Additional
Information about the Issuer, the Guarantor and the Securities
You
should read this pricing supplement together with the market measure supplement dated May 18, 2018, the prospectus supplement
dated May 18, 2018 and the prospectus dated April 5, 2019 for additional information about the securities. When you read the accompanying
market measure supplement and prospectus supplement, please note that all references in such supplements to the prospectus dated
April 27, 2018, or to any sections therein, should refer instead to the accompanying prospectus dated April 5, 2019 or to the
corresponding sections of such prospectus, as applicable. Information included in this pricing supplement supersedes information
in the market measure supplement, prospectus supplement and prospectus to the extent it is different from that information. Certain
defined terms used but not defined herein have the meanings set forth in the prospectus supplement.
When
we refer to “we,” “us” or “our” in this pricing supplement, we refer only to Wells Fargo Finance
LLC and not to any of its affiliates, including Wells Fargo & Company.
You
may access the market measure supplement, prospectus supplement and prospectus on the SEC website www.sec.gov as follows (or if
such address has changed, by reviewing our filing for the relevant date on the SEC website):
Estimated
Value of the Securities
The
original offering price of each security includes certain costs that are borne by you. Because of these costs, the estimated value
of the securities on the trade date is less than the original offering price. The costs included in the original offering price
relate to selling, structuring, hedging and issuing the securities, as well as to our funding considerations for debt of this
type.
The
costs related to selling, structuring, hedging and issuing the securities include (i) the agent discount (if any), (ii) the projected
profit that our hedge counterparty (which may be one of our affiliates or a dealer participating in the distribution of the securities)
expects to realize for assuming risks inherent in hedging our obligations under the securities and (iii) hedging and other costs
relating to the offering of the securities.
Our
funding considerations take into account the higher issuance, operational and ongoing management costs of market-linked debt such
as the securities as compared to conventional debt of Wells Fargo & Company of the same maturity, as well as our and our affiliates’
liquidity needs and preferences. Our funding considerations are reflected in the fact that we determine the economic terms of
the securities based on an assumed rate that is generally lower than our internal funding rate, which is described below and is
used in determining the estimated value of the securities.
If
the costs relating to selling, structuring, hedging and issuing the securities were lower, or if the assumed rate we use to determine
the economic terms of the securities were higher, the economic terms of the securities would be more favorable to you and the
estimated value would be higher. The estimated value of the securities as of the trade date is set forth on the cover page
of this pricing supplement.
Determining
the estimated value
Our
affiliate, Wells Fargo Securities, LLC (“WFS”), calculated the estimated value of the securities set forth
on the cover page of this pricing supplement based on its proprietary pricing models. Based on these pricing models and related
market inputs and assumptions referred to in this section below, WFS determined an estimated value for the securities by estimating
the value of the combination of hypothetical financial instruments that would replicate the payout on the securities, which combination
consists of a non-interest bearing, fixed-income bond (the “debt component”) and one or more derivative instruments
underlying the economic terms of the securities (the “derivative component”).
The
estimated value of the debt component is based on an internal funding rate that reflects, among other things, our and our affiliates’
view of the funding value of the securities. This rate is used for purposes of determining the estimated value of the securities
since we expect secondary market prices, if any, for the securities that are provided by WFS or any of its affiliates to generally
reflect such rate. WFS determined the estimated value of the securities based on this internal funding rate, rather than the assumed
rate that we use to determine the economic terms of the securities, for the same reason.
WFS
calculated the estimated value of the derivative component based on a proprietary derivative-pricing model, which generated a
theoretical price for the derivative instruments that constitute the derivative component based on various inputs, including the
“derivative component factors” identified in “Risk Factors—The Value Of The Securities Prior To Stated
Maturity Will Be Affected By Numerous Factors, Some Of Which Are Related In Complex Ways.” These inputs may be market-observable
or may be based on assumptions made by WFS in its discretion.
The
estimated value of the securities determined by WFS is subject to important limitations. See “Risk Factors—The Estimated
Value Of The Securities Is Determined By Our Affiliate’s Pricing Models, Which May Differ From Those Of Other Dealers”
and “Risk Factors—Our And The Guarantor’s Economic Interests And Those Of Any Dealer Participating In The Offering
Are Potentially Adverse To Your Interests.”
Valuation
of the securities after issuance
The
estimated value of the securities is not an indication of the price, if any, at which WFS or any other person may be willing to
buy the securities from you in the secondary market. The price, if any, at which WFS or any of its affiliates may purchase the
securities in the secondary market will be based upon WFS’s proprietary pricing models and will fluctuate over the term
of the securities due to changes in market conditions and other relevant factors. However, absent changes in these market conditions
and other relevant factors, except as otherwise described in the following paragraph, any secondary market price will be lower
than the estimated value on the trade date because the secondary market price will be reduced by a bid-offer spread, which may
vary depending on the aggregate face amount of the securities to be purchased in the secondary market transaction, and the expected
cost of unwinding any related hedging transactions. Accordingly, unless market conditions and other relevant factors change significantly
in your favor, any secondary market price for the securities is likely to be less than the original offering price.
If
WFS or any of its affiliates makes a secondary market in the securities at any time up to the original issue date or during the
3-month period following the trade date, the secondary market price offered by WFS or any of its affiliates will be increased
by an amount reflecting a portion of the costs associated with selling, structuring, hedging and issuing the
securities
that are included in the original offering price. Because this portion of the costs is not fully deducted upon issuance, any secondary
market price offered by WFS or any of its affiliates during this period will be higher than it would be if it were based solely
on WFS’s proprietary pricing models less the bid-offer spread and hedging unwind costs described above. The amount of this
increase in the secondary market price will decline steadily to zero over this 3-month period. If you hold the securities through
an account at WFS or any of its affiliates, we expect that this increase will also be reflected in the value indicated for the
securities on your brokerage account statement.
If
WFS or any of its affiliates makes a secondary market in the securities, WFS expects to provide those secondary market prices
to any unaffiliated broker-dealers through which the securities are held and to commercial pricing vendors. If you hold your securities
through an account at a broker-dealer other than WFS or any of its affiliates, that broker-dealer may obtain market prices for
the securities from WFS (directly or indirectly), but could also obtain such market prices from other sources, and may be willing
to purchase the securities at any given time at a price that differs from the price at which WFS or any of its affiliates is willing
to purchase the securities. As a result, if you hold your securities through an account at a broker-dealer other than WFS or any
of its affiliates, the value of the securities on your brokerage account statement may be different than if you held your securities
at WFS or any of its affiliates.
The
securities will not be listed or displayed on any securities exchange or any automated quotation system. Although WFS and/or its
affiliates may buy the securities from investors, they are not obligated to do so and are not required to make a market for the
securities. There can be no assurance that a secondary market will develop.
Investor
Considerations
We
have designed the securities for investors who:
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seek
leveraged exposure at the upside participation rate to any upside performance of the
underlier, as measured by the extent (if any) to which the final underlier level is greater
than the initial underlier level, subject to the maximum settlement amount;
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desire
payment of the face amount at maturity so long as the final underlier level is not less
than the initial underlier level by more than the buffer amount;
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desire
to moderate any decline from the initial underlier level to the final underlier level
in excess of the buffer amount through the buffer feature;
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understand
that the ability of the buffer feature to moderate any decline in the underlier in excess
of the buffer amount is progressively reduced as the final underlier level declines because
they will be exposed on a leveraged basis to any decline in the underlier in excess of
the buffer amount;
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understand
that if the final underlier level is less than the initial underlier level by more than
the buffer amount, they will be exposed to the decrease in the underlier from the initial
underlier level, subject to the buffer feature, and will lose some, and possibly all,
of the face amount of the securities;
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are
willing to forgo interest payments on the securities and dividends on securities included
in the underlier; and
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are
willing to hold the securities until maturity.
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The
securities are not designed for, and may not be a suitable investment for, investors who:
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seek
a liquid investment or are unable or unwilling to hold the securities to maturity;
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are
unwilling to accept the risk that the final underlier level may decrease from the initial
underlier level by more than the buffer amount;
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seek
uncapped exposure to the upside performance of the underlier;
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seek
certainty of receiving the face amount of the securities at stated maturity;
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are
unwilling to purchase securities with an estimated value as of the trade date that is
lower than the original offering price, as set forth on the cover page;
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are
unwilling to accept the risk of exposure to foreign developed equity markets;
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seek
exposure to the underlier but are unwilling to accept the risk/return trade-offs inherent
in the payment at stated maturity for the securities;
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are
unwilling to accept the credit risk of Wells Fargo Finance LLC and Wells Fargo &
Company to obtain exposure to the underlier generally, or to the exposure to the underlier
that the securities provide specifically; or
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prefer
the lower risk of fixed income investments with comparable maturities issued by companies
with comparable credit ratings.
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Hypothetical
Payout Profile
The
following profile is based on a maximum settlement amount of 127.795% of the face amount or $1,277.95 per security, an upside
participation rate of 1.7, a buffer level equal to 85% of the initial underlier level, a buffer rate of approximately 1.1765 and
a buffer amount of 15%. This graph has been prepared for purposes of illustration only. Your actual return will depend on the
actual final underlier level and whether you hold your securities to maturity.
Risk
Factors
The
securities have complex features and investing in the securities will involve risks not associated with an investment in conventional
debt securities. You should carefully consider the risk factors set forth below as well as the other information contained in
this pricing supplement and the accompanying market measure supplement, prospectus supplement and prospectus, including the documents
they incorporate by reference. As described in more detail below, the value of the securities may vary considerably before the
stated maturity date due to events that are difficult to predict and are beyond our control. You should reach an investment decision
only after you have carefully considered with your advisors the suitability of an investment in the securities in light of your
particular circumstances.
You
May Lose Up To All Of Your Investment.
We
will not repay you a fixed amount on the securities on the stated maturity date. The cash settlement amount will depend on the
direction of and percentage change in the final underlier level relative to the initial underlier level and the other terms of
the securities. Because the level of the underlier will be subject to market fluctuations, the cash settlement amount you receive
may be more or less, and possibly significantly less, than the original offering price of your securities.
If
the final underlier level is less than the initial underlier level by more than the buffer amount, the cash settlement amount
will be less than the face amount per security and you will be exposed on a leveraged basis to the decline in the underlier beyond
the buffer amount. As a result, you may receive less than, and possibly lose all of, the face amount per security at maturity
even if the level of the underlier is greater than or equal to the initial underlier level or the buffer level at certain points
during the term of the securities.
Even
if the final underlier level is greater than the initial underlier level, the amount you receive at stated maturity may only be
slightly greater than the face amount, and your yield on the securities may be less than the yield you would earn if you bought
a traditional interest-bearing debt security of Wells Fargo Finance LLC or another issuer with a similar credit rating with the
same stated maturity date.
Your
Return Will Be Limited By The Maximum Settlement Amount And May Be Lower Than The Return On A Direct Investment In The Underlier.
Your
return on the securities will be subject to a maximum settlement amount. The opportunity to participate in the possible increases
in the level of the underlier through an investment in the securities will be limited because the cash settlement amount will
not exceed the maximum settlement amount. Furthermore, the effect of the upside participation rate will be progressively reduced
for all final underlier levels exceeding the final underlier level at which the maximum settlement amount is reached, which we
refer to as the cap level.
No
Periodic Interest Will Be Paid On The Securities.
No
periodic payments of interest will be made on the securities. However, if the agreed-upon tax treatment is successfully challenged
by the Internal Revenue Service (the “IRS”), you may be required to recognize taxable income over the term
of the securities. You should review the section of this pricing supplement entitled “United States Federal Tax Considerations.”
The
Securities Are Subject To Credit Risk.
The
securities are our obligations, are fully and unconditionally guaranteed by the Guarantor and are not, either directly or indirectly,
an obligation of any other third party. Any amounts payable under the securities are subject to creditworthiness, and you will
have no ability to pursue any securities included in the underlier for payment. As a result, our and the Guarantor’s actual
and perceived creditworthiness may affect the value of the securities and, in the event we and the Guarantor were to default on
the obligations under the securities and the guarantee, you may not receive any amounts owed to you under the terms of the securities.
As
A Finance Subsidiary, We Have No Independent Operations And Will Have No Independent Assets.
As
a finance subsidiary, we have no independent operations beyond the issuance and administration of our securities and will have
no independent assets available for distributions to the holders of our securities if they make claims in respect of such securities
in a bankruptcy, resolution or similar proceeding. Accordingly, any recoveries by such holders will be limited to those available
under the related guarantee by the Guarantor and that guarantee will rank pari passu with all other unsecured, unsubordinated
obligations of the Guarantor. Holders will have recourse only to a single claim against the Guarantor and its assets under the
guarantee. Holders of the securities should accordingly assume that in any such proceedings they would not have any priority over
and should be treated pari passu with the claims of other unsecured, unsubordinated creditors of the Guarantor, including
holders of unsecured, unsubordinated debt securities issued by the Guarantor.
Holders
Of The Securities Have Limited Rights Of Acceleration.
Payment
of principal on the securities may be accelerated only in the case of payment defaults that continue for a period of 30 days,
certain events of bankruptcy or insolvency relating to Wells Fargo Finance LLC only, whether voluntary or involuntary, certain
situations under which the guarantee ceases to be in full force and effect or if the Guarantor denies or disaffirms its obligations
under the guarantee. If you purchase the securities, you will have no right to accelerate the payment of principal on the securities
if we fail in the performance of any of our obligations under the securities, other than the obligations to pay principal and
interest on the securities. See “Description of Debt Securities of Wells Fargo Finance LLC—Events of Default and Covenant
Breaches” in the accompanying prospectus.
Holders
Of The Securities Could Be At Greater Risk For Being Structurally Subordinated If Either We Or The Guarantor Convey, Transfer
Or Lease All Or Substantially All Of Our Or Its Assets To One Or More Of The Guarantor’s Subsidiaries.
Under
the indenture, we may convey, transfer or lease all or substantially all of our assets to one or more of the Guarantor’s
subsidiaries. Similarly, the Guarantor may convey, transfer or lease all or substantially all of its assets to one or more of
its subsidiaries. In either case, third-party creditors of the Guarantor’s subsidiaries would have additional assets from
which to recover on their claims while holders of the securities would be structurally subordinated to creditors of the Guarantor’s
subsidiaries with respect to such assets. See “Description of Debt Securities of Wells Fargo Finance LLC—Consolidation,
Merger or Sale” in the accompanying prospectus.
The
Securities Will Not Have The Benefit Of Any Cross-Default Or Cross-Acceleration With Other Indebtedness Of The Guarantor; Events
Of Bankruptcy, Insolvency, Receivership Or Liquidation Relating To The Guarantor And Failure By The Guarantor To Perform Any Of
Its Covenants Or Warranties (Other Than A Payment Default Under The Guarantee) Will Not Constitute An Event Of Default With Respect
To The Securities.
The
securities will not have the benefit of any cross-default or cross-acceleration with other indebtedness of the Guarantor. In addition,
events of bankruptcy, insolvency, receivership or liquidation relating to the Guarantor and failure by the Guarantor to perform
any of its covenants or warranties (other than a payment default under the guarantee) will not constitute an event of default
with respect to the securities.
The
Estimated Value Of The Securities On The Trade Date, Based On WFS’s Proprietary Pricing Models, Is Less Than The Original
Offering Price.
The
original offering price of the securities includes certain costs that are borne by you. Because of these costs, the estimated
value of the securities on the trade date is less than the original offering price. The costs included in the original offering
price relate to selling, structuring, hedging and issuing the securities, as well as to our funding considerations for debt of
this type. The costs related to selling, structuring, hedging and issuing the securities include (i) the agent discount (if any),
(ii) the projected profit that our hedge counterparty (which may be one of our affiliates or a dealer participating in the distribution
of the securities) expects to realize for assuming risks inherent in hedging our obligations under the securities and (iii) hedging
and other costs relating to the offering of the securities. Our funding considerations are reflected in the fact that we determine
the economic terms of the securities based on an assumed rate that is generally lower than our internal funding rate, which is
described above under “Estimated Value of the Securities—Determining the estimated value.” If the costs relating
to selling, structuring, hedging and issuing the securities were lower, or if the assumed rate we use to determine the economic
terms of the securities were higher, the economic terms of the securities would be more favorable to you and the estimated value
would be higher.
The
Estimated Value Of The Securities Is Determined By Our Affiliate’s Pricing Models, Which May Differ From Those Of Other
Dealers.
The
estimated value of the securities was determined for us by WFS using its proprietary pricing models and related market inputs
and assumptions referred to above under “Estimated Value of the Securities—Determining the estimated value.”
Certain inputs to these models may be determined by WFS in its discretion. WFS’s views on these inputs may differ from other
dealers’ views, and WFS’s estimated value of the securities may be higher, and perhaps materially higher, than the
estimated value of the securities that would be determined by other dealers in the market. WFS’s models and its inputs and
related assumptions may prove to be wrong and therefore not an accurate reflection of the value of the securities.
The
Estimated Value Of The Securities Is Not An Indication Of The Price, If Any, At Which WFS Or Any Other Person May Be Willing To
Buy The Securities From You In The Secondary Market.
The
price, if any, at which WFS or any of its affiliates may purchase the securities in the secondary market will be based on WFS’s
proprietary pricing models and will fluctuate over the term of the securities as a result of changes in the market and other factors
described in the next risk factor. Any such secondary market price for the securities will also be reduced by a bid-offer spread,
which may vary depending on the aggregate face amount of the securities to be purchased in the
secondary
market transaction, and the expected cost of unwinding any related hedging transactions. Unless the factors described in the next
risk factor change significantly in your favor, any such secondary market price for the securities is likely to be less than the
original offering price.
If
WFS or any of its affiliates makes a secondary market in the securities at any time up to the original issue date or during the
3-month period following the trade date, the secondary market price offered by WFS or any of its affiliates will be increased
by an amount reflecting a portion of the costs associated with selling, structuring, hedging and issuing the securities that are
included in the original offering price. Because this portion of the costs is not fully deducted upon issuance, any secondary
market price offered by WFS or any of its affiliates during this period will be higher than it would be if it were based solely
on WFS’s proprietary pricing models less the bid-offer spread and hedging unwind costs described above. The amount of this
increase in the secondary market price will decline steadily to zero over this 3-month period. If you hold the securities through
an account at WFS or any of its affiliates, we expect that this increase will also be reflected in the value indicated for the
securities on your brokerage account statement. If you hold your securities through an account at a broker-dealer other than WFS
or any of its affiliates, the value of the securities on your brokerage account statement may be different than if you held your
securities at WFS or any of its affiliates, as discussed above under “Estimated Value of the Securities—Valuation
of the securities after issuance.”
The
Value Of The Securities Prior To Stated Maturity Will Be Affected By Numerous Factors, Some Of Which Are Related In Complex Ways.
The
value of the securities prior to stated maturity will be affected by the level of the underlier at that time, interest rates at
that time and a number of other factors, some of which are interrelated in complex ways. The effect of any one factor may be offset
or magnified by the effect of another factor. The following factors, which we refer to as the “derivative component factors,”
are expected to affect the value of the securities. When we refer to the “value” of your security, we mean
the value that you could receive for your security if you are able to sell it in the open market before the stated maturity date.
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Underlier
Performance. The value of the securities prior to maturity will depend substantially
on the then-current level of the underlier. The price at which you may be able to sell
the securities before stated maturity may be at a discount, which could be substantial,
from their original offering price, if the level of the underlier at such time is less
than, equal to or not sufficiently above the initial underlier level.
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Interest
Rates. The value of the securities may be affected by changes in the interest rates
in the U.S. markets.
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Volatility
Of The Underlier. Volatility is the term used to describe the size and frequency
of market fluctuations. The value of the securities may be affected if the volatility
of the underlier changes.
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Time
Remaining To Maturity. The value of the securities at any given time prior to maturity
will likely be different from that which would be expected based on the then-current
level of the underlier. This difference will most likely reflect a discount due to expectations
and uncertainty concerning the level of the underlier during the period of time still
remaining to the stated maturity date. In general, as the time remaining to maturity
decreases, the value of the securities will approach the amount that could be payable
at maturity based on the then-current level of the underlier.
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Dividend
Yields On The Securities Included In The Underlier. The value of the securities may
be affected by the dividend yields on securities included in the underlier.
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Currency
Exchange Rates. Because the underlier includes securities quoted in one or more foreign
currencies and the level of the underlier is based on the U.S. dollar value of such securities,
the value of the securities may be affected if the exchange rate between the U.S. dollar
and any such foreign currency changes.
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In
addition to the derivative component factors, the value of the securities will be affected by actual or anticipated changes in
our and the Guarantor’s creditworthiness. You should understand that the impact of one of the factors specified above, such
as a change in interest rates, may offset some or all of any change in the value of the securities attributable to another factor,
such as a change in the level of the underlier. Because several factors are expected to affect the value of the securities, changes
in the level of the underlier may not result in a comparable change in the value of the securities. We anticipate that the value
of the securities will always be at a discount to the maximum settlement amount.
The
Securities Will Not Be Listed On Any Securities Exchange And We Do Not Expect A Trading Market For The Securities To Develop.
The
securities will not be listed or displayed on any securities exchange or any automated quotation system. Although the agent and/or
its affiliates may purchase the securities from holders, they are not obligated to do so and are not required to make a market
for the securities. There can be no assurance that a secondary market will develop. Because we do not expect that any market makers
will participate in a secondary market for the securities, the price at which you may be able to sell your securities is likely
to depend on the price, if any, at which the agent is willing to buy your securities.
If
a secondary market does exist, it may be limited. Accordingly, there may be a limited number of buyers if you decide to sell your
securities prior to stated maturity. This may affect the price you receive upon such sale. Consequently, you should be willing
to hold the securities to stated maturity.
Your
Return On The Securities Could Be Less Than If You Owned Securities Included In The Underlier.
Your
return on the securities will not reflect the return you would realize if you actually owned the securities included in the underlier
and received the dividends and other payments paid on those securities. This is in part because the cash settlement amount payable
at stated maturity will be determined by reference to the final underlier level, which will be calculated by reference to the
prices of the securities in the underlier without taking into consideration the value of dividends and other payments paid on
those securities. In addition, the cash settlement amount will not be greater than the maximum settlement amount.
Historical
Levels Of The Underlier Should Not Be Taken As An Indication Of The Future Performance Of The Underlier During The Term Of The
Securities.
The
trading prices of the securities included in the underlier will determine the cash settlement amount payable at maturity to you.
As a result, it is impossible to predict whether the closing level of the underlier will fall or rise compared to the initial
underlier level. Trading prices of the securities included in the underlier will be influenced by complex and interrelated political,
economic, financial and other factors that can affect the markets in which those securities are traded and the values of those
securities themselves. Accordingly, any historical levels of the underlier do not provide an indication of the future performance
of the underlier.
Changes
That Affect The Underlier May Adversely Affect The Value Of The Securities And The Amount You Will Receive At Stated Maturity.
The
policies of the underlier sponsor concerning the calculation of the underlier and the addition, deletion or substitution of securities
comprising the underlier and the manner in which the underlier sponsor takes account of certain changes affecting such securities
may affect the level of the underlier and, therefore, may affect the value of the securities and the cash settlement amount payable
at maturity. The underlier sponsor may discontinue or suspend calculation or dissemination of the underlier or materially alter
the methodology by which it calculates the underlier. Any such actions could adversely affect the value of the securities.
We
Cannot Control Actions By Any Of The Unaffiliated Companies Whose Securities Are Included In The Underlier.
Actions
by any company whose securities are included in the underlier may have an adverse effect on the price of its security, the final
underlier level and the value of the securities. We are not affiliated with any of the companies included in the underlier. These
companies will have no obligations with respect to the securities, including any obligation to take our or your interests into
consideration for any reason. These companies will not receive any of the proceeds of the offering of the securities and will
not be responsible for, and will not have participated in, the determination of the timing of, prices for, or quantities of, the
securities to be issued. These companies will not be involved with the administration, marketing or trading of the securities
and will have no obligations with respect to any amounts to be paid to you on the securities.
We
And Our Affiliates Have No Affiliation With The Underlier Sponsor And Have Not Independently Verified Its Public Disclosure Of
Information.
We
and our affiliates are not affiliated in any way with the underlier sponsor and have no ability to control or predict its actions,
including any errors in or discontinuation of disclosure regarding the methods or policies relating to the calculation of the
underlier. We have derived the information about the underlier sponsor and the underlier contained in this pricing supplement
and the accompanying market measure supplement from publicly available information, without independent verification. You, as
an investor in the securities, should make your own investigation into the underlier and the underlier sponsor. The underlier
sponsor is not involved in the offering of the securities made hereby in any way and has no obligation to consider your interest
as an owner of the securities in taking any actions that might affect the value of the securities.
An
Investment In The Securities Is Subject To Risks Associated With Foreign Securities Markets.
The
underlier includes the securities of foreign companies and you should be aware that investments in securities linked to the value
of foreign equity securities involve particular risks. Foreign securities markets may have less liquidity and may be more volatile
than the U.S. securities markets, and market developments may affect foreign markets differently than U.S. securities markets.
Direct or indirect government intervention to stabilize a foreign securities market, as well as cross-shareholdings in foreign
companies, may affect trading prices and volumes in those markets. Also, there is generally less publicly available information
about non-U.S. companies that are not subject to the reporting requirements of the
Securities
and Exchange Commission, and non-U.S. companies are subject to accounting, auditing and financial reporting standards and requirements
that differ from those applicable to U.S. reporting companies.
The
prices and performance of securities of non-U.S. companies are subject to political, economic, financial, military and social
factors which could negatively affect foreign securities markets, including the possibility of recent or future changes in a foreign
government’s economic, monetary and fiscal policies, the possible imposition of, or changes in, currency exchange laws or
other laws or restrictions applicable to foreign companies or investments in foreign equity securities, the possibility of imposition
of withholding taxes on dividend income, the possibility of fluctuations in the rate of exchange between currencies, the possibility
of outbreaks of hostility or political instability and the possibility of natural disaster or adverse public health developments.
Moreover, the relevant non-U.S. economies may differ favorably or unfavorably from the U.S. economy in important respects, such
as growth of gross national product, rate of inflation, trade surpluses or deficits, capital reinvestment, resources and self-sufficiency.
The
securities included in the underlier may be listed on a foreign stock exchange. A foreign stock exchange may impose trading limitations
intended to prevent extreme fluctuations in individual security prices and may suspend trading in certain circumstances. These
actions could limit variations in the closing level of the underlier which could, in turn, adversely affect the value of the securities.
The
U.S. Federal Tax Consequences Of An Investment In The Securities Are Unclear.
There
is no direct legal authority regarding the proper U.S. federal tax treatment of the securities, and we do not plan to request
a ruling from the IRS. Consequently, significant aspects of the tax treatment of the securities are uncertain, and the IRS or
a court might not agree with the treatment of the securities as prepaid derivative contracts that are “open transactions”
for U.S. federal income tax purposes. If the IRS were successful in asserting an alternative treatment of the securities, the
tax consequences of the ownership and disposition of the securities might be materially and adversely affected.
Section
871(m) of the Internal Revenue Code of 1986, as amended (the “Code”), imposes a withholding tax of up to 30%
on “dividend equivalents” paid or deemed paid to non-U.S. investors in respect of certain financial instruments linked
to U.S. equities. In light of Treasury regulations, as modified by an IRS notice, that provide a general exemption for financial
instruments
issued prior to January 1, 2021 that do not have a “delta” of one, the securities should not be subject to withholding
under Section 871(m). However, the IRS could challenge this conclusion. If withholding applies to the securities, we will not
be required to pay any additional amounts with respect to amounts withheld.
In
addition, in 2007 the U.S. Treasury Department and the IRS released a notice requesting comments on various issues regarding the
U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. Any Treasury regulations
or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of
an investment in the securities, including the character and timing of income or loss and the degree, if any, to which income
realized by non-U.S. persons should be subject to withholding tax, possibly with retroactive effect. You should read carefully
the discussion under “United States Federal Tax Considerations” in this pricing supplement. You should also consult
your tax adviser regarding the U.S. federal tax consequences of an investment in the securities, as well as tax consequences arising
under the laws of any state, local or non-U.S. taxing jurisdiction.
Determining
Payment at Stated Maturity
On
the stated maturity date, you will receive a cash payment per security (the cash settlement amount) calculated as follows:
Hypothetical
Returns
The
following table illustrates, for a range of hypothetical final underlier levels:
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the
hypothetical percentage change from the initial underlier level to the hypothetical final
underlier level; and
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the
hypothetical pre-tax total return.
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Hypothetical
underlier return
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Hypothetical
pre-tax total
return
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The
above figures are for purposes of illustration only and may have been rounded for ease of analysis. The actual amount you receive
at stated maturity and the resulting pre-tax return will depend on the actual final underlier level.
If,
for example, the underlier return were determined to be -75.00%, the pre-tax return on your securities at maturity would be approximately
-70.588%, as shown in the table above. As a result, if you purchased your securities on the original issue date at the face amount
and held them to the stated maturity date, you would lose approximately 70.588% of your investment. In addition, if the underlier
return were determined to be 50.00%, the cash settlement amount that we would deliver on your securities at maturity would be
capped at the maximum settlement amount, and the pre-tax return on your securities would therefore be capped at 27.795%, as shown
in the table above. As a result, if you held your securities to the stated maturity date, you would not benefit from any underlier
return in excess of 16.35%.
Additional
Terms of the Securities
Wells
Fargo Finance LLC will issue the securities as part of a series of senior unsecured debt securities entitled “Medium-Term
Notes, Series A,” which is more fully described in the prospectus supplement. Information included in this pricing supplement
supersedes information in the market measure supplement, prospectus supplement and prospectus to the extent that it is different
from that information.
Certain
Definitions
A
“trading day” means a day, as determined by the calculation agent, on which (i) the underlier sponsor is scheduled
to publish the level of the underlier and (ii) each related futures or options exchange is scheduled to be open for trading for
its regular trading session.
The
“relevant stock exchange” for any security underlying the underlier means the primary exchange or quotation
system on which such security is traded, as determined by the calculation agent.
The
“related futures or options exchange” for the underlier means an exchange or quotation system where trading
has a material effect (as determined by the calculation agent) on the overall market for futures or options contracts relating
to the underlier.
Calculation
Agent
Wells
Fargo Securities, LLC, one of our affiliates and a wholly owned subsidiary of Wells Fargo & Company, will act as initial calculation
agent for the securities and may appoint agents to assist it in the performance of its duties. Pursuant to the calculation agent
agreement, we may appoint a different calculation agent without your consent and without notifying you.
The
calculation agent will determine the cash settlement amount you receive at stated maturity. In addition, the calculation agent
will, among other things:
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determine
whether a market disruption event or non-trading day has occurred;
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•
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determine
if adjustments are required to the closing level of the underlier under various circumstances;
and
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if
publication of the underlier is discontinued, select a successor underlier (as defined
below) or, if no successor underlier is available, determine the closing level of the
underlier.
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All
determinations made by the calculation agent will be at the sole discretion of the calculation agent and, in the absence of manifest
error, will be conclusive for all purposes and binding on us and you. The calculation agent will have no liability for its determinations.
Market
Disruption Events
A
“market disruption event” means any of (A), (B), (C) or (D) below, as determined by the calculation agent in
its sole discretion:
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(A)
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Any
of the following events occurs or exists with respect to any security included in the
underlier or any successor underlier, and the aggregate of all securities included in
the underlier or successor underlier with respect to which any such event occurs comprise
20% or more of the level of the underlier or successor underlier:
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a
material suspension of or limitation imposed on trading by the relevant stock exchange
for such security or otherwise at any time during the one-hour period that ends at the
scheduled closing time for the relevant stock exchange for such security on that day,
whether by reason of movements in price exceeding limits permitted by the relevant stock
exchange or otherwise;
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any
event, other than an early closure, that materially disrupts or impairs the ability of
market participants in general to effect transactions in, or obtain market values for,
such security on its relevant stock exchange at any time during the one-hour period that
ends at the scheduled closing time for the relevant stock exchange for such security
on that day; or
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the
closure on any exchange business day of the relevant stock exchange for such security
prior to its scheduled closing time unless the earlier closing is announced by such relevant
stock exchange at least one hour prior to the earlier of (i) the actual closing time
for the regular trading session on such relevant stock exchange and (ii) the submission
deadline for orders to be entered into the relevant stock exchange system for execution
at the scheduled closing time for such relevant stock exchange on that day.
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(B)
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Any
of the following events occurs or exists with respect to futures or options contracts
relating to the underlier or any successor underlier:
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a
material suspension of or limitation imposed on trading by any related futures or options
exchange or otherwise at any time during the one-hour period that ends at the close of
trading on such related futures or options exchange on that day, whether by reason of
movements in price exceeding limits permitted by the related futures or options exchange
or otherwise;
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any
event, other than an early closure, that materially disrupts or impairs the ability of
market participants in general to effect transactions in, or obtain market values for,
futures or options contracts relating to the underlier or successor underlier on any
related futures or options exchange at any time during the one-hour period that ends
at the close of trading on such related futures or options exchange on that day; or
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the
closure on any exchange business day of any related futures or options exchange prior
to its scheduled closing time unless the earlier closing time is announced by such related
futures or options exchange at least one hour prior to the earlier of (i) the actual
closing time for the regular trading session on such related futures or options exchange
and (ii) the submission deadline for orders to be entered into the related futures or
options exchange system for execution at the close of trading for such related futures
or options exchange on that day.
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(C)
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The
underlier sponsor fails to publish the level of the underlier or any successor underlier
(other than as a result of the underlier sponsor having discontinued publication of the
underlier or successor underlier and no successor underlier being available).
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(D)
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Any
related futures or options exchange fails to open for trading during its regular trading
session.
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For
purposes of determining whether a market disruption event has occurred:
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(1)
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the
relevant percentage contribution of a security included in the underlier or any successor
underlier to the level of such underlier will be based on a comparison of (x) the portion
of the level of such underlier attributable to that security to (y) the overall level
of such underlier, in each case using the official opening weightings as published by
the underlier sponsor as part of the market opening data;
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(2)
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the
“scheduled closing time” of any relevant stock exchange or related
futures or options exchange on any trading day means the scheduled weekday closing time
of such relevant stock exchange or related futures or options exchange on such trading
day, without regard to after hours or any other trading outside the regular trading session
hours; and
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(3)
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an
“exchange business day” means any trading day on which (i) the underlier
sponsor publishes the level of the underlier or any successor underlier and (ii) each
related futures or options exchange is open for trading during its regular trading session,
notwithstanding any related futures or options exchange closing prior to its scheduled
closing time.
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If
a market disruption event occurs or is continuing on the determination date, then the determination date will be postponed to
the first succeeding trading day on which a market disruption event has not occurred and is not continuing; however, if such first
succeeding trading day has not occurred as of the eighth trading day after the originally scheduled determination date, that eighth
trading day shall be deemed to be the determination date. If the determination date has been postponed eight trading days after
the originally scheduled determination date and a market disruption event occurs or is continuing on such eighth trading day,
the calculation agent will determine the closing level of the underlier on such eighth trading day in accordance with the formula
for and method of calculating the closing level of the underlier last in effect prior to commencement of the market disruption
event, using the closing price (or, with respect to any relevant security, if a market disruption event has occurred with respect
to such security, its good faith estimate of the value of such security at the time at which the official closing level of the
underlier is calculated and published by the underlier sponsor) on such date of each security included in the underlier. As used
herein, “closing price” means, with respect to any security on any date, the relevant stock exchange traded
or quoted price of such security as of the time at which the official closing level of the underlier is calculated and published
by the underlier sponsor.
Adjustments
to the Underlier
If
at any time the method of calculating the underlier or a successor underlier, or the closing level thereof, is changed in a material
respect, or if the underlier or a successor underlier is in any other way modified so that such underlier does not, in the opinion
of the calculation agent, fairly represent the level of such underlier had those changes or modifications not been made, then
the calculation agent will, at the close of business in New York, New York, on each date that the closing level of such underlier
is to be calculated, make such calculations and adjustments as, in the good faith judgment of the calculation agent, may be necessary
in order to arrive at a level of an underlier comparable to the underlier or successor underlier as if those changes or modifications
had not been made, and the calculation agent will calculate the closing level of the underlier or successor underlier with reference
to such underlier, as so adjusted. Accordingly, if the method of calculating the underlier or successor underlier is modified
so that the level of such underlier is a fraction or a multiple of what it would have been if it had not been modified (e.g.,
due to a split or reverse split in such equity underlier), then the
calculation
agent will adjust the underlier or successor underlier in order to arrive at a level of such underlier as if it had not been modified
(e.g., as if the split or reverse split had not occurred).
Discontinuance
of the Underlier
If
the sponsor or publisher of the underlier (the “underlier sponsor”) discontinues publication of the underlier,
and the underlier sponsor or another entity publishes a successor or substitute equity index that the calculation agent determines,
in its sole discretion, to be comparable to the underlier (a “successor underlier”), then, upon the calculation
agent’s notification of that determination to the trustee and Wells Fargo Finance LLC, the calculation agent will substitute
the successor underlier as calculated by the relevant underlier sponsor or any other entity and calculate the final underlier
level as described above. Upon any selection by the calculation agent of a successor underlier, Wells Fargo Finance LLC will cause
notice to be given to holders of the securities.
In
the event that the underlier sponsor discontinues publication of the underlier prior to, and the discontinuance is continuing
on, the determination date and the calculation agent determines that no successor underlier is available at such time, the calculation
agent will calculate a substitute closing level for the underlier in accordance with the formula for and method of calculating
the underlier last in effect prior to the discontinuance, but using only those securities that comprised the underlier immediately
prior to that discontinuance. If a successor underlier is selected or the calculation agent calculates a level as a substitute
for the underlier, the successor underlier or level will be used as a substitute for the underlier for all purposes, including
the purpose of determining whether a market disruption event exists.
If
on the determination date the underlier sponsor fails to calculate and announce the level of the underlier, the calculation agent
will calculate a substitute closing level of the underlier in accordance with the formula for and method of calculating the underlier
last in effect prior to the failure, but using only those securities that comprised the underlier immediately prior to that failure;
provided that, if a market disruption event occurs or is continuing on such day, then the provisions set forth above under “—Market
Disruption Events” shall apply in lieu of the foregoing.
Notwithstanding
these alternative arrangements, discontinuance of the publication of, or the failure by the underlier sponsor to calculate and
announce the level of, the underlier may adversely affect the value of the securities.
Events
of Default and Acceleration
If
an event of default with respect to the securities has occurred and is continuing, the amount payable to a holder of a security
upon any acceleration permitted by the securities, with respect to each security, will be equal to the cash settlement amount,
calculated as provided herein. The cash settlement amount will be calculated as though the date of acceleration were the determination
date.
MSCI
EAFE Index®
The
MSCI EAFE Index® is an equity index that is designed to measure equity
performance in developed markets, excluding the United States and Canada. See “Description of Equity Indices—The MSCI
Indices” in the accompanying market measure supplement for additional information about the MSCI EAFE Index®.
In
addition, information about the MSCI EAFE Index® may be obtained from
other sources including, but not limited to, the MSCI EAFE Index® sponsor’s
website (including information regarding (i) the sector weightings and (ii) the country weightings for the MSCI EAFE Index®).
We are not incorporating by reference into this pricing supplement the website or any material it includes. Neither we nor the
agent makes any representation that such publicly available information regarding the MSCI EAFE Index®
is accurate or complete.
Historical
Information
We
obtained the closing levels of the MSCI EAFE Index® from Bloomberg Financial
Markets without independent verification.
The
historical performance of the underlier should not be taken as an indication of the future performance of the underlier during
the term of the securities.
The
following graph sets forth the daily closing levels of the underlier for each day in the period from January 1, 2014 through November
5, 2019. The closing level on November 5, 2019 was 1,976.40.
MSCI
EAFE Index® Daily Closing Levels
The
MSCI EAFE Index® is the exclusive property of MSCI Inc. (“MSCI”). MSCI and the MSCI EAFE Index® are
service marks of MSCI or its affiliates and have been licensed to Wells Fargo & Company, our parent company, for use by Wells
Fargo & Company and certain of its affiliated or subsidiary companies (including us). The securities are not sponsored, endorsed,
sold or promoted by MSCI, any of its affiliates, any of its information providers or any other third party involved in, or related
to, compiling, computing or creating the MSCI EAFE Index®
Benefit
Plan Investor Considerations
Each
fiduciary of a pension, profit-sharing or other employee benefit plan to which Title I of the Employee Retirement Income Security
Act of 1974 (“ERISA”) applies (a “plan”), should consider the fiduciary standards of ERISA
in the context of the plan’s particular circumstances before authorizing an investment in the securities. Accordingly, among
other factors, the fiduciary should consider whether the investment would satisfy the prudence and diversification requirements
of ERISA and would be consistent with the documents and instruments governing the plan. When we use the term “holder”
in this section, we are referring to a beneficial owner of the securities and not the record holder.
Section
406 of ERISA and Section 4975 of the Code prohibit plans, as well as individual retirement accounts and Keogh plans to which Section
4975 of the Code applies (also “plans”), from engaging in specified transactions involving “plan assets”
with persons who are “parties in interest” under ERISA or “disqualified persons” under the Code (collectively,
“parties in interest”) with respect to such plan. A violation of those “prohibited transaction”
rules may result in an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for such persons, unless statutory
or administrative exemptive relief is available. Therefore, a fiduciary of a plan should also consider whether an investment in
the securities might constitute or give rise to a prohibited transaction under ERISA and the Code.
Employee
benefit plans that are governmental plans, as defined in Section 3(32) of ERISA, certain church plans, as defined in Section 3(33)
of ERISA, and foreign plans, as described in Section 4(b)(4) of ERISA (collectively, “Non-ERISA Arrangements”),
are not subject to the requirements of ERISA, or Section 4975 of the Code, but may be subject to similar rules under other applicable
laws or regulations (“Similar Laws”).
We
and our affiliates may each be considered a party in interest with respect to many plans. Special caution should be exercised,
therefore, before the securities are purchased by a plan. In particular, the fiduciary of the plan should consider whether statutory
or administrative exemptive relief is available. The U.S. Department of Labor has issued five prohibited transaction class exemptions
(“PTCEs”) that may provide exemptive relief for direct or indirect prohibited transactions resulting from the
purchase or holding of the securities. Those class exemptions are:
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PTCE
96-23, for specified transactions determined by in-house asset managers;
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PTCE
95-60, for specified transactions involving insurance company general accounts;
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PTCE
91-38, for specified transactions involving bank collective investment funds;
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PTCE
90-1, for specified transactions involving insurance company separate accounts; and
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PTCE
84-14, for specified transactions determined by independent qualified professional asset
managers.
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In
addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide an exemption for transactions between a plan
and a person who is a party in interest (other than a fiduciary who has or exercises any discretionary authority or control with
respect to investment of the plan assets involved in the transaction or renders investment advice with respect thereto) solely
by reason of providing services to the plan (or by reason of a relationship to such a service provider), if in connection with
the transaction of the plan receives no less, and pays no more, than “adequate consideration” (within the meaning
of Section 408(b)(17) of ERISA).
Any
purchaser or holder of the securities or any interest in the securities will be deemed to have represented by its purchase and
holding that either:
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no
portion of the assets used by such purchaser or holder to acquire or purchase the securities
constitutes assets of any plan or Non-ERISA Arrangement; or
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the
purchase and holding of the securities by such purchaser or holder will not constitute
a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code or similar violation under any Similar Laws.
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Due
to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions,
it is particularly important that fiduciaries or other persons considering purchasing the securities on behalf of or with “plan
assets” of any plan consult with their counsel regarding the potential consequences under ERISA and the Code of the acquisition
of the securities and the availability of exemptive relief.
The
securities are contractual financial instruments. The financial exposure provided by the securities is not a substitute or proxy
for, and is not intended as a substitute or proxy for, individualized investment management or advice for the benefit of any purchaser
or holder of the securities. The securities have not been designed and will not be administered in a manner intended to reflect
the individualized needs and objectives of any purchaser or holder of the securities.
Each
purchaser or holder of the securities acknowledges and agrees that:
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(i)
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the
purchaser or holder or its fiduciary has made and shall make all investment decisions
for the purchaser or holder and the purchaser or holder has not relied and shall not
rely in any way upon us or our affiliates to act as a fiduciary or adviser of the purchaser
or holder with respect to (a) the design and terms of the securities, (b) the purchaser
or holder’s investment in the securities, or (c) the exercise of or failure to
exercise any rights we have under or with respect to the securities;
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(ii)
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we
and our affiliates have acted and will act solely for our own account in connection with
(a) all transactions relating to the securities and (b) all hedging transactions in connection
with our obligations under the securities;
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(iii)
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any
and all assets and positions relating to hedging transactions by us or our affiliates
are assets and positions of those entities and are not assets and positions held for
the benefit of the purchaser or holder;
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(iv)
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our
interests may be adverse to the interests of the purchaser or holder; and
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(v)
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neither
we nor any of our affiliates is a fiduciary or adviser of the purchaser or holder in
connection with any such assets, positions or transactions, and any information that
we or any of our affiliates may provide is not intended to be impartial investment advice.
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Purchasers
of the securities have the exclusive responsibility for ensuring that their purchase, holding and subsequent disposition of the
securities does not violate the fiduciary or prohibited transaction rules of ERISA, the Code or any Similar Law. Nothing herein
shall be construed as a representation that an investment in the securities would be appropriate for, or would meet any or all
of the relevant legal requirements with respect to investments by, plans or Non-ERISA Arrangements generally or any particular
plan or Non-ERISA Arrangement.
United
States Federal Tax Considerations
The
following is a discussion of the material U.S. federal income and certain estate tax consequences of the ownership and disposition
of the securities. It applies to you only if you purchase a security for cash in the initial offering at the “issue price,”
which is the first price at which a substantial amount of the securities is sold to the public, and hold the security as a capital
asset within the meaning of Section 1221 of the Code. It does not address all of the tax consequences that may be relevant to
you in light of your particular circumstances or if you are an investor subject to special rules, such as:
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a
financial institution;
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a
“regulated investment company”;
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a
tax-exempt entity, including an “individual retirement account” or “Roth
IRA”;
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a
dealer or trader subject to a mark-to-market method of tax accounting with respect to
the securities;
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a
person holding a security as part of a “straddle” or conversion transaction
or who has entered into a “constructive sale” with respect to a security;
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a
U.S. holder (as defined below) whose functional currency is not the U.S. dollar; or
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an
entity classified as a partnership for U.S. federal income tax purposes.
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If
an entity that is classified as a partnership for U.S. federal income tax purposes holds the securities, the U.S. federal income
tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are
a partnership holding the securities or a partner in such a partnership, you should consult your tax adviser as to your particular
U.S. federal tax consequences of holding and disposing of the securities.
We
will not attempt to ascertain whether any of the issuers of the underlying stocks of the underlier (the “underlying stocks”)
is treated as a “passive foreign investment company” (“PFIC”) within the meaning of Section 1297
of the Code. If any of the issuers of the underlying stocks were so treated, certain adverse U.S. federal income tax consequences
might apply to you, if you are a U.S. holder (as defined below), upon the sale, exchange or other disposition of the securities. You
should refer to information filed with the Securities and Exchange Commission or another governmental authority by the issuers
of the underlying stocks and consult your tax adviser regarding the possible consequences to you if any of the issuers of the
underlying stocks is or becomes a PFIC.
This
discussion is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury
regulations, all as of the date of this pricing supplement, changes to any of which subsequent to the date of this pricing supplement
may affect the tax consequences described herein, possibly with retroactive effect. This discussion does not address the effects
of any applicable state, local or non-U.S. tax laws, any alternative minimum tax consequences, the potential application of the
Medicare tax on investment income or the consequences to taxpayers subject to special tax accounting rules under Section 451(b)
of the Code. You should consult your tax adviser concerning the application of U.S. federal income and estate tax laws to your
particular situation (including the possibility of alternative treatments of the securities), as well as any tax consequences
arising under the laws of any state, local or non-U.S. jurisdiction.
Tax
Treatment of the Securities
In
the opinion of our counsel, Davis Polk & Wardwell LLP, which is based on current market conditions, a security should be treated
as a prepaid derivative contract that is an “open transaction” for U.S. federal income tax purposes. By purchasing
a security, you agree (in the absence of an administrative determination or judicial ruling to the contrary) to this treatment.
Due
to the absence of statutory, judicial or administrative authorities that directly address the U.S. federal tax treatment of the
securities or similar instruments, significant aspects of the treatment of an investment in the securities are uncertain. We do
not plan to request a ruling from the IRS, and the IRS or a court might not agree with the treatment described below. Accordingly,
you should consult your tax adviser regarding all aspects of the U.S. federal income and estate tax consequences of an investment
in the securities. Unless otherwise indicated, the following discussion is based on the treatment of the securities as prepaid
derivative contracts that are “open transactions.”
Tax
Consequences to U.S. Holders
This
section applies only to U.S. holders. You are a “U.S. holder” if you are a beneficial owner of a security that
is, for U.S. federal income tax purposes:
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a
citizen or individual resident of the United States;
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a
corporation created or organized in or under the laws of the United States, any state
therein or the District of Columbia; or
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an
estate or trust the income of which is subject to U.S. federal income taxation regardless
of its source.
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Tax
Treatment Prior to Maturity. You should not be required to recognize income over the term of the securities prior to maturity,
other than pursuant to a sale, exchange or retirement as described below.
Sale,
Exchange or Retirement of the Securities. Upon a sale, exchange or retirement of the securities, you should recognize gain or
loss equal to the difference between the amount realized on the sale, exchange or retirement and your tax basis in the securities
that are sold, exchanged or retired. Your tax basis in the securities should equal the amount you paid to acquire them. This gain
or loss should be long-term capital gain or loss if at the time of the sale, exchange or retirement you held the securities for
more than one year, and short-term capital gain or loss otherwise. Long-term capital gains recognized by non-corporate U.S. holders
are generally subject to taxation at reduced rates. The deductibility of capital losses is subject to certain limitations.
Possible
Alternative Tax Treatments of an Investment in the Securities
Alternative
U.S. federal income tax treatments of the securities are possible that, if applied, could materially and adversely affect the
timing and/or character of income, gain or loss with respect to them. It is possible, for example, that the securities could
be treated as debt instruments governed by Treasury regulations relating to the taxation of contingent payment debt instruments. In
that case, regardless of your method of tax accounting for U.S. federal income tax purposes, you generally would be required to
accrue income based on our comparable yield for similar non-contingent debt, determined as of the time of issuance of the securities,
in each year that you held the securities, even though we are not required to make any payment with respect to the securities
prior to maturity. In addition, any gain on the sale, exchange or retirement of the securities would be treated as ordinary
income.
Other
possible U.S. federal income tax treatments of the securities could also affect the timing and character of income or loss with
respect to the securities. In 2007, the U.S. Treasury Department and the IRS released a notice requesting comments on the U.S.
federal income tax treatment of “prepaid forward contracts” and similar instruments. The notice focuses in particular
on whether to require holders of these instruments to accrue income over the term of their investment. It also asks for comments
on a number of related topics, including the character of income or loss with respect to these instruments; whether short-term
instruments should be subject to any such accrual regime; the relevance of factors such as the exchange-traded status of the instruments
and the nature of the underlying property to which the instruments are linked; and whether these instruments are or should be
subject to the “constructive ownership” regime, which very generally can operate to recharacterize certain long-term
capital gain as ordinary income and impose a notional interest charge. While the notice requests comments on appropriate transition
rules and effective dates, any Treasury regulations or other guidance promulgated after consideration of these issues could materially
and adversely affect the tax consequences of an investment in the securities, possibly with retroactive effect. You should consult
your tax adviser regarding the possible alternative treatments of an investment in the securities and the issues presented by
this notice.
Tax
Consequences to Non-U.S. Holders
This
section applies only to non-U.S. holders. You are a “non-U.S. holder” if you are a beneficial owner of a security
that is, for U.S. federal income tax purposes:
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an
individual who is classified as a nonresident alien;
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a
foreign corporation; or
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a
foreign estate or trust.
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You
are not a non-U.S. holder for purposes of this discussion if you are (i) an individual who is present in the United States for
183 days or more in the taxable year of disposition or (ii) a former citizen or resident of the United States. If you are or may
become such a person during the period in which you hold a security, you should consult your tax adviser regarding the U.S. federal
tax consequences of an investment in the securities.
Sale,
Exchange or Retirement of the Securities. Subject to the discussion below regarding Section 871(m), you generally should not
be subject to U.S. federal income or withholding tax in respect of amounts paid to you, provided that income in respect of the
securities is not effectively connected with your conduct of a trade or business in the United States.
If
you are engaged in a U.S. trade or business, and if income from the securities is effectively connected with the conduct of that
trade or business, you generally will be subject to regular U.S. federal income tax with respect to that income in the same manner
as if you were a U.S. holder, unless an applicable income tax treaty provides otherwise. If you are such a holder and you are
a corporation, you should also consider the potential application of a 30% (or lower treaty rate) branch profits tax.
Tax
Consequences Under Possible Alternative Treatments. If all or any portion of a security were recharacterized as a debt instrument,
subject to the discussions below regarding FATCA and Section 871(m), any payment made to you with respect to the security generally
should not be subject to U.S. federal withholding or income tax, provided that: (i) income or gain in respect of the security
is not effectively connected with your conduct of a trade or business in the United States, and (ii) you provide an appropriate
IRS Form W-8 certifying under penalties of perjury that you are not a United States person.
Other
U.S. federal income tax treatments of the securities are also possible. In 2007, the U.S. Treasury Department and the IRS released
a notice requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments.
Among the issues addressed in the notice is the degree, if any, to which income with respect to instruments such as the securities
should be subject to U.S. withholding tax. While the notice requests comments on appropriate transition rules and effective dates,
it is possible that any Treasury regulations or other guidance promulgated after consideration of these issues might materially
and adversely affect the withholding tax consequences of an investment in the securities, possibly with retroactive effect. Accordingly,
you should consult your tax adviser regarding the issues presented by the notice.
Possible
Withholding Under Section 871(m) of the Code. Section 871(m) of the Code and Treasury regulations promulgated thereunder (“Section
871(m)”) generally impose a 30% withholding tax on dividend equivalents paid or deemed paid to non-U.S. holders with
respect to certain financial instruments linked to U.S. equities (“U.S. underlying equities”) or indices that
include U.S. underlying equities. Section 871(m) generally applies to instruments that substantially replicate the economic performance
of one or more U.S. underlying equities, as determined based on tests set forth in the applicable Treasury regulations (a “specified
security”). However, the regulations, as modified by an IRS notice, exempt financial instruments issued prior to January
1, 2021 that do not have a “delta” of one. Based on the terms of the securities and representations provided by us,
our counsel is of the opinion that the securities should not be treated as transactions that have a “delta” of one
within the meaning of the regulations with respect to any U.S. underlying equity and, therefore, should not be specified securities
subject to withholding tax under Section 871(m).
A
determination that the securities are not subject to Section 871(m) is not binding on the IRS, and the IRS may disagree with this
treatment. Moreover, Section 871(m) is complex and its application may depend on your particular circumstances. For example, if
you enter into other transactions relating to a U.S. underlying equity, you could be subject to withholding tax or income tax
liability under Section 871(m) even if the securities are not specified securities subject to Section 871(m) as a general matter.
You should consult your tax adviser regarding the potential application of Section 871(m) to the securities.
In
the event withholding applies, we will not be required to pay any additional amounts with respect to amounts withheld.
U.S.
Federal Estate Tax
If
you are an individual non-U.S. holder or an entity the property of which is potentially includible in such an individual’s
gross estate for U.S. federal estate tax purposes (for example, a trust funded by such an individual and with respect to which
the individual has retained certain interests or powers), you should note that, absent an applicable treaty exemption, the securities
may be treated as U.S. situs property subject to U.S. federal estate tax. If you are such an individual or entity, you should
consult your tax adviser regarding the U.S. federal estate tax consequences of investing in the securities.
Information
Reporting and Backup Withholding
Amounts
paid on the securities, and the proceeds of a sale, exchange or other disposition of the securities, may be subject to information
reporting and, if you fail to provide certain identifying information (such as an accurate taxpayer identification number if you
are a U.S. holder) or meet certain other conditions, may also be subject to backup withholding at the rate specified in the Code.
If you are a non-U.S. holder that provides an appropriate IRS Form W-8, you will generally establish an exemption from backup
withholding. Amounts withheld under the backup withholding rules are not additional taxes and may be refunded or credited against
your U.S. federal income tax liability, provided the relevant information is timely furnished to the IRS.
FATCA
Legislation
commonly referred to as “FATCA” generally imposes a withholding tax of 30% on payments to certain non-U.S.
entities (including financial intermediaries) with respect to certain financial instruments, unless various U.S. information reporting
and due diligence requirements have been satisfied. An intergovernmental agreement between the United States and the non-U.S.
entity’s jurisdiction may modify these requirements. This legislation applies to certain financial instruments that
are treated as paying U.S.-source interest, dividends or dividend equivalents or other U.S.-source “fixed or determinable
annual or periodical” income (“FDAP income”). If required under FATCA, withholding applies to payments
of FDAP income. While existing Treasury regulations would also require withholding on payments of gross proceeds of the
disposition (including upon retirement) of certain financial instruments treated as paying U.S.-source interest or dividends,
the U.S. Treasury Department has indicated in subsequent proposed regulations its intent to eliminate this requirement.The U.S.
Treasury Department has indicated that taxpayers may rely on these proposed regulations pending their finalization. If the securities
were treated as debt instruments or as subject to Section 871(m), the withholding regime under FATCA would apply to the securities.
If withholding applies to the securities, we will not be required to pay any additional amounts with respect to amounts withheld.
If you are a non-U.S. holder, or a U.S. holder holding securities through a non-U.S. intermediary, you should consult your tax
adviser regarding the potential application of FATCA to the securities.
The
preceding discussion constitutes the full opinion of Davis Polk & Wardwell LLP regarding the material U.S. federal tax consequences
of owning and disposing of the securities.
You
should consult your tax adviser regarding all aspects of the U.S. federal income and estate tax consequences of an investment
in the securities and any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.