COLLATERAL AGREEMENT

Exhibit 4.7

Execution Copy

 

C OLLATERAL A GREEMENT

among

WELLS FARGO & COMPANY,

WILMINGTON TRUST COMPANY,

as Collateral Agent, Custodial Agent,

Securities Intermediary and Securities Registrar

and

WELLS FARGO CAPITAL XV,

acting through The Bank of New York Mellon Trust Company, National Association,

as Property Trustee

Dated as of September 10, 2008

 

T ABLE OF C ONTENTS

 

 

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EXHIBITS AND SCHEDULES

Exhibit A – Form of Capital PPS Certificate

Exhibit B – Form of Normal PPS Certificate

Exhibit C – Form of Stripped PPS Certificate

Schedule I – Reference Dealers

 

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This C OLLATERAL A GREEMENT , dated as of September 10, 2008, among W ELLS F ARGO  & C OMPANY , a Delaware corporation (the “ Company ”), W ILMINGTON T RUST C OMPANY , a Delaware banking corporation, as collateral agent (in such capacity, the “ Collateral Agent ”), as Custodial Agent (in such capacity, the “ Custodial Agent ”), as securities intermediary (as defined in Section 8-102(a)(14) of the UCC) with respect to the Collateral Account (in such capacity, the “ Securities Intermediary ”), and as securities registrar with respect to the Trust Preferred Securities (in such capacity, the “ Securities Registrar ”), and W ELLS F ARGO C APITAL XV, a Delaware statutory trust (the “ Issuer Trust ”), acting through T HE B ANK OF N EW Y ORK M ELLON T RUST C OMPANY , N ATIONAL A SSOCIATION , a national banking association organized and existing under the laws of the United States, not in its individual capacity but solely as Property Trustee on behalf of the Issuer Trust (in such capacity, the “ Property Trustee ”).

R ECITALS

The Company and the Issuer Trust (acting through the Property Trustee) are parties to the Stock Purchase Contract Agreement, dated as of the date hereof (as modified and supplemented and in effect from time to time, the “ Stock Purchase Contract Agreement ”), pursuant to which the Company has agreed to issue stock purchase contracts, having a stated amount of $100,000 per contract (each, a “ Stock Purchase Contract ”) to the Issuer Trust.

Each Stock Purchase Contract requires the Company to issue and sell, and the Property Trustee (on behalf of the Issuer Trust) to purchase, on the Stock Purchase Date (as defined in the Stock Purchase Contract Agreement), for an amount equal to $100,000 (the “ Purchase Price ”), one share of the Company’s Non-Cumulative Perpetual Preferred Stock, Series B, $100,000 liquidation preference per share (the “ Preferred Stock ”).

Pursuant to the Trust Agreement, the Stock Purchase Contract Agreement and the Stock Purchase Contracts, the Issuer Trust acting through the Property Trustee is required to execute and deliver this Agreement, to grant the pledge provided herein of the Collateral (as defined herein) to secure the Obligations (as defined herein) and to appoint the Custodial Agent to establish and maintain the Custody Account (as defined herein).

N OW , THEREFORE , THIS C OLLATERAL A GREEMENT WITNESSETH : For and in consideration of the agreements and obligations set forth herein and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary, the Securities Registrar and the Issuer Trust mutually agree as follows:

ARTICLE I

D EFINITIONS

Section 1.01 Definitions.

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a) The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, and nouns and pronouns of the masculine gender include the feminine and neuter genders.

(b) The words “ herein ,” “ hereof ” and “ hereunder ” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision and references to any Article, Section or other subdivision are references to an Article, Section or other subdivision of this Agreement.

(c) The following terms that are defined in the UCC shall have the meanings set forth therein: “ certificated security ,” “ control ,” “ financial asset ,” “ financing statement ,” “ entitlement order ,” “ securities account, ” “ security entitlement ” and “ funds-transfer system ”.

(d) Capitalized terms used herein and not defined herein have the meanings assigned to them in the Trust Agreement.

(e) The following terms have the meanings given to them in this Section 1.01(e):

“ Agreement ” means this Collateral Agreement, as the same may be amended, modified or supplemented from time to time.

“ Bank ” means Wells Fargo Bank, N.A. or its successor.

“ Cash ” means any coin or currency of the United States as at the time shall be legal tender for payment of public and private debts.

“ Collateral ” means the collective reference to:

(1) the Collateral Account and all investment property and other financial assets from time to time credited to the Collateral Account and all security entitlements with respect thereto, including, without limitation, (A) the Notes, other than any Notes that are Transferred to (x) the Custodial Agent in accordance with Section 6.02 upon the Exchange of Normal PPS and Qualifying Treasury Securities for Stripped PPS and Capital PPS pursuant to Sections 5.13(a)(i), (b) and (c) of the Trust Agreement from time to time, (y) the Remarketing Agent or the Custody Account in accordance with Section 8.02(b) upon a Successful Remarketing or (z) the property trustee of a new trust in the event the Company elects to remarket the Notes in the form of New Trust Preferred Securities pursuant to Section 3.2(f) of the Indenture Supplement and (B) any Qualifying Treasury Securities and security entitlements thereto delivered from time to time upon the exchange of Normal PPS and Qualifying Treasury Securities for Stripped PPS and Capital PPS pursuant to Sections 5.13(a)(i), (b) and (c) of the Trust Agreement and in accordance with Section 6.02;

(2) all Qualifying Treasury Securities and security entitlements thereto purchased by the Collateral Agent with the Proceeds of Qualifying Treasury Securities pursuant to Section 6.05;

(3) the Deposit;

 

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(4) all Proceeds of any of the foregoing (whether such Proceeds arise before or after the commencement of any proceeding under any applicable bankruptcy, insolvency or other similar law, by or against the Issuer Trust, as pledgor or with respect to the pledgor); and

(5) all powers and rights now owned or hereafter acquired under or with respect to the Collateral.

“ Collateral Account ” means the securities account of Wilmington Trust Company, as Collateral Agent, maintained with the Securities Intermediary and designated “Wilmington Trust Company, as Collateral Agent of Wells Fargo & Company, as pledgee of Wells Fargo Capital XV, acting through The Bank of New York Mellon Trust Company, National Association, as Property Trustee.”

“ Collateral Agent ” means the Person named as the “Collateral Agent” in the first paragraph of this Agreement until a successor Collateral Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter “Collateral Agent” shall mean such Person or any subsequent successor who is appointed pursuant to this Agreement.

“ Company ” means the Person named as the “Company” in the first paragraph of this Agreement until a successor shall have become such pursuant to the applicable provisions of the Stock Purchase Contract Agreement, and thereafter “Company” shall mean such successor.

“ Custodial Agent ” means the Person named as the “Custodial Agent” in the first paragraph of this Agreement until a successor Custodial Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter “Custodial Agent” shall mean such Person or any subsequent successor who is appointed pursuant to this Agreement.

“ Custody Account ” means the securities account of Wilmington Trust Company, as Custodial Agent, designated “Wilmington Trust Company, as Custodial Agent for Wells Fargo Capital XV.”

“ Exchange ” means an exchange of Normal PPS and Qualifying Treasury Securities for Stripped PPS and Capital PPS pursuant to Section 5.13(b) of the Trust Agreement and Section 6.02 or an exchange of Stripped PPS and Capital PPS for Normal PPS and Qualifying Treasury Securities pursuant to Section 5.13(d) of the Trust Agreement and Section 6.03.

“ Market Disruption Event ” means (i) a general moratorium on commercial banking activities in New York declared by the relevant authorities or (ii) any material disruption of the U.S. government securities market or U.S. federal funds-transfer systems, written notification of which shall have been given to the Collateral Agent by any of the Administrative Trustees.

“ Notes ” means the Remarketable 9.25% Junior Subordinated Notes due 2044 of the Company issued pursuant to the Indenture.

“ Notice of Contingent Disposition Election ” means a Notice of Contingent Disposition Election substantially in the form set forth on the reverse side of the form of Capital PPS Certificate, a copy of which is attached as Exhibit A hereto.

 

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“ Notice of Contingent Exchange Election ” means a Notice of Contingent Exchange Election substantially in the form set forth on the reverse side of the form of Normal PPS Certificate, a copy of which is attached as Exhibit B hereto.

“ Obligations ” means all obligations and liabilities of the Issuer Trust and the Property Trustee on behalf of the Issuer Trust under each Stock Purchase Contract, the Stock Purchase Contract Agreement and this Agreement or any other document made, delivered or given in connection herewith or therewith, in each case whether on account of principal, interest (including, without limitation, interest accruing before and after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Property Trustee or the Issuer Trust, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Company or the Collateral Agent or the Securities Intermediary that are required to be paid by the Issuer Trust pursuant to the terms of any of the foregoing agreements).

“ Permitted Investments ” means any one of the following, in each case maturing on the Business Day following the date of acquisition:

(1) any evidence of indebtedness with an original maturity of 365 days or less issued, or directly and fully guaranteed or insured, by the United States of America or any agency or instrumentality thereof ( provided, however, that the full faith and credit of the United States of America is pledged in support of the timely payment thereof or such indebtedness constitutes a general obligation of it);

(2) deposits, certificates of deposit or acceptances with an original maturity of 365 days or less of any institution which is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million at the time of deposit (and which may include the Collateral Agent);

(3) investments with an original maturity of 365 days or less of any Person that are fully and unconditionally guaranteed by a bank referred to in clause (2);

(4) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any agency thereof and backed as to timely payment by the full faith and credit of the United States of America;

(5) investments in commercial paper, other than commercial paper issued by the Company or its Affiliates, of any corporation incorporated under the laws of the United States of America or any State thereof, which commercial paper has a rating at the time of purchase at least equal to “A-1” by Standard & Poor’s Ratings Services (“ S&P ”) or at least equal to “P-1” by Moody’s Investors Service, Inc. (“ Moody’s ”); and

(6) investments in money market funds (including, but not limited to, money market funds managed by the Collateral Agent or an Affiliate of the Collateral Agent) registered under the Investment Company Act of 1940, as amended, rated in the highest applicable rating category by S&P or Moody’s.

“ Pledge ” means the lien and security interest created by this Agreement.

 

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“ Pledged Notes ” means each Note deposited with the Collateral Agent pursuant to Section 6.01 or delivered to the Collateral Agent pursuant to Section 6.03, until such time as it is released from the Pledge and delivered to the Custodial Agent pursuant to Section 6.02 or to the Remarketing Agent or the Custody Account pursuant to Section 8.02(b).

“ Pledged Treasury Securities ” means Qualifying Treasury Securities from time to time credited to the Collateral Account pursuant to Section 6.02 and not then released from the Pledge pursuant to Section 6.03, together with all Qualifying Treasury Securities purchased from time to time by the Collateral Agent with the Proceeds of maturing Pledged Treasury Securities pursuant to Section 6.05.

“ Proceeds ” has the meaning ascribed thereto in Section 9-102(a)(64) of the UCC and includes, without limitation, all interest, dividends, Cash, instruments, securities, financial assets and other property received, receivable or otherwise distributed upon the sale (including, without limitation, the Remarketing), exchange, collection or disposition of any financial assets from time to time held in the Collateral Account.

“ Property Trustee ” means the Person named as the “Property Trustee” in the first paragraph of this Agreement until a successor Property Trustee shall have become such pursuant to the applicable provisions of the Trust Agreement, and thereafter “Property Trustee” shall mean such Person or any subsequent successor who is appointed pursuant to the Trust Agreement.

“ Recombination Notice and Request ” means a Recombination Notice and Request substantially in the form set forth on the reverse side of the forms of Capital PPS Certificate and Stripped PPS Certificate, copies of which are attached hereto as Exhibits A and C, respectively.

“ Reference Dealer ” means each of the U.S. government securities dealers listed on Schedule I hereto (including any successor thereto) and any other U.S. government securities dealers designated by the Collateral Agent (it being understood that the Collateral Agent may, but shall not be obligated, to designate any one or more such other U.S. government securities dealers); provided, however , that if at any time fewer than three of the entities named on Schedule I are active U.S. government securities dealers and approved counterparties of Wilmington Trust Company, any of the Administrative Trustees may designate an additional U.S. government securities dealer as a Reference Dealer.

“ Roll Date ” means, with respect to any Additional Distribution Date, the latest date prior to such Additional Distribution Date that is a maturity date of Qualifying Treasury Securities held in the Collateral Account.

“ Securities Intermediary ” means the Person named as the “Securities Intermediary” in the first paragraph of this Agreement until a successor Securities Intermediary shall have become such pursuant to the applicable provisions of this Agreement, and thereafter “Securities Intermediary” shall mean such Person or any subsequent successor who is appointed pursuant to this Agreement.

“ Securities Registrar ” means the Person named as the “Securities Registrar” in the first paragraph of this Agreement until a successor Securities Registrar shall have been appointed by the Company pursuant to the applicable provisions of the Trust Agreement, and thereafter “Securities Registrar” shall mean such Person or any subsequent successor who is appointed pursuant to the Trust Agreement by the Company.

 

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“ Stripping Notice and Request ” means a Stripping Notice and Request substantially in the form set forth on the reverse side of the form of Normal PPS Certificate, a copy of which is attached as Exhibit B hereto.

“ Trade Date ” means, with respect to each Roll Date, the Business Day immediately preceding such Roll Date.

“ TRADES ” means the Treasury/Reserve Automated Debt Entry System maintained by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.

“ TRADES Regulations ” means the regulations of the United States Department of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time. Unless otherwise defined herein, all terms defined in the TRADES Regulations are used herein as therein defined.

“ Transfer ” or “ Transferred ” means (i) in the case of certificated securities in registered form, delivery as provided in Section 8-301(a) of the UCC, endorsed to the transferee or in blank by an effective endorsement, (ii) in the case of Qualifying Treasury Securities, registration of the transferee as the owner of such Qualifying Treasury Securities on TRADES and (iii) in the case of security entitlements, including, without limitation, security entitlements with respect to Qualifying Treasury Securities, a securities intermediary indicating by book entry that such security entitlement has been credited to the transferee’s securities account.

“ Trust Agreement ” means the Amended and Restated Trust Agreement, dated as of the date hereof, among the Company, as Depositor, the Property Trustee, the Delaware Trustee and the Administrative Trustees (each as named therein), and the several Holders (as defined therein).

“ UCC ” means the Uniform Commercial Code as in effect in the State of New York from time to time.

“ Value ” means, with respect to any item of Collateral on any date, as to (1) Cash, the face amount thereof, (2) Notes, the aggregate principal amount thereof, and (3) Qualifying Treasury Securities, the aggregate principal amount thereof.

(f) The following terms have the meanings set forth in the Section or other subdivision of this Agreement or in the other agreement set forth below.

 

 

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ARTICLE II

P LEDGE

Section 2.01 Pledge.

The Issuer Trust (acting through the Property Trustee) hereby pledges and grants to the Collateral Agent, as agent of and for the benefit of the Company, a continuing first priority security interest in and to, and a lien upon and right of set-off against, all of the Issuer Trust’s right, title and interest in and to the Collateral to secure the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations. The Collateral Agent shall have all of the rights, remedies and recourses with respect to the Collateral afforded a secured party by the UCC, in addition to, and not in limitation of, the other rights, remedies and recourses afforded to the Collateral Agent by this Agreement.

Section 2.02 Control.

The Collateral Agent shall have control of the Collateral Account pursuant to the provisions of Article III.

Section 2.03 Termination.

This Agreement and the Pledge created hereby shall terminate upon the satisfaction of the Obligations or the earlier termination of the Stock Purchase Contracts in accordance with their terms. Upon receipt by the Collateral Agent from the Company of notice of such termination, the Collateral Agent shall, except as otherwise provided herein, Transfer and instruct the Securities Intermediary to Transfer the Collateral to or upon the order of the Property Trustee, free and clear of the Pledge created hereby.

ARTICLE III

C ONTROL

Section 3.01 Establishment of Collateral Account.

The Securities Intermediary hereby confirms that:

(a) the Securities Intermediary has established the Collateral Account;

(b) the Collateral Account is a securities account;

(c) subject to the terms of this Agreement, the Securities Intermediary shall identify in its records the Collateral Agent as the entitlement holder entitled to exercise the rights that comprise any financial asset credited to the Collateral Account;

 

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(d) all property delivered to the Securities Intermediary pursuant to this Agreement or the Stock Purchase Contract Agreement, including any Permitted Investments purchased by the Securities Intermediary from the Proceeds of any Collateral, will be credited promptly to the Collateral Account; and

(e) all securities or other property underlying any financial assets credited to the Collateral Account shall be (i) registered in the name of the Property Trustee and indorsed to the Securities Intermediary or in blank, (ii) registered in the name of the Securities Intermediary or the Collateral Agent, or (iii) credited to another securities account maintained in the name of the Securities Intermediary. In no case will any financial asset credited to the Collateral Account be registered in the name of the Property Trustee or specially indorsed to the Property Trustee unless such financial asset has been further indorsed to the Securities Intermediary or in blank.

Section 3.02 Treatment as Financial Assets.

Each item of property (whether investment property, financial asset, security, instrument or Cash) credited to the Collateral Account shall be treated as a financial asset under Article 8 of the UCC.

Section 3.03 Sole Control by Collateral Agent.

Except as provided in Section 8.01, at all times prior to the termination of the Pledge, the Collateral Agent shall have sole control of the Collateral Account, and the Securities Intermediary shall take instructions and directions with respect to the Collateral Account solely from the Collateral Agent. If at any time the Securities Intermediary shall receive an entitlement order issued by the Collateral Agent and relating to the Collateral Account, the Securities Intermediary shall comply with such entitlement order without further consent by the Property Trustee, the Issuer Trust or any other Person. Except as otherwise permitted under this Agreement, until termination of the Pledge, the Securities Intermediary will not comply with any entitlement orders issued by the Property Trustee.

The Issuer Trust hereby irrevocably constitutes and appoints the Collateral Agent and the Company, with full power of substitution, as the Issuer Trust’s attorney-in-fact to take on behalf of, and in the name, place and stead of the Issuer Trust and the Holders, any action necessary or desirable to perfect and to keep perfected the security interest in the Collateral referred to in Section 2.01. The grant of such power-of-attorney shall not be deemed to require of the Collateral Agent any specific duties or obligations not otherwise expressly assumed by the Collateral Agent hereunder. Notwithstanding the foregoing, in no event shall the Collateral Agent, Securities Intermediary or the Property Trustee be responsible for the preparation or filing of any financing or continuation statements or responsible for maintenance or perfection of any security interest hereunder.

Section 3.04 Securities Intermediary’s Location.

The Collateral Account, and the rights and obligations of the Securities Intermediary, the Collateral Agent, the Property Trustee and the Issuer Trust with respect thereto, shall be governed by the laws of the State of New York. Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Securities Intermediary’s jurisdiction.

 

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Section 3.05 No Other Claims.

Except for the claims and interest of the Collateral Agent and of the Issuer Trust in the Collateral Account, the Securities Intermediary (without having conducted any investigation) does not know of any claim to, or interest in, the Collateral Account or in any financial asset credited thereto. If any Person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Collateral Account or in any financial asset carried therein, the Securities Intermediary will promptly notify the Collateral Agent and the Property Trustee.

Section 3.06 Investment and Release.

All Proceeds of financial assets from time to time deposited in the Collateral Account shall be invested and reinvested as provided in this Agreement. At no time prior to termination of the Pledge with respect to any particular property shall such property be released from the Collateral Account except in accordance with this Agreement or upon written instructions of the Collateral Agent.

Section 3.07 No Other Agreements.

The Securities Intermediary has not entered into, and prior to the termination of the Pledge will not enter into, any agreement with any other Person relating to the Collateral Account or any financial assets credited thereto, including, without limitation, any agreement to comply with entitlement orders of any Person other than the Collateral Agent.

Section 3.08 Powers Coupled with an Interest.

The rights and powers granted in this Article III to the Collateral Agent have been granted in order to perfect its security interests in the Collateral Account, are powers coupled with an interest and will be affected neither by the bankruptcy of the Property Trustee or the Issuer Trust nor by the lapse of time. The obligations of the Securities Intermediary under this Article III shall continue in effect until the termination of the Pledge with respect to any and all Collateral.

Section 3.09 Waiver of Lien; Waiver of Set-off.

The Securities Intermediary waives any security interest, lien or right to make deductions or set-offs that it may now have or hereafter acquire in or with respect to the Collateral Account, any financial asset credited thereto or any security entitlement in respect thereof. Neither the financial assets credited to the Collateral Account nor the security entitlements in respect thereof will be subject to deduction, set-off, banker’s lien or any other right in favor of any person other than the Company.

ARTICLE IV

C USTODY

Section 4.01 Appointment.

The Issuer Trust hereby appoints the Custodial Agent as Custodial Agent of the Issuer Trust to hold all of the Notes that are property of the Issuer Trust, other than the Pledged Notes (collectively, the “ Custody Notes ”), for the benefit of the Issuer Trust and for the purposes set forth herein, and the Custodial Agent hereby accepts such appointment under the terms and conditions set forth herein.

 

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Section 4.02 Custody.

The Custodial Agent will hold the Custody Notes in the Custody Account. For the avoidance of doubt, the Custodial Agent shall segregate on its books and records the assets of the Issuer Trust from assets held by the Custodial Agent for other customers (including the Collateral) or for the Custodial Agent itself. The Custodial Agent shall only have the obligations expressly set forth herein and shall have no responsibility for monitoring compliance with the Trust Agreement, the Stock Purchase Agreement or any other agreement in connection therewith. The Custodial Agent shall accept the Transfer of Notes from the Collateral Agent from time to time pursuant to Section 6.02, deliver Notes to the Collateral Agent from time to time pursuant to Section 6.03 and deliver Notes to the Remarketing Agent on the Remarketing Settlement Date pursuant to Section 8.03.

Section 4.03 Termination of Custody Account.

Upon receipt by the Custodial Agent from the Company of notice of termination of this Agreement pursuant to Section 2.03, the Custodial Agent shall deliver the Custody Notes to the Property Trustee.

Section 4.04 Waiver of Lien; Waiver of Set-off.

The Custodial Agent waives any security interest, lien or right to make deductions or set-offs that it may now have or hereafter acquire in or with respect to the Custodial Agent, any financial asset credited thereto or any security entitlement in respect thereof. Neither the financial assets credited to the Custody Account nor the security entitlements in respect thereof will be subject to deduction, set-off, banker’s lien or any other right in favor of any Person other than the Issuer Trust.

ARTICLE V

D ISTRIBUTIONS ON C OLLATERAL AND

C USTODY N OTES

Section 5.01 Interest on Notes.

(a) The Collateral Agent shall transfer all interest received from time to time by the Collateral Agent on account of the Pledged Notes to the Paying Agent.

(b) The Custodial Agent shall transfer all interest received from time to time by the Custodial Agent on account of the Custody Notes to the Paying Agent.

Section 5.02 Payments Following Termination Event or Redemption Prior to Stock Purchase Date.

Following a Termination Event or the termination of the Stock Purchase Contracts upon redemption of all the Notes by the Company prior to the Stock Purchase Date in accordance with the Indenture, written notice of which the Collateral Agent or the Custodial Agent, as the case may be, shall have received from the Company, the Property Trustee or any of the Administrative Trustees,

 

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(a) the Collateral Agent shall cause the Securities Intermediary to Transfer or otherwise assign (i) the Pledged Notes or the Deposit, (ii) the Pledged Treasury Securities and (iii) any Permitted Investments, including in each case any and all payments of principal or interest it receives in respect thereof, to the Property Trustee or its designee, free and clear of the Pledge created hereby; and

(b) the Custodial Agent shall Transfer the Custody Notes and any and all payments of principal or interest it receives in respect thereof to the Property Trustee or its designee.

Section 5.03 Payments Prior to or on Stock Purchase Date.

(a) Except as provided in Section 5.03(c) and Section 6.05, if the Collateral Agent or the Custodial Agent, as the case may be, shall not have received from the Company, the Property Trustee or any of the Administrative Trustees notice of any Termination Event or notice of the termination of the Stock Purchase Contracts upon the redemption of all the Notes by the Company prior to the Stock Purchase Date in accordance with the Indenture, all payments of principal received by the Collateral Agent or the Securities Intermediary in respect of (i) the Pledged Notes or the Deposit and (ii) the Pledged Treasury Securities shall be held until the Stock Purchase Date and an amount thereof equal to the Purchase Price under the Stock Purchase Contracts shall be transferred to the Company on the Stock Purchase Date as provided in Section 2.2 of the Stock Purchase Contract Agreement in satisfaction of the Issuer Trust’s obligation to pay such Purchase Price. Any balance remaining in the Collateral Account shall be released from the Pledge and Transferred to the Paying Agent, free and clear of the Pledge created thereby. The Company shall instruct the Collateral Agent in writing as to the Permitted Investments in which any payments received under this Section 5.03(a) (which, for purpose of confirmation, includes the excess Proceeds received under Section 6.05(b)) shall be invested; provided, however , that if the Company fails to deliver such instructions by 10:30 A.M. (New York City time) on the day such payments are received by the Collateral Agent, the Collateral Agent shall invest such payments in the Permitted Investments as described in clause (6) of the definition of Permitted Investments. The Collateral Agent shall have no liability in respect of losses incurred as a result of the failure of the Company to provide timely written investment direction. The Collateral Agent may conclusively rely on any written direction and shall bear no liability for any loss or other damage based on acting or omitting to act under this Section 5.03 (which, for purpose of confirmation, includes acting or omitting to act under Section 6.05(b) in respect of excess Proceeds referred to therein) pursuant to any direction of the Company or any investment in Permitted Investments as described in clause (6) of the definition of Permitted Investments as provided herein and neither the Collateral Agent nor the Securities Intermediary shall in any way be liable for the selection of Permitted Investments or by reason of any insufficiency in the Collateral Account resulting from any loss on any Permitted Investment included therein.

(b) All payments of principal received by the Custodial Agent in respect of the Custody Notes shall be transferred to the Paying Agent.

(c) All payments of principal received by the Collateral Agent or the Securities Intermediary in respect of (1) the Pledged Notes and (2) the Pledged Treasury Securities or security entitlements thereto, that, in each case, have been released from the Pledge pursuant hereto (other than Pledged Notes that upon such release shall have become Custody Notes in accordance with Section 6.03) shall be transferred to or in accordance with the written instructions of the Paying Agent.

 

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Section 5.04 Payments to Property Trustee.

The Securities Intermediary and the Custodial Agent shall use commercially reasonable efforts to deliver payments to the Paying Agent or the Property Trustee as provided hereunder to the following account established by the Paying Agent or the Property Trustee, for credit to Wilmington Trust Company, ABA 0311-00092, A/C 089816-000, Ref: Wells Fargo Capital XV Property Account, not later than 12:00 P.M. (New York City time) on the Business Day it receives such payment; provided, however , that if such payment is required to be made on a day that is not a Business Day or after 10:00 A.M. (New York City time) on a Business Day, then it shall use commercially reasonable efforts to deliver such payment to the Paying Agent or the Property Trustee no later than 10:30 A.M. (New York City time) on the next succeeding Business Day.

Section 5.05 Assets Not Properly Released.

If the Paying Agent or the Property Trustee shall receive any principal payments on account of financial assets credited to the Collateral Account and not released therefrom in accordance with this Agreement, the Paying Agent or the Property Trustee shall hold the same as trustee of an express trust for the benefit of the Company and, upon receipt of an Officers’ Certificate of the Company so directing, promptly deliver the same to the Securities Intermediary for credit to the Collateral Account or to the Company for application to the Obligations, and the Paying Agent or the Property Trustee shall acquire no right, title or interest in any such payments of principal amounts so received. Neither the Paying Agent nor the Property Trustee shall have any liability under this Section 5.05 unless and until it has been notified in writing that such payment was delivered to it erroneously and nor shall it have any liability for any action taken, suffered or omitted to be taken prior to its receipt of such notice.

Section 5.06 Withholding.

Any payment hereunder shall be made less any withholding or backup withholding as required by law, and any such withholding shall be deemed as if made to the intended recipient of such payment.

ARTICLE VI

I NITIAL D EPOSIT ; E XCHANGE OF N ORMAL PPS AND

Q UALIFYING T REASURY S ECURITIES FOR S TRIPPED PPS AND C APITAL PPS; R EINVESTMENT OF

P ROCEEDS OF P LEDGED T REASURY S ECURITIES

Section 6.01 Initial Deposit of Notes.

(a) Prior to or concurrently with the execution and delivery of this Agreement, the Property Trustee shall Transfer to the Securities Intermediary, for credit to the Collateral Account, Notes having an aggregate principal amount of $1,750,100,000.

(b) The Collateral Agent shall, at any time or from time to time, at the written request of the Company, cause any or all securities or other property underlying any financial assets credited to the Collateral Account to be registered in the name of the Securities Intermediary, the Collateral Agent or their respective nominees; provided, however , that unless any Event of Default shall have occurred and be continuing, and in respect of which the Collateral Agent shall have received written notice from the Property Trustee or the Administrative Trustees, the Collateral Agent agrees not to cause any Notes to be so re-registered.

 

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Section 6.02 Exchange of Normal PPS and Qualifying Treasury Securities for Stripped PPS and Capital PPS.

(a) On each occasion on which a Holder of Normal PPS exercises its rights pursuant to Sections 5.13(a)(i), (b) and (c) of the Trust Agreement to exchange Normal PPS and Qualifying Treasury Securities for Stripped PPS and Capital PPS by, during any Exchange Period:

(i) depositing with the Securities Intermediary, for credit to the Collateral Account the treasury security that is the Qualifying Treasury Security on the date of deposit, in the principal amount of $1,000 for each Normal PPS being Exchanged;

(ii) Transferring the Normal PPS being Exchanged to the Securities Registrar; and

(iii) delivering a duly executed and completed Stripping Notice and Request to the Securities Registrar and Collateral Agent (x) stating that the Holder has deposited the appropriate Qualifying Treasury Securities with the Collateral Agent for deposit in the Collateral Account, (y) stating that the Holder is Transferring the related Normal PPS to the Securities Registrar in connection with an Exchange of such Normal PPS and Qualifying Treasury Securities for a Like Amount of Stripped PPS and Capital PPS, and (z) requesting the delivery to the Holder of such Stripped PPS and Capital PPS,

the Collateral Agent shall, upon the deposit and Transfer pursuant to clauses (i) and (ii) and receipt of the notice and request referred to in clause (iii), (w) be deemed to accept the Qualifying Treasury Securities deposited pursuant to clause (i) as Collateral subject to the Pledge, (x) release Pledged Notes of a Like Amount from the Pledge, (y) Transfer such Pledged Notes to the Custodial Account free and clear of the Company’s security interest therein, and (z) confirm to the Property Trustee in writing that such release and Transfer has occurred. The Custodial Agent shall continue to hold such Notes as Custody Notes pursuant to Article IV.

(b) The Securities Registrar, pursuant to the procedures provided for in Section 5.11 of the Trust Agreement dealing with increasing and decreasing the number of Trust Preferred Securities evidenced by Book-Entry Trust Preferred Securities Certificates, shall cancel the number of Normal PPS Transferred pursuant to Section 6.02(a) and deliver a Like Amount of Stripped PPS and Capital PPS to the Holder, all by making appropriate notations on the Book-Entry Trust Preferred Securities Certificates of the appropriate Series.

(c) The substitution of Qualifying Treasury Securities, or security entitlements thereto, for financial assets held in the Collateral Account pursuant to this Section 6.02, shall not constitute a novation of the security interest created hereby.

Section 6.03 Exchange of Stripped PPS and Capital PPS for Normal PPS and Qualifying Treasury Securities.

(a) On each occasion on which a Holder of Stripped PPS and Capital PPS exercises its rights pursuant to Sections 5.13(d) of the Trust Agreement to exchange Stripped PPS and Capital PPS for Normal PPS and Qualifying Treasury Securities by, during any Exchange Period, Transferring the

 

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Stripped PPS and the Capital PPS being Exchanged to the Securities Registrar and delivering a duly executed and completed Recombination Notice and Request to the Securities Registrar and Collateral Agent (x) stating that the Holder is Transferring the related Stripped PPS and Capital PPS to the Securities Registrar in connection with the Exchange of such Stripped PPS and Capital PPS for a Like Amount of each of Normal PPS and Pledged Treasury Securities, (y) requesting the Collateral Agent to release from the Pledge and deliver to the Holder Pledged Treasury Securities in a principal amount equal to the Liquidation Amount of the Stripped PPS being exchanged, and (z) requesting the Securities Registrar to deliver to the Holder Normal PPS of a Like Amount:

(i) the Custodial Agent shall Transfer a Like Amount of Notes from the Custody Account to the Collateral Account in substitution for such Pledged Treasury Securities;

(ii) the Collateral Agent shall be deemed to accept the Notes Transferred by the Custodial Agent pursuant to clause (i) as Collateral subject to the Pledge; and

(iii) the Collateral Agent shall release Pledged Treasury Securities of a Like Amount from the Pledge and deliver such Qualifying Treasury Securities to the Holder free and clear of the Company’s security interest therein, and confirm in writing to the Property Trustee that such release and Transfer has occurred; and

the Securities Registrar, pursuant to the procedures provided for in Section 5.11 of the Trust Agreement dealing with increasing and decreasing the number of Trust Preferred Securities evidenced by Book-Entry Trust Preferred Securities Certificates, shall cancel the number of Stripped PPS and Capital PPS delivered pursuant to Section 6.03(a) and deliver a Like Amount of Normal PPS to the Holder, all by making appropriate notations on the Book-Entry Trust Preferred Securities Certificates of the appropriate Series.

(b) The substitution of Notes for financial assets held in the Collateral Account pursuant to this Section 6.03, shall not constitute a novation of the security interest created hereby.

Section 6.04 Termination Event; Redemption Prior to Stock Purchase Date.

(a) Upon receipt by the Collateral Agent of written notice from the Company, the Property Trustee or any of the Administrative Trustees of the Issuer Trust that (x) a Termination Event has occurred or (y) the Stock Purchase Contracts have been terminated upon redemption of all the Notes prior to the Stock Purchase Date in accordance with the Indenture, the Collateral Agent shall release all Collateral from the Pledge and shall promptly instruct the Securities Intermediary to Transfer:

(i) any Pledged Notes;

(ii) any Proceeds of the Deposit; and

(iii) any Pledged Treasury Securities,

to the Property Trustee, free and clear of the Pledge created hereby.

 

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(b) If such Termination Event shall result from the Company’s becoming a debtor under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail promptly to effectuate the release and Transfer of all Pledged Notes, Pledged Treasury Securities, Permitted Investments, the Deposit and Proceeds of any of the foregoing, as the case may be, as provided by this Section 6.04, the Property Trustee or any of the Administrative Trustees shall:

(i) use its best efforts to obtain an opinion of a nationally recognized law firm to the effect that, notwithstanding the Company being the debtor in such a bankruptcy case, the Collateral Agent will not be prohibited from releasing or Transferring the Collateral as provided in this Section 6.04 and shall deliver or cause to be delivered such opinion to the Collateral Agent within ten calendar days after the occurrence of such Termination Event, and if (A) the Property Trustee or any of the Administrative Trustees shall be unable to obtain such opinion within ten calendar days after the occurrence of such Termination Event or (B) the Collateral Agent shall continue, after delivery of such opinion, to refuse to effectuate the release and Transfer of all Pledged Notes, Pledged Treasury Securities, Permitted Investments, the Deposit and Proceeds of any of the foregoing, as the case may be, as provided in this Section 6.04, then the Property Trustee shall within 15 calendar days after the occurrence of such Termination Event commence an action or proceeding in the court having jurisdiction of the Company’s case under the Bankruptcy Code seeking an order requiring the Collateral Agent to effectuate the release and Transfer of all Pledged Notes, Pledged Treasury Securities, Permitted Investments, the Deposit and Proceeds of any of the foregoing, or as the case may be, as provided by this Section 6.04; or

(ii) commence an action or proceeding like that described in Section 6.04(b)(i) hereof within 10 calendar days after the occurrence of such Termination Event.

Section 6.05 Reinvestment of Proceeds of Pledged Treasury Securities.

(a) At or about 11:00 A.M., New York City time, on each Trade Date, the Collateral Agent shall select at least three Reference Dealers (including at least three Reference Dealers named on Schedule I hereto or named by any of the Administrative Trustees as replacements therefor who are approved counterparties of Wilmington Trust Company) and request each of them to provide a commitment (which may be oral if promptly confirmed in writing by facsimile or e-mail), satisfactory in form to the Collateral Agent, to the effect that if selected as the Final Dealer, such Reference Dealer shall sell to the Collateral Agent, for delivery against payment on the immediately succeeding Roll Date, an aggregate principal amount of the U.S. treasury security that is the Qualifying Treasury Security on such Roll Date equal to the aggregate principal amount of Qualifying Treasury Securities held in the Collateral Account on such Trade Date. If the Collateral Agent shall have received at least two firm offers, it shall select the lowest offer and the Reference Dealer providing the lowest offer shall be the “ Final Dealer ”; provided, however , that if two or more Reference Dealers have provided identical lowest offers, the Collateral Agent shall select any of these Reference Dealers as the Final Dealer in its absolute discretion. The Final Dealer shall be obligated to sell to the Collateral Agent, for Cash on the Roll Date, the aggregate principal amount of the U.S. treasury security specified in such offer. If the Collateral Agent determines that (i) a Market Disruption Event has occurred or (ii) fewer than two Reference Dealers have provided firm offers in a timely manner meeting the foregoing requirements, the steps contemplated above shall be taken on each succeeding Business Day on which the Collateral Agent determines that no Market Disruption Event has occurred until at least two Reference Dealers have provided such offers, except that the Collateral Agent shall request offers from the Reference Dealers for same day settlement. The Collateral Agent shall use reasonable care in administering the foregoing procedures and shall have no liability in connection therewith to the Issuer Trust, the Property Trustee, the Company or any other Person in the absence of gross negligence or willful misconduct. All determinations regarding whether a Market Disruption Event has occurred shall be made by the Collateral Agent in its sole discretion.

 

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(b) On each Roll Date (or, if no Final Dealer shall have been selected on the Trade Date, on the date that the Final Dealer is selected), the Collateral Agent shall instruct the Securities Intermediary to apply the Proceeds of the U.S. treasury securities held in the Collateral Account to the purchase price of the aggregate principal amount of the U.S. treasury security specified in the Final Dealer’s offer, which shall be deposited in the Collateral Account, and to apply the excess of such Proceeds over the purchase price of the Qualifying Treasury Securities to purchase Permitted Investments for deposit in the Collateral Account.

(c) On each Additional Distribution Date, if the Qualifying Treasury Securities shall have been purchased and deposited in the Collateral Account, the Collateral Agent shall liquidate the Permitted Investments in the Collateral Account and direct the Securities Intermediary to pay the Proceeds to the Payment Account.

Section 6.06 Application of Proceeds in Settlement of Stock Purchase Contracts.

(a) The Issuer Trust (acting through the Property Trustee) agrees to pay the purchase price under the Stock Purchase Contracts on the Stock Purchase Date from the Proceeds of the Qualifying Treasury Securities held in the Collateral Account and the Deposit (or in the circumstances set forth in Section 2.2(b) of the Stock Purchase Contract Agreement, by assignment thereof). Without receiving any further instruction from the Property Trustee, the Collateral Agent shall, in settlement of such Stock Purchase Contracts on the Stock Purchase Date, (i) instruct the Securities Intermediary to remit Proceeds of the Qualifying Treasury Securities to the Company and (ii) instruct the Bank to pay the Proceeds of the Deposit to the Company in an amount equal to the excess of the Purchase Price over the amount of the Proceeds of the Qualifying Treasury Securities.

(b) In the event of a Failed Remarketing, the Collateral Agent, for the benefit of the Company, will, at the written instruction of the Company to the fullest extent permitted by applicable law, deliver or dispose of the Pledged Notes in accordance with the Company’s written instructions to satisfy in full, from any such disposition or retention, the obligations of the Issuer Trust to pay the purchase price for the shares of Preferred Stock to be issued under the Stock Purchase Contracts to the extent not paid from the Proceeds of the Qualifying Treasury Securities held in the Collateral Account, and the Company hereby waives any claim it may otherwise have for any deficiency under the UCC or other applicable law.

(c) Thereafter, the Collateral Agent shall promptly remit the Proceeds of the Qualifying Treasury Securities held in the Collateral Account in excess of the aggregate purchase price for the shares of Preferred Stock to be issued under such Stock Purchase Contracts to the Property Trustee or to the Paying Agent on behalf of the Property Trustee for deposit into the Payment Account.

ARTICLE VII

V OTING R IGHTS — N OTES

Section 7.01 Voting Rights.

The Property Trustee on behalf of the Issuer Trust may, subject to the Trust Agreement, exercise, or refrain from exercising, any and all voting and other consensual rights pertaining to the Notes or any part thereof for any purpose not inconsistent with the terms of this Agreement and in accordance with the terms of the Stock Purchase Contract Agreement; provided , however , that the Property Trustee shall not exercise or shall not refrain from exercising such right with respect to any Notes, if, in the

 

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reasonable judgment of the Property Trustee, such action would impair or otherwise have a material adverse effect on the value of all or any of the Notes; and provided , further , that the Property Trustee shall give the Company, the Collateral Agent and the Custodial Agent, at least five Business Days’ prior written notice of the manner in which it intends to exercise, or its reasons for refraining from exercising, any such right. Upon receipt of any notices and other communications in respect of any Notes, including notice of any meeting at which holders of the Notes are entitled to vote or solicitation of consents, waivers or proxies of holders of the Notes, the Collateral Agent and the Custodial Agent shall use reasonable efforts to send promptly to the Property Trustee such notice or communication, and as soon as reasonably practicable after receipt of a written request therefor from the Property Trustee, execute and deliver to the Property Trustee such proxies and other instruments in respect of such Notes (in form and substance reasonably satisfactory to the Collateral Agent or the Custodial Agent, as the case may be) as are prepared by the Company and delivered to the Property Trustee with respect to the Notes.

ARTICLE VIII

R IGHTS AND R EMEDIES

Section 8.01 Rights and Remedies of the Collateral Agent.

(a) In addition to the rights and remedies specified in Section 6.04 or otherwise available at law or in equity, after an event of default under the Stock Purchase Contracts, the Collateral Agent shall have all of the rights and remedies with respect to the Collateral of a secured party under the UCC (whether or not the UCC is in effect in the jurisdiction where the rights and remedies are asserted) and the TRADES Regulations and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted. Without limiting the generality of the foregoing, such remedies may include, to the extent permitted by applicable law, (1) retention of the Pledged Notes or the Pledged Treasury Securities in full satisfaction of the Issuer Trust’s or the Property Trustee’s obligations under the Stock Purchase Contracts and the Stock Purchase Contract Agreement or (2) sale of the Pledged Notes or the Pledged Treasu