semiannual basis, assuming a 360-day year
consisting of twelve 30-day months, at the Treasury Rate plus 12.5 basis points, plus, in either case, accrued and unpaid interest to, but not including, the Redemption Date for such Notes; provided, however,
if the Redemption Date is after a Regular Record Date and on or prior to a corresponding Interest Payment Date, such accrued and unpaid interest will be paid on the Redemption Date to the holder of record on the Regular Record Date. 

(c)    On or after September 1, 2031 , the Notes shall be redeemable, as a whole or in part, at the Company’s
option, on at least 10 days, but not more than 60 days, prior notice electronically delivered or mailed to each registered Holder of the Notes to be redeemed, at a Redemption Price (calculated by the Company) equal to 100% of the principal amount of
the Notes to be redeemed plus accrued and unpaid interest to, but not including, the Redemption Date. 
 (d)    On and
after the Redemption Date for the Notes to be redeemed, interest will cease to accrue on such Notes or any portion thereof called for redemption, unless the Company defaults in the payment of the Redemption Price and accrued interest, if any. On or
before the Redemption Date for such Notes, the Company shall deposit with the Trustee or a Paying Agent, funds sufficient to pay the Redemption Price to be redeemed on the Redemption Date, and accrued and unpaid interest, if any, on such Notes. If
less than all of the Notes are to be redeemed, such Notes to be redeemed shall be selected in accordance with the procedures of the Depositary; provided, however, that in no event, shall Notes of a principal amount of $2,000 or less be redeemed in
part. 

  
 7 

 (e)    Notice of any redemption shall be electronically delivered or
mailed at least 10 days but not more than 60 days before the Redemption Date to each Holder of the Notes to be redeemed; provided, however, that if the Trustee is asked to give such notice it shall be notified in writing of such request at least 5
days prior to the date of the giving of such notice (unless a shorter notice shall be satisfactory to the Trustee). Such notice shall state the Redemption Price (if known) or the formula pursuant to which the Redemption Price is to be determined if
the Redemption Price cannot be determined at the time the notice is given. If the Redemption Price cannot be determined at the time such notice is to be given, the actual Redemption Price, calculated as described above in clause (b) or (c)
shall be set forth in an Officer’s Certificate of the Company delivered to the Trustee no later than two Business Days prior to the Redemption Date. Notice of redemption having been given as provided in the Indenture, the Notes called for
redemption shall become due and payable on the Redemption Date at the Redemption Price, plus accrued and unpaid interest, if any, to, but not including, the Redemption Date. 

ARTICLE V 
 COVENANTS AND REMEDIES

 Section 5.01    Limitations on Liens. The Company (or any successor corporation) will not, and will not
permit any Subsidiary to, create, assume, incur or guarantee any indebtedness for borrowed money secured by a pledge, lien or other encumbrance, except for Permitted Liens (defined below), on the Voting Securities (defined below) of Charles
Schwab & Co., Inc., Charles Schwab Bank, SSB, Charles Schwab Investment Management, Inc., or Schwab Holdings, Inc. unless the Company shall cause the Notes to be secured equally and ratably with (or, at the Company’s option, prior
to) any indebtedness secured thereby. “Permitted Liens” means (i) liens for taxes or assessments or governmental charges or levies (a) that are not then due and delinquent, (b) the validity of which is being contested
in good faith or (c) which are less than $1,000,000 in amount; (ii) liens created by or resulting from any litigation or legal proceedings which are currently being contested in good faith by appropriate proceedings or which involve claims
of less than $1,000,000; (iii) deposits to secure (or in lieu of) surety, stay, appeal or customs bonds; and (iv) such other liens as the Board of Directors of the Company determines do not materially detract from or interfere with the present
value or control of the Voting Securities subject thereto or affected thereby. “Voting Securities” means stock of any class or classes having general voting power under ordinary circumstances to elect a majority of the board of
directors, managers or trustees of the corporation in question, provided that, for the purposes hereof, stock which carries only the right to vote conditionally on the happening of an event shall not be considered voting stock whether or not such
event shall have happened. 
 ARTICLE VI 

SUPPLEMENTAL INDENTURES 

Section 6.01    Supplemental Indentures with Consent of Holders. The terms of this Supplemental Indenture may
be modified as set forth in Article IX of the Base Indenture. For the avoidance of doubt, no supplemental indenture shall, without the consent of the Holder of each Outstanding Note, reduce the Redemption Price of any Note. 

  
 8 

 ARTICLE VII 

MISCELLANEOUS 

Section 7.01    Sinking Funds. Article XII of the Base Indenture shall have no application. The Notes shall
not have the benefit of a sinking fund. 
 Section 7.02    Conversion of Notes. Article XIV of the Base
Indenture shall have no application. The Notes shall not be convertible into shares of Common Stock of the Company. 

Section 7.03    Reports by the Company. The Company shall be deemed to have complied with the first sentence
of Section 7.4 of the Base Indenture to the extent that such information, documents and reports are filed with the Commission via EDGAR (or any successor electronic delivery procedure); provided, however, that the Trustee shall have no
obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR system (or its successor). 

Section 7.04    Confirmation of Indenture. The Base Indenture, as supplemented and amended by this
Supplemental Indenture and all other indentures supplemental thereto, is in all respects ratified and confirmed, and the Base Indenture, this Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one
and the same instrument. 
 Section 7.05    Counterparts. The parties hereto may sign one or more copies of
this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. 

Section 7.06    Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 
 Section 7.07    Trustee. The Trustee makes no
representations as to the validity or sufficiency of this Supplemental Indenture. The recitals herein are deemed to be those of the Company and not of the Trustee. 

[Remainder of Page Intentionally Left Blank] 

  
 9 

 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed as of the day and year first written above. 
  

			
	THE CHARLES SCHWAB CORPORATION, as Issuer
		
	By:	 	 /s/ Peter Crawford

		 	Name: Peter Crawford
		 	 Title: Executive Vice President and Chief

Financial Officer

	
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
		
	By:	 	 /s/ Manjari Purkayastha

		 	Name: Manjari Purkayastha
		 	Title: Vice President

  
 [Signature Page to
Eighteenth Supplemental Indenture] 

 EXHIBIT A 

FORM OF NOTE 
 THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
(“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN. 
 TRANSFERS OF THIS NOTE ARE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF. 

  
 A-1 

 THE CHARLES SCHWAB CORPORATION 

1.950% Senior Notes due 2031 
  

			
	No. [    ]	  	 CUSIP No.: 808513 BT1

ISIN No.: US808513BT10

 THE CHARLES SCHWAB CORPORATION, a Delaware corporation (the “Issuer”), for value received
promises to pay to CEDE & CO., or its registered assigns, the principal sum of [                     ] DOLLARS, or such lesser amount as is
indicated in the records of the Trustee and Depositary, on December 1, 2031. 
 Interest Payment Dates: June 1 and December 1
of each year (each, an “Interest Payment Date”), commencing on December 1, 2021. 
 Interest Record Dates: May 16
and November 16 (each, a “Regular Record Date”). 
 Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this place. 
 Dated: August 26, 2021 

  
 2 

 IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually, by facsimile or
electronically by its duly authorized officers. 
  

					
	THE CHARLES SCHWAB CORPORATION
			
	    	 	By:	 	  

		 		 	Name: Peter Crawford
		 		 	 Title: Executive Vice President and
 Chief
Financial Officer

  

	
	Attest:
	
	  

	Name:
	Title:

  
 3 

 This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.

 Dated: August 26, 2021 
  

			
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
		
	By:	 	  

		 	Authorized Signatory

  
 4 

 (REVERSE OF NOTE) 

THE CHARLES SCHWAB CORPORATION 

1.950% Senior Notes due 2031 

1.    Interest. 

The Charles Schwab Corporation (the “Issuer”) promises to pay interest on the principal amount of this Note at the rate per
annum described above. Cash interest on the Notes will accrue from the most recent date to which interest has been paid; or, if no interest has been paid, from and including August 26, 2021. Interest on this Note will be paid to but excluding
the relevant Interest Payment Date or on such earlier date as the principal amount shall become due in accordance with the provisions hereof. Interest will be payable to the Holder of record on the Regular Record Date, provided, however, interest
payable on the Stated Maturity will be paid to the person to whom the principal will be payable. The Issuer will pay interest semi-annually in arrears on each Interest Payment Date, commencing December 1, 2021. If any Interest Payment Date,
Redemption Date or the Stated Maturity of the Notes is not a Business Day, then the related payment of interest and/or principal payable, as applicable, on such date will be paid on the next succeeding Business Day with the same force and effect as
if made on such Interest Payment Date, Redemption Date or Stated Maturity and no further interest will accrue as a result of such delay. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. 
 The Issuer shall pay interest on overdue principal from time to time on
demand by the Trustee pursuant to Section 5.3 of the Base Indenture (defined below) at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 

2.    Paying Agent. 

Initially, The Bank of New York Mellon Trust Company, N.A. (the “Trustee”) will act as paying agent (the “Paying
Agent”). The Issuer may change any paying agent without notice to the Holders. 
 3.    Indenture; Defined
Terms. 
 This Note is one of the 1.950% Senior Notes due 2031 (the “Notes”) issued under the Senior Indenture dated as of
June 5, 2009 (as amended, modified or supplemented from time to time in accordance therewith, the “Base Indenture” and, as amended, modified and supplemented by the Eighteenth Supplemental Indenture dated as of August 26,
2021, the “Indenture”) by and between the Issuer and the Trustee, as trustee. This Note is a “Global Security” and the Notes are “Global Securities” under the Indenture. 

For purposes of this Note, unless otherwise defined herein, capitalized terms herein are used as defined in the Indenture. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the “TIA”) as in effect on the date on which the Indenture was
qualified under the TIA. Notwithstanding anything to the contrary herein, the 

  
 5 

 
Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of them. To the extent the terms of the Indenture and this Note are
inconsistent, the terms of the Indenture shall govern. 
 4.    Denominations; Transfer; Exchange. 

The Notes are in registered form, without coupons, in denominations of $2,000 and multiples of $1,000 thereafter. A Holder shall register the
transfer or exchange of Notes in accordance with the Indenture. The Issuer may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable
in connection therewith as permitted by the Indenture. The Issuer need not issue, authenticate, register the transfer of or exchange any Notes or portions thereof for a period of fifteen (15) days before the electronic delivery or mailing of a
notice of redemption, nor need the Issuer register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. 

5.    Amendment; Modification; Waiver. 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Securities of all series affected under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the
Securities of all series at the time Outstanding affected thereby (voting together as a single class). The Indenture contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Securities of all series
at the time Outstanding with respect to which an Event of Default under the Indenture shall have occurred and be continuing (voting together as a single class), on behalf of the Holders of all Securities of such affected series, to waive, with
certain exceptions, such past default with respect to all such series and its consequences. The Indenture also permits the Holders of not less than a majority in aggregate principal amount of the Securities of each series at the time Outstanding
affected thereby (voting together as a single class), on behalf of the Holders of all Securities of such affected series, to waive compliance by the Issuer with certain provisions of the Indenture. Any such consent or waiver by the Holder of this
Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Security issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note. 
 6.    Optional Redemption. 

Beginning on or after February 26, 2022, the Issuer may redeem the Notes in whole or in part, at its option, at any time or from time to
time prior to maturity on at least 10 days, but not more than 60 days, prior notice electronically delivered or mailed to each registered Holder of the Notes (the “Redemption Date”). 

If any or all of the Notes are redeemed on or after February 26, 2022 and before September 1, 2031, the Redemption Price will be
equal to the greater of: (i) 100% of the 

  
 6 

 
principal amount of the Notes to be redeemed, or (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of interest and principal
thereon (exclusive of interest accrued and unpaid to, but not including, the Redemption Date), assuming for this purpose that the Notes would mature on September 1, 2031, discounted to the Redemption Date, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate plus 12.5 basis points, plus, in either case, accrued interest thereon to,
but not including, the Redemption Date; provided, however, if the Redemption Date is after a Regular Record Date and on or prior to a corresponding Interest Payment Date, such accrued and unpaid interest will be paid on the Redemption Date to the
holder of record on the Regular Record Date. 
 If any or all of the Notes are redeemed on or after September 1, 2031, the Redemption
Price (calculated by the Company) will be equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but not including, the Redemption Date for such Notes. 

On and after the Redemption Date for the Notes, interest will cease to accrue on the Notes or any portion thereof called for redemption,
unless the Issuer defaults in the payment of the Redemption Price and accrued interest, if any. On or before the Redemption Date for the Notes, the Issuer shall deposit with the Trustee or a Paying Agent, funds sufficient to pay the Redemption Price
of the Notes to be redeemed on the Redemption Date, and accrued and unpaid interest, if any, on such Notes. If less than all of the Notes are to be redeemed, the Notes to be redeemed shall be selected in accordance with the procedures of the
Depositary; provided, however, that in no event, shall Notes of a principal amount of $2,000 or less be redeemed in part. 
 Notice of any
redemption shall be electronically delivered or mailed at least 10 days but not more than 60 days before the Redemption Date to each Holder of the Notes to be redeemed; provided, however, that if the Trustee is asked to give such notice it shall be
notified in writing of such request at least 5 days prior to the date of the giving of such notice (unless a shorter notice shall be satisfactory to the Trustee). Such notice shall state the Redemption Price (if known) or the formula pursuant to
which the Redemption Price is to be determined if the Redemption Price cannot be determined at the time the notice is given. If the Redemption Price cannot be determined at the time such notice is to be given, the actual Redemption Price, calculated
as described above, shall be set forth in an Officer’s Certificate of the Issuer delivered to the Trustee no later than two Business Days prior to the Redemption Date. Notice of redemption having been given as provided in the Indenture, the
Notes called for redemption shall become due and payable on the Redemption Date at the Redemption Price, plus accrued and unpaid interest, if any, to, but not including, the Redemption Date. 

7.    Defaults and Remedies. 

If an Event of Default with respect to Notes at the time Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities of all Notes then Outstanding (voting together as a single class) may declare the principal amount of all the Securities of the affected series to

  
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be due and payable immediately, by a notice in writing to the Issuer (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) of and the
accrued interest on all the Securities of such affected series shall become immediately due and payable. 
 The Indenture permits, subject
to certain limitations therein provided, Holders of not less than a majority in aggregate principal amount of the Securities of all affected series (voting together as a single class) at the time Outstanding, to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series. 

8.    Authentication. 

This Note shall not be valid until the Trustee manually, electronically or by facsimile signs the certificate of authentication on this Note.

 9.    Abbreviations and Defined Terms. 

Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 

10.    CUSIP Numbers. 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to
be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 

11.    Governing Law. 

This Note and the Indenture shall be governed by, and construed in accordance with, the laws of the State of California. 

  
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 ASSIGNMENT FORM 

To assign this Note, fill in the form below: 
 I or we assign and
transfer this Note to 
 (Print or type assignee’s name, address and zip code) 

(Insert assignee’s soc. sec. or tax I.D. No.) 

and irrevocably appoint                as agent to transfer this Note on the
books of the Issuer. The agent may substitute another to act for him. 
  

							
	 	 	 
	Date:                                	    	 	Your Signature:                                	 	  	
	 	    	 	 	 	  	 

 Sign exactly as your name appears on the other side of this Note. 

 

					
		 		 	  

	Signature Guarantee:	 		 	Signature
	  
	 		 	  

	Signature must be guaranteed	 		 	Signature

 Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the
Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to,
or in substitution for, STAMP, all in accordance with the United States Securities Exchange Act of 1934, as amended. 

  
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